Westmorland and Furness Council is facing one of the most serious financial crises in its short history after internal finance papers revealed a projected £9.973 million overspend this year, triggering an immediate clampdown on spending, the launch of a voluntary redundancy programme and a review of council-owned assets that could be sold to raise cash.
Senior managers have been warned that the authority must now take a “one council” approach to avoid finishing the financial year in the red, with pressure mounting from rising demand for adult social care, children’s services and place-based statutory duties. The overspend is set to be debated by Cabinet next week as councillors are urged to take urgent action.
All non-essential spending has been halted with immediate effect, with managers instructed to scrutinise every item of expenditure and ask whether it is genuinely necessary to deliver core services. Staff have been told that even small savings could make a difference as the council approaches the final quarter of the financial year.
Decision-making powers over significant spending have also been pulled into a new central Spend Control Board, which will now approve all spending of £30,000 or more. This applies to both staffing and non-staffing costs and includes roles that already have approved budgets. Existing financial delegations have effectively been suspended, meaning directors and budget holders can no longer sign off major spending without central approval.
At the same time, a Voluntary Redundancy, Early Retirement and Flexible Retirement window will open from 15 December until 12 January. Any eligible employee will be able to apply, but the council has stressed that not all applications will be accepted. Each case will be judged on whether the role can be removed without damaging the delivery of essential statutory services, with affordability also playing a key role.
Behind the scenes, officers are also preparing for what could be an even tougher financial settlement next year. Changes to the government’s Fair Funding Formula are expected to reduce the council’s income from 2026/27, with early modelling suggesting a substantial funding gap. As a result, capital projects are being reviewed to identify schemes that can be paused, borrowing costs are being examined to see if refinancing could reduce interest payments, reserves are being reassessed, and council-owned buildings and land are being reviewed for potential sale to help plug the gap.
Procurement, contracts, purchase orders and compliance with “no purchase order, no pay” rules are also under increased scrutiny, as the council looks for tighter control and better value for money across all departments.
A spokesperson for Westmorland and Furness Council said:
“Demand for some local authority services, such as supporting vulnerable adults and children, continues to rise, placing an increasing pressure on finances.
“Alongside this, the government is changing the formula used for allocating funding to local authorities. While we do not yet know the exact figures for 2026/27 and the two years after, modelling strongly suggests that we should anticipate a substantial reduction in our overall funding allocation.
“Members and officers have therefore been undertaking extensive work in recent weeks to consider options available to us to ensure the council remains financially sustainable while continuing to deliver essential services.
“As a responsible authority we have put in place additional spending control measures to ensure our expenditure is providing best value.
“We are also opening a Voluntary Redundancy (VR) window for staff. Hard-working colleagues were informed of this possibility last Thursday, and we are now working to ensure they have the right levels of information should this be something they wish to consider.
“Any applications will be carefully assessed against clear criteria to ensure the council can continue to operate effectively. We will provide support for any colleagues who are accepted for VR, as well as those who continue delivering vital services across our communities.”
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