‘Bankruptcy’ warning as council floats budget plans

Uncertainty over the future of Devon’s councils is causing problems for officers trying to draw up budgets for the coming years.

Now one leading councillor has warned that his local authority could be heading for catastrophe as it tries to create a budget based on uncertainties and government policy shifts.
Teignbridge Council’s overview and scrutiny committee met to discuss the authority’s proposed budget for the next financial year, which would see its share of household council tax increase by 2.99 per cent.
But a report drawn up by chief finance officer Martin Flitcroft warned that the council’s cash reserves could run out in three to four years unless major savings or other sources of funding could be found. If that happened, the council would have no choice but to issue a ‘Section 114’ notice which means the council effectively declares bankruptcy.
Several local authorities around the country have already done so.
Cllr Phil Buillivant (Bradley), who leads the Conservative group, told the meeting: “This council is being run into the ground financially because of the decisions being put forward in these budgets.”
He said it was ‘dangerous’ and ‘nonsensical’ to take the council closer to bankruptcy, and called for fiscal controls to deliver the savings needed.
“I believe this budget is unviable,” he said. “We really need to go back to basics and cut out unnecessary spending if this council is not to go bankrupt.
“Why are we being so profligate with our spending plans?”
Executive member Cllr John Parrott (Lib Dem, Kenn Valley) said the finance team had been coping with a ‘constant stream’ of policy changes from the government as well as the uncertainty over plans for devolution and a possible Devon-wide unitary council in the future.
Despite promises to the contrary, he added, the government’s changes to National Insurance would cost the council more than £350,000.
Among the options Teignbridge will have to raise money will be to increase fees and charges, including car park rates.
“It’s a sound budget,” said Cllr Parrott.
And Mr Flitcroft added: “This budget shows the worst case scenario, but there is no magic wand.”