Chesterfield council’s funding black hole poses threat to jobs and services

The Labour-controlled council has already revealed that like many other local authorities it is facing serious funding gaps on its budgets due to the Covid-19 pandemic, the cost of living crisis and exceptionally high inflation rates.

But Liberal Democrat Cllr Paul Holmes has criticised the borough after it announced its strategy to meet budget shortfalls which currently stand at £2.5m for 2024/25, rising to £3.4m in 2026/27.

Cllr Holmes told the Labour-led council at a recent council meeting: “Labour councillors say it is all the fault of someone else. The Government, Covid and inflation. These are indeed problems affecting every council. But as far back as 2019, long before Covid or high inflation appeared, the council was overspending by £1m a year.

“You refused to tackle this annual overspending, you even hired extra staff and so made the overspend worse. You went for short term fixes such as temporarily freezing vacant jobs in order to save on salary costs for a few months.

“You took money from Reserves but now admit you can’t do that anymore.”

Cllr Holmes also claimed at the meeting that the council has been selling off land and property including the historic Tapton House but the local authority still remains in a difficult financial position.

He revealed that financial documents presented to the council meeting in July showed that the council had to approve a £292,000 transfer from council reserves to fill a hole in last year’s financial budget which ended in April and that the council had to approve a £1m transfer from reserves to cover a gap in the 2023/4 Budget.

The council’s Budget Strategy Report notes that there is little left in reserves that can be used to cover deficits anymore, according to Cllr Holmes who adds that the report also states that efficiency savings will not be enough to save £2.5M in the next year.

Cllr Holmes added that the report states staff reductions will be required including 30 expected voluntary redundancies, and it also states the council may have to stop delivering some non-statutory services altogether.

He also told the council meeting: “If you had made planned savings over the last four years the problem would be much less now. Instead, you have waited until the council has fallen over a financial cliff edge.

“Now you have to make sudden and deep cuts. This was not prudent, it was irresponsible. Chesterfield residents will suffer as a result.”

The Budget Strategy Report presented to the council cabinet meeting set out the council’s strategic approach to meeting budget shortfalls which currently stand at £2.5m in 2024/25, rising to £3.4m in 2026/27.

Council income has not materialised at expected levels after increased pressure from the cost of living crisis, increasing private sector costs, high inflation and Brexit creating a skills gap, according to the council.

The council claims that reduced rental income from the Pavements Shopping Centre, empty retail units in the town centre, and reduced income from car parks has also had an impact.

In addition, occupancy and income levels are lower at the markets, and there have also been reductions in income from venues and with rental income from industrial and commercial units.

Planning application delays have delayed income and council housing rent income has reduced while supervision and management costs have increased, according to the council.

However, the council has stated that it has plans to address financial pressures, protect essential services and meet increasing demand to help the vulnerable.

It claims to have made significant savings over many years and taken steps to manage demand and deliver services in the most economic, efficient way.

The council says it aims to balance the 2024/25 budget and its medium-term financial plan by reviewing service provision, identifying general efficiencies, increasing income, establishing stronger commercial operating principles, transforming how it delivers services and by rationalising assets and reviewing reserves.

Cllr Amanda Serjeant, deputy leader of the council, and cabinet member for finance and asset management has said that despite pressures largely beyond its control, the council is taking robust action to keep it on a sustainable financial footing and it aims to protect essential services as far as it can.

She added that it is the case that the council will have to reduce its workforce and this may mean stopping the delivery of some services and possibly reducing others.

Cllr Serjeant said: “Disappointingly, Cllr Holmes and his Liberal Democrats Group colleagues chose to absolve themselves of any responsibility by abstaining on the Budget Strategy but without proposing any alternatives to protect services for our residents.

“Cllr Holmes also knows full well that this is a sector-wide issue. As the Institute of Fiscal Studies reference in their latest report the Local Government funding regime is broken. This isn’t surprisng after a decade of Government austerity, the budgetary impacts of the Covid-19 pandemic, the post-pandemic world of exceptionally high inflation and the unprecedented demand we are seeing for council services fuelled by the cost-of-living crisis facing the borough’s residents.”

She added that the Labour council has worked diligently with council officers to sustain services and its external auditors have given the council a clean bill of health for its 2021/22 financial year.

Cllr Sarjeant said that the council has successfully and prudently built its Reserves year on year to cover potential risks and uncertainties which has allowed the council to deploy them.

She said the council cannot rely on making efficiences alone to balance its budgets over the medium-term which is why its new strategy includes investing in digital technology, rationalising its number of operational buildings, and adopting a more commercial approach to delivering some council services.

Cllr Serjeant added: “It is the case that we are going to have reduce the size of the council’s workforce, which is why we have recently launched a corporate voluntary redundancy and voluntary early retirement scheme in agreement with the trade unions. Alongside our existing vacancy control measures, our aim in the next six months is to right size the organisation for the future, deliver budget savings and avoid the need for compulsory redundancies.

“Inevitably, such measures will have consequences in relation to our ability to continue to deliver all of the council’s services to the same levels and standards. This might mean stopping the delivery of some services and, or reducing how much we deliver of others. Where this is the case, we will communicate and consult with service users about our intentions and, where appropriate, explore alternative delivery options.

“Under this Labour administration, Chesterfield Borough Council will continue to put its communities first. We will work tirelessly to deliver on our priorities to make Chesterfield a thriving borough, to improve the quality of life of local people, and to build a resilient council that is ever present for its tenants, residents and businesses.”