Cheshire East Council reports potential shortfall of £18.7m

Cheshire East Council has published an updated financial forecast which shows a potential shortfall of £18.7m against anticipated expenditure in 2023/24.

This is an increase on the forecast deficit of £12.8m published in the first financial review, earlier this year.

The Council says the increase is due to inflation continuing at a higher level than forecast when we set the budget, as well as higher interest rates, which have made council borrowing more expensive at a time when demand for our services is increasing.

The second financial review report, which provides an update on forecast expenditure on council services, forecast income and planned savings measures, will be considered by the council's service committees at their November meetings.

Since the start of the current financial year, and following the first financial review, the council has implemented a range of measures to reduce the impact of financial pressures. This has included controls on spending and reviews of recruitment, contracts and income-generation.

Councillor Craig Browne, deputy leader of Cheshire East Council, said: "Despite the many measures and mitigations we are putting in place, forecast costs and demand for council services continue to exceed the approved budget. As a council, we are required by law to set a balanced budget at the start of the year and we cannot end the year with a deficit. We must balance the books.

"In February, the council agreed a budget and four-year financial strategy, including a range of proposals for savings and changes to services, including libraries, parking, garden waste collections and our maintenance of green spaces. We are already implementing these and know that any changes to valued council services can be difficult for the people who depend on those services. However, we are now facing the prospect of even more pressure on our budgets and those agreed savings will not be enough.

"Added to this is the uncertainty surrounding recent government announcements, including the scrapping of HS2 north of Birmingham and asylum seeker accommodation, and uncertainty about winter pressures on health and care services. We are pursuing a compensation and investment package in relation to HS2 but we have no certainty at this stage about the scale of impact or the compensation we can expect.

"Similarly, with asylum seeker hotels, the council has legal duties to find housing for anyone who presents as homeless. Government has announced that it is ending contracts with 50 hotels, meaning that people currently accommodated in those hotels may be at increased risk of homelessness. But it is unclear as to what that means for local councils, including Cheshire East.

"Equally, we know that NHS is preparing for a difficult winter. This has a knock-on effect on to the council's social care services.

"At this point, we do not have clarity on any additional government support for the anticipated increased demand. These are just a few examples of the pressures and uncertainties we are facing."

The potential shortfall of £18.7m is 5.3 per cent of the council's net revenue spending budget of £353.1m for 2023/24.

Councillor Nick Mannion, chair of the council's finance sub-committee, said: "We are absolutely committed to protecting services for the people most at risk in our community. We are required by law to provide care and support services to the children, families and adults who need them.

"These are statutory services – they are a priority for the council and account for the significant majority of the council's day-to-day expenditure. So, as costs, complexity and scale of demand increase, we are forced to find alternative ways of doing things and identify savings everywhere we can.

"Councillors and officers are working extremely hard to reduce the forecast deficit. We are leaving no stone unturned.

"Significant savings have already been identified to reduce the impact of these in-year pressures. However, at this stage, we are still left with the prospect of an £18.7m shortfall. It is inevitable that we will have to make further difficult decisions affecting council services in order to balance the budget this year and next.

"Where we seek to make changes, we will engage with those affected to understand the impacts of what we are proposing before we implement any change. But we must act at pace.

"These are unprecedented times. We know that people are seeing their household bills and other costs rising, while at the same time they are seeing reductions and changes in some council services.

"We cannot change the financial environment in which we are operating but we must do everything we can to ensure that essential services are maintained."



Here's what readers have had to say so far. Why not add your thoughts below.

Pete Wright
Thursday 26th October 2023 at 2:57 pm
You might refer to cost saving measures at "mitigation" but another way of putting it is that you're making residents pay more at a time when even the council admit that households are struggling .... such as between 40 and 200% increases in car park charges (so not exactly "due to inflation" as claimed is it?), and £56 to empty green bins, which means people either cough up or spend money on petrol for journeys to Knutsford tip or wherever. So we end up paying more for a lower level of service, and the reason appears to be you based your financial predictions on interest rates remaining low and cheap borrowing to service debt, rather than having a balanced budget in the first place
Laurie Atterbury
Wednesday 1st November 2023 at 3:54 pm
Bad management of funds
Jean Berman
Wednesday 1st November 2023 at 4:45 pm
Maybe get rid of some of the extortionate salaries being paid to useless staff
Simon Worthington
Thursday 2nd November 2023 at 2:04 am
How many people who actually pay the tithe use any of the care “services”? Is this just another transfer from those who work to those who don’t?
ALL councils should collectively tell the Gubmint that their residents do not have financial responsibility for the economic migrants that should not be here.
Jon Williams
Thursday 2nd November 2023 at 7:07 am
I don't mind C/E paying for some new new glasses for the Highways inspectors though, they need it so they can can ALL potholes.
David Smith
Friday 3rd November 2023 at 3:18 pm
Another collection of incoherent replies?