Derbyshire County Council has announced that it will be stopping all non-essential spending due to a £46m budget gap. The council’s cabinet will discuss measures to bring down its forecasted overspend at a meeting on 21 September. If the measures are approved, the council will stop or defer new projects, bring in financial controls and freeze recruitment to cut costs.
Derbyshire County Council
The council currently has £28 million left in reserves which is “considered to be the minimum level of general reserve for an organisation the size of the council”. The forecast £46 million overspend would “more than deplete” this, pushing the authority into the red.
The council says it may have to issue a formal freeze on all but statutory services by law, as Birmingham City Council did last week, if it cannot meet a balanced budget or if its reserves fall to “unacceptably low levels”. Emma Alexander, the county council’s managing director has asked for the help of staff to find ways to make savings. She wrote: “We have in the past used reserves to bridge overspends and under-achieved savings but this is not a sustainable solution and the size of the in-year challenge means that we need to take decisive action to control our costs this year. Many other local authorities are facing similar situations, so this is not just a Derbyshire issue.
“We all need to stop spending on anything that is non-essential so we can continue to deliver vital services for local people. I know we’ve all been making savings for many years, but now we need to look even deeper and harder at what we can save.”
Emma Alexander outlined the immediate measures the council is taking, including a stop on non-essential spending. “With immediate effect, there is a recruitment freeze across the council. We will continue to recruit to all roles that have been offered and recruitment interviews planned up to and including Monday, September 25, but any other live recruitment activity will be paused” she stated.
There will be also an “urgent” review of all external agency staffing, all projects to commission consultants should be suspended if not “business-critical”, spending on the council’s properties will be limited to “health and safety requirements”, all new contracts will be delayed if not “business-critical”, and the spend on employee travel and training will be limited.
Many of the council’s services are not what the authority would call statutory so it does not legally have to provide them. This includes providing a museum, with Buxton Museum and Art Gallery currently closed since June pending the need for significant works to save the building; along with support to voluntary groups, and subsidies for bus routes.
Previous financial issues
In the past 13 years, Derbyshire County Council has made £300 million in cuts to meet balanced budgets, along with £16 million which is being cut this financial year and a combined total of £46.7 million it was already pencilling in to cut over the next five years. Its current budget is set to overrun the planned £701.5 million to £747.9 million. This is after the use of nearly £30 million in reserves to meet next year’s budget, with the council having to use £55 million in reserves to meet last year’s budget in March.
Also in June, the county council announced it was looking at selling off its own 156-year-old Matlock headquarters to potentially turn it into a hotel and in July the council disclosed it was closing all 10 of its Chesterfield area offices, looking at cutting opening hours and bringing in potential charges at its household waste tips and later that month contributed £56.93 million to settle the contract for the failed Sinfin Waste Plant.
Moreover, three Local Government and Social Care Ombudsman cases published in July showed the council owing nearly £27,000 to distressed families after failing to provide them with sufficient support.
The council’s Conservative leader, Cllr Barry Lewis, said “We have always been a well-managed, efficient and financially stable council which has balanced our books, maintained a robust level of reserves and been able to support vital, high quality, value-for-money services for our residents across Derbyshire.
“However, the reality is that the financial pressures we are facing, along with other councils and households, are now greater than ever experienced before, with most of these pressures being simply outside our control.
“We’ve been taking many measures over the past few years to make sure we carefully control our costs, such as vacancy control measures, but now we need to do much more. We are continuing to lobby the Government for extra funding so that we can continue to run vital services to those who need them most, but we also recognise that even more difficult decisions will be needed to be made to try to balance the books.
“But despite this intense pressure on our budget we are ambitious for Derbyshire, committed to supporting people through the cost-of-living rises, helping to drive our local economy, working towards a devolution deal and working with partners to get the best value in all that we do.”
Cllr Joan Dixon, leader of the council’s Labour group, said “Thirteen years of local government funding being cut to the bone by the Conservative government combined with six years of financial mismanagement by the ruling Tory group at Matlock have brought Derbyshire County Council to the edge of bankruptcy. Ultimately it will be the people of Derbyshire who will suffer with cuts to their valued and needed local services.”
Finbar Bowie, on behalf of the trade union GMB, said “Workers at Derbyshire County Council deserve urgent answers. Why have the council’s political leadership let the situation decline to this point and when did they become aware of the scale of the problem? Through the months ahead GMB will be fighting tooth and nail to defend our members’ jobs, terms and conditions against any attacks.”
A spokesperson for the trade union Unison East Midlands said “This is very worrying news from Derbyshire County Council and for their hard-working and dedicated workforce. The recruitment freeze, along with an already sizeable number of job vacancies at the council, will inevitably lead to already stretched staff taking on more work and stress. How many more councils will have to wave the white flag before the Westminster government put their hands in their pockets and properly fund local services After 13 years, not a single part of our public services has been immune from Conservative cuts. When spending is slashed, services crumble.”
Cllr Ed Fordham, leader of the council’s Liberal Democrat group, said: “It is not a huge surprise that the council has found itself in financial difficulty. For the last 20 years, national government has starved all councils of much-needed investment, and now we are suffering the consequences of rising inflation – caused by this Government’s poor handling of the economy”.
“It now falls on the Conservative administration to ensure that in tackling the overspend and budget pressures they don’t flog off the county’s valuable property assets nor take the easy route of plundering our reserves. This is going to be a major test of the council leadership and they must not fail.
“To make the wrong decisions behind closed doors could spell disaster for our financial stability – there has to be greater clarity, more transparency, and a real sense of the need to be held accountable for plans and strategies. Poor financial decisions now could cost Derbyshire residents a fortune in the future.”
As with the leadership at Birmingham City Council, it appears Derbyshire County Council has been financially mismanaged as overspending has placed them into near-bankruptcy. However, it is also crucial to note that cuts to local authorities have placed council’s in difficult positions.