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Labour says Tories have left Derbyshire Council on the brink of bankruptcy

Opposition Labour councillors have accused Conservative-controlled Derbyshire County Council of placing the authority on the precipice of bankruptcy after the council voted by a majority to back hard-hitting saving proposals to balance an estimated deficit of around £40m for the 2024-25 financial year.

The council’s cabinet had previously approved its proposed Revenue Budget Report recommendations before the plan was considered by all councillors across political parties at a Full Council meeting on February 14, at County Hall, Matlock.

Councillors voted by a majority at the latest meeting to set a balanced budget with an agreement on how the council will manage its finances for the 2024-25 financial year from April 1, with planned saving proposals and cuts to be considered and implemented in the future to balance its budget gaps.   

The council set its net budget cost for delivering services for 2024-25 at £714.8m and it approved a 2.99 per cent council tax increase for residents which is the highest rise possible, but opposition Labour councillors stressed they could not support the budget report.  

Opposition Labour Group Leader, Cllr Joan Dixon, told the meeting: “This is perhaps one of the saddest days we have faced as a county. If not the saddest, the angriest, because we have been taken to the brink of bankruptcy because that is the language a normal man or woman in the street would understand.”  

Cllr Dixon claims the council has missed opportunities to bring more funding in with council tax, has failed to lobby to get services funded, has failed to make savings, and has propped up the budget with settlements and Covid support money.   

She argued that since 2010 – when the Conservatives became the primary governing party – as much as £300 million has been removed from the council’s budget, and the council has depended on its reserves, and in future years it will need to rely on its earmarked reserves.  

Cllr Dixon also reminded the council that it has had to pay £57m out in a settlement following a dispute with a waste management team which oversaw a waste facility in Sinfin, Derby, and she argued that the council’s Revenue Budget Report is not sustainable.  

She said: “One has to ask the question whether this is a sustainable budget? The report is very clear. This is not sustainable. It requires transformation of services, demands management and other efficiencies.”  

Cllr Dixon also cast doubt on the council’s assumption that the devolution deal with the launch of the East Midlands Combined County Authority from March will bring in funding and help to pick up the costs.  

She said: “It struck me today that the council is in cuts denial. We are not allowed to mention the word cuts.”  

The Labour councillor claims the financial sustainability of the Conservative-controlled council is at real risk if the proposed savings and efficiencies are not delivered.  

She told the meeting: “Since 2009, you have been in control for 11 of the last 15 years so you have to take responsibility for the financial situation the council finds itself in.”  

Cllr Dixon claims the council has blamed the war in Ukraine, inflationary pressures and the cost of living crisis, staff pay rises, and the increasing demand for social care rather than taking responsibility for its financial situation.  

She added: “We cannot support this. You need to take responsibility for this. This is your budget… you need to own it.”  

Liberal Democrat Group Leader, Cllr Ed Fordham, said the council’s financial position had become unsustainable and that the risks placed on the council budgets are huge if it get things wrong.  

The budget report forecast an overspend of more than £34m for 2023-24 and forecast a budget gap of more than £39m in 2024-25.   

Derbyshire County Council, like many other councils, has blamed high inflation rates, the cost of living crisis, rising costs and rising demands on services, particularly social services, and the impact of costly pay awards.   

It has also been critical of uncertainty surrounding funding and under-funding from the government, although an extra £7.6m has recently been allocated for Derbyshire for 2024-25 for adult and children’s social care, which are two areas identified by the council as being in desperate need of support.

The council reduced its estimated in-year 2023-24 budget shortfall of £46.4m, announced in September 2023, to £34.1m, which it intends to further reduce with funds released from earmarked reserves and by tight cost controls on non-essential spending.  

In addition, it has now compiled its saving proposals to meet an estimated budget deficit of more than £39m for the 2024-25 financial year which begins on April 1.   

The budget report contains savings proposals to support a balanced budget for the term of the council’s Five-Year Financial Plan up to 2028-29 and it is hoped these will amount to approximately £66.6m in savings by 2028-29. 

Derbyshire County Council’s plans includes saving proposals likely to affect the elderly, disabled and children, and it has already stopped non-essential spending and implemented a hiring freeze, reduced residents’ capital entitlement limit for adult care from £50,000 to £23,250 and has increased the cost of a school meal by about 41 per cent.       

It has also stated that redundancies cannot be ruled out as it examines retraining, redeployment, voluntary redundancies and leaving empty posts unfilled, and it hopes to sell its office headquarters, County Hall, at Matlock, which could become a hotel, offices and homes.    

The council has also now approved its proposed 4.99 per cent council tax increase – which is the highest council tax rise possible – to help address its increased adult social care and budget pressures.  

A majority vote in favour of the overall Revenue Budget Report means the council also agreed a number of other matters.  

