Cheshire East financial problems increase

Cheshire East Council’s financial woes have increased with an updated financial forecast which shows a potential shortfall of £18.7m in 2023/24.

A forecast deficit of £12.8m was published in the first financial review, earlier this year.

The Council maintains the increase is due to “inflation continuing at a higher level than forecast when we set the budget, as well as higher interest rates, which have made council borrowing more expensive at a time when demand for our services is increasing.”

The updated financial review report will be considered by the council’s service committees at their November meetings.

Following the first financial review, the council has implemented a range of measures – including the introduction of car parking charges where none are currently levied, increasing existing car parking charges and requiring payment for the removal of green garden waste.

The Council has already approved payments of £1,200 a day, plus agency costs (£1,380), to a new interim Chief Executive, which must have added to its problems.

Councillor Craig Browne, deputy leader of Cheshire East Council, said: “Despite the many measures and mitigations we are putting in place, forecast costs and demand for council services continue to exceed the approved budget. As a council, we are required by law to set a balanced budget at the start of the year and we cannot end the year with a deficit. We must balance the books.

“In February, the council agreed a budget and four-year financial strategy, including a range of proposals for savings and changes to services, including libraries, parking, garden waste collections and our maintenance of green spaces. We are already implementing these and know that any changes to valued council services can be difficult for the people who depend on those services. However, we are now facing the prospect of even more pressure on our budgets and those agreed savings will not be enough. 

“Added to this is the uncertainty surrounding recent government announcements, including the scrapping of HS2 north of Birmingham and asylum seeker accommodation, and uncertainty about winter pressures on health and care services. We are pursuing a compensation and investment package in relation to HS2 but we have no certainty at this stage about the scale of impact or the compensation we can expect. 

“Similarly, with asylum seeker hotels, the council has legal duties to find housing for anyone who presents as homeless. Government has announced that it is ending contracts with 50 hotels, meaning that people currently accommodated in those hotels may be at increased risk of homelessness. But it is unclear as to what that means for local councils, including Cheshire East. 

“Equally, we know that NHS is preparing for a difficult winter. This has a knock-on effect on to the council’s social care services. 

“At this point, we do not have clarity on any additional government support for the anticipated increased demand. These are just a few examples of the pressures and uncertainties we are facing.” 

The potential shortfall of £18.7m is 5.3 per cent of the council’s net revenue spending budget of £353.1m for 2023/24.

Councillor Nick Mannion, chair of the council’s finance sub-committee, said: “We are absolutely committed to protecting services for the people most at risk in our community. We are required by law to provide care and support services to the children, families and adults who need them. 

“These are statutory services – they are a priority for the council and account for the significant majority of the council’s day-to-day expenditure. So, as costs, complexity and scale of demand increase, we are forced to find alternative ways of doing things and identify savings everywhere we can.

“Councillors and officers are working extremely hard to reduce the forecast deficit. We are leaving no stone unturned. 

“Significant savings have already been identified to reduce the impact of these in-year pressures. However, at this stage, we are still left with the prospect of an £18.7m shortfall. It is inevitable that we will have to make further difficult decisions affecting council services in order to balance the budget this year and next.

“Where we seek to make changes, we will engage with those affected to understand the impacts of what we are proposing before we implement any change. But we must act at pace.

“These are unprecedented times. We know that people are seeing their household bills and other costs rising, while at the same time they are seeing reductions and changes in some council services. 

“We cannot change the financial environment in which we are operating but we must do everything we can to ensure that essential services are maintained.”