Council heading for bankruptcy – again!

Cheshire East has been on the verge of bankruptcy several times over the past few years, following any number of incredibly poor decisions.

Now there are suggestions that the council will go bust if the Government doesn’t give the go-ahead for the Middlewich Bypass – because it couldn’t cover the £26 million the council has already invested.

Any normal organisation would await confirmation of funding for a scheme of this magnitude – it would appear that yet again Cheshire East is running true to its profligate form.

The council is awaiting a decision from the Department of Transport that it will award the grant funding of £46.78 million towards the cost of the scheme.

The bypass was put on hold in April of last year when Government enquiries suggested the business case was flawed.

At Thursday’s meeting of the highways and transport committee, councillors discussed the report which contained several recommendations that would allow work on the scheme to start immediately should approval be given.

Cllr Mike Sewart (Con) said: “I hope this scheme goes ahead. Middlewich needs it, Middlewich deserves it. But if it doesn’t go ahead, if the government say no to this funding, what would be the revenue implications for this council?”

Committee chair Mark Goldmith (Ind) replied: “We’ve invested £26 million into the scheme, a lot of that will be lost. And that £26m would also become an expense we couldn’t capitalise. So, whereas we were looking to pay that amount off over 25 years, we would have to pay it off in one year, and that could well bankrupt the council.

“We don’t have £26 million of reserves to pay for that, as we all know well. The government may allow us to capitalise that, as they did with the investment in HS2, but they are unlikely to refund us that money. The whole process is extremely risky, as it were.”

He added: “I think at this point of the process, after talking with the government for over a decade, having a public inquiry into this that took two weeks and approved it, that we should really be in a position to know what the hurdle is we have to get over at the final stage to get the funding, and that it should be automatically awarded, and we should not be waiting for the minister to make a decision on that.

“The implications are very big. We are lobbying the government hard to inform them, let them know that.”

Cllr Liz Wardlaw said the council got burned with HS2. “Can I be confident that we are doing the maximum amount of work in order to prepare for this project with the maximum confidence that our money won’t be lost,” she asked.

Director of transport and infrastructure Tom Moody said: “As officers, we have done all we can in improving the original business case.” Cllr Goldsmith said: “While we’re confident in our business proposal, and the pitch we’ve made to government, the whole process of funding these sort of major projects, leaves me with no confidence whatsoever. We backed HS2 because parliament promised to make it happen, and they didn’t – and if we can’t trust their word, then who can we within central government?”

The committee agreed the recommendations with 11 voting in favour and one abstaining.

Cheshire East Council has requested permission from the Government to increase council tax – up to double the usual limit. See our report last week.

Maybe making councillors responsible for their own fiscal ineptitude would encourage them to be a tad more cautious with our money.