These included: Approving the level and allocation of budget savings: Noting the consultation; Approving the council tax requirement of £410,111,128, the use of the Revenue Contributions to Capital Expenditure Earmarked Reserve to provide one-off support to the 2024-25 budget, and the authorisation of the Director of Finance to allocate cash limits on cabinet members’ portfolios.

Derbyshire County Council aims to make ongoing savings by the end of 2028-29 of around £66.612m and it has identified departmental budget saving proposals of £68.640m from 2024-25 to 2028-29, according to the authority.

The Full Council meeting heard that while the authority has set a balanced budget for 2024-25, the financial position remains challenging and that difficult decisions will still have to be made in the months ahead.

Absolute final decisions have yet to be made on all the budget savings proposals, many of which would see some council services changed, reduced or stopped if agreed.

Council Leader Cllr Barry Lewis and Deputy Leader Cllr Simon Spencer reassured residents that all efforts were being made to protect vital services, especially around social care for adults and children.

Cllr Spencer told the meeting that no one wishes to find themselves in this financial position. He accused the opposition councillors of ‘doom-mongering’ and he stressed the budget decisions are based around the need to balance the budget in a narrow time-frame, adding that the council will not drop below its target expenditure levels. 

 

Cllr Lewis also said that earmarked reserves are there to be used when it is appropriate to do so.    

He added that it is absolutely right for the opposition to challenge the budget, but it is the controlling council’s responsibility to deliver savings which it will do.   

Cllr Spencer said: “It’s been no mean task to come forward with the proposals we have heard today. We have many times gone through the reserves and taken a very pragmatic approach and we have taken decisions in light of the challenges the authority faces.”   

He added: “It seems like the opposition want us to fail. If we do fail it will be the people of Derbyshire who suffer and the staff who suffer; this organisation will be in a place none of us want to be and it would be far better if we could have a proper dialogue.”   

Cllr Spencer argued the best way for the council to meet its current demands is for all the councillors to work together. He argued that opposition councillors have been given every opportunity during the budget setting process to come forward with alternative measures.

Budget saving proposals in the report are expected to involve reviewing and redesigning some services with changes likely to affect the elderly, disabled and children.

Others include changes to waste disposal, libraries and heritage, and converting the council’s multi-million pound County Hall building at Matlock into a hotel, residential space, and a new office site.

The budget saving proposals identified for 2024-25 include: Redesigning five short-stay residential homes and four day centres for people with learning disabilities; Redesigning 16 council elderly residential care homes and ten day care centres; Redesigning council care arrangements within extra care settings for older people; Reviewing the delivery of children’s centres and reviewing the children’s services Early Help service; Changing policy for post-16 home to school transport; And reviewing residential short-break and support services for disabled children.

Others include: Restricting or charging for waste disposal of tyres and asbestos and generating income by allowing small businesses to use centres for a fee; Modernising the way the council delivers its library and heritage services; Reviewing the usage and options for Derbyshire County Council’s County Hall offices; And ceasing the production of the Derbyshire Now magazine and reducing the council’s countryside grounds maintenance budget.

The council has confirmed that it needed to address a predicted funding gap of around £40m for 2024-25.

If any local authority fails to meet its legal obligation to balance its yearly budgets it may have to issue a Section 114 notice which could effectively see them fall into bankruptcy and give up control to Central Government and potentially lose control over their finances and spending.

Labour Cllr Kevin Gillott, who fears the council may go too deep into its reserves, said: “As we all know this year is very difficult for the council because we are standing on the precipice of a Section 114 notice.”

Councillor Lewis argued that the council has always been a well-run, stable and efficient council which has worked hard to balance its books while providing high quality, vital services to residents.

He added: “It is down to this continuing strong and efficient financial management that we have been able to set a balanced budget for the year ahead, although we know that tough decisions lie ahead.

“The challenges we continue to face are far greater than experienced before and are down to external factors simply outside our control.

“We believe the budget and council tax we have agreed will help us to protect vital services for older and vulnerable people and children which is a priority, but we acknowledge the rise in council tax will not be welcomed by residents with already stretched household budgets.

“We will continue to lobby the government for extra funding following success on this in recent weeks and will continue with our call for the significant costs of placements for children in care to be addressed.”

Cllr Spencer said the challenges are far from over for the council as it must make some very tough decisions in the coming months.

He added: “We have received extra money for social care but continue to lobby Government for extra funding and for a multi-year settlement which would be very welcome and allow us to better plan for future years.

“Doing our best for Derbyshire residents is at the heart of what we do and while the financial pressures are immense we will continue to work hard to protect the services so many people rely on.”

During the meeting, the council also voted by a majority in favour of: Noting the position of its financial reserves; Considering the budget public consultation results; Approving the Capital Programme Approvals and Planned Asset Maintenance Programme for 2024-25; Adopting the Treasury Management and Capital Strategies for 2024-25; And approving the Council Plan for 2024-25.

The council also agreed the basic allowance pay awards for councillors is to be increased by 5.1per cent and for those also eligible for Special Responsibility Allowances there will be an increase of 3.5per cent.

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