Balanced or bust: Cotswold District Council makes bid to sidestep bankruptcy
By Simon Hacker | 25th October 2023
All local authorities have to balance their housekeeping to deliver local services, but the task for Cotswold District Council (CDC) now weighs heavily – either it stays in the black or goes bust.
Hamstrung by lower government funding and rising costs, CDC has now published its financial challenge for the next three years, with deputy leader and cabinet member for finance Mike Evemy issuing a stark warning of an "unprecedented" challenge.
Financial modelling from CDC reveals that unless significant changes are made to reduce spending and increase income, it will be game over in 2027.
Cllr Evemy said: "The Government has failed to fund local councils properly and as a result, we're now facing an unprecedented financial challenge. For the time being, we are in a relatively sound financial position due to decisions in the last few years to raise charges and make services more efficient."
But he added: "I want to be upfront with residents that if we don't take tough decisions over the next couple of years, we risk ending up like other councils - declaring effective bankruptcy and then seeing big tax rises, huge hikes in charges and services shutdown.
"We are committed to meeting this funding challenge and our mission is to avoid getting into that position - as we have seen this year at Birmingham City Council. It isn't just Birmingham though, it is a national challenge and many other councils have issued warnings in recent months.
CDC's proposed budget will be considered by its cabinet on November 2nd, while the following day, a consultation on the proposals will be launched. This runs until December 8th, and the results will be considered at cabinet on January 11th with a full council vote to ratify the budget in February.
Proposals this year, the council says, could save £1.5m for ringfencing services residents and communities rely on. Last year, the council was able to freeze car parking charges to help residents and visitors with the cost of living, but it warns it cannot afford to continue that policy into next year.
"By making difficult decisions in next year's budget, it will help us avoid making much tougher decisions in future and facing the harsh changes we have seen at councils that have lost control of their finances.
The Council has seen core government funding reduced in real terms by 50% in the last decade, while inflation has pushed up the cost of delivering services. Additionally, the much delayed review of local government funding suggests a further £3m reduction in funding will be imposed by 2027, which would cut CDC's budget by around 25% in one go.
Amid uncertainty on when the review will happen and how severe its impact will be, councillors say must make decisions now to prepare for it.
In its draft budget for 2023/24, CDC is proposing to raise council tax by £5 a year for a Band D Property and increase car parking charges. These measures hope to raise £685,000. The council also proposes, among other potential changes, to increase the garden waste charge, so that the service continues to be paid for by the people who directly use it.
"We will be consulting on our proposed budget for 2024/25 from Friday 3 November and will let residents, businesses and community organisations know how they can provide feedback to us on our plans."
Local authorities such as CDC are legally required to balance their budgets each year. If unable to do so, and all other options are exhausted, they then have to consider issuing a Section 114 notice, which indicate that the council concerned is effectively bankrupt. On most occasions when this happens, the government steps in to take direct control, thereby increasing taxes and charges and making cuts to services in order to balance the budget.
● CDC collects council tax but on average only retains 7% of it, the rest going to the county council, police, fire and parish councils. CDC delivers more than 50 local services including waste collection, planning, licensing, housing and homelessness support, parking and leisure.
Copyright 2023 Moose Partnership Ltd. All rights reserved. Reproduction of any content is strictly forbidden without prior permission.