Scrapping of HS2 could force Cheshire East to issue a section 114 notice

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Cheshire East Council could be forced to issue a section 114* notice following the cancellation of Phase Two of HS2.

The Council is 'seeking a fair and equitable deal to compensate for its losses along with 'the opportunity cost to the borough' following the Prime Minister's announcement in October that the Government was cancelling the HS2 scheme north of Birmingham.

According to a report prepared for the Full Council meeting on 13th December, the Council has spent over £11million preparing for HS2 and the Crewe Hub, including £8.6 million funded by borrowing.

Under local government accountancy regulations, the Council will be required to write off this expenditure which would include expensing the £8.6 million through the Council's revenue account.

As a result, the Council looks unlikely to be able to balance its budget unless they are compensated by the Government.

The report states "The requirement to fund this expenditure from revenue could therefore trigger a s.114 notice as the Council could be placed in a position where there are insufficient funds, and inadequate reserves, to manage in-year expenditure."

HS2 was set to deliver up to 5-7 HS2 trains per hour calling at Crewe station and an hourly HS2 service to London from Macclesfield which the Council says would have provided a catalyst for growth and regeneration in these towns and the wider borough - delivering nearly 5,000 new jobs, 4,500 new homes and boosting the local economy by £750m in Crewe alone.

* UK local authorities cannot go bankrupt. A section 114 notice indicates that the council's forecast income is insufficient to meet its forecast expenditure for the next year. A section 114 notice means the council cannot make new spending commitments and must meet within 21 days to discuss what do next. Most councils under a section 114 notice will then pass a new budget to introduce cuts and reduce spending.

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Comments

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

Jonathan Follows
Friday 15th December 2023 at 3:12 pm
If CEC had been able to increase the Council Tax by the rate of inflation, say 9%, then it would have raised an additional £10m this year. But central government limited it to a <5% increase.
Of course, nobody likes paying taxes. But I'd have accepted 9% rather than the 4.99% we got.
And also we've had years when CEC has increased Council Tax at more than the prevailing rate of inflation. So "payback" say some.
All this means that we'll end up with a large Council Tax increase next year to pay off the debt.
Alan Brough
Friday 15th December 2023 at 7:18 pm
@Jonathan Follows,

All of that assumes that CE are well managed and doing the very best they can with our Council Tax.
The evidence suggests (strongly) that this is not the case.
We have seen successive cuts in services over recent years to the extent that we should really be manning the ramparts and demanding WHERE our Council Tax is actually going.
Graham Jackson
Saturday 16th December 2023 at 5:49 am
What was the £11m spent on, particularly the £8m which was borrowed? It’s hard to believe that such a large sum was borrowed without some sort of project guarantee, or was this more speculative land purchases for example? Is it just coincidence that leading members of the local authority are leaving?
Pete Wright
Saturday 16th December 2023 at 6:44 am
How has the council spent £11 million on HS2 preparations? I haven't seen any building going on, what was it spent on? And also thought it prudent to borrow most of it presumably expecting interest rates would remain low for ever. Good work. But at the end of the day council tax payers will end up footing the bill one way or another as usual, even though we were never asked for our opinions on the cancelled project and many would've no doubt rejected it as too expensive
Stuart Redgard
Saturday 16th December 2023 at 4:56 pm
#Alan Brough

Exactly what evidence "suggests (strongly)" that the current administration is not "well managed and doing the very best they can with our Council Tax". Facts and figures please, not innuendo.

Yes, "we have seen successive cuts in services over recent years", but this is not due to the current administration not being well managed”. It's mainly due to three reasons.

1) The services that are being cut are not "statutory services” that a local authority has to provide by law. These are discretionary services provided for the benefit of the local community. (ie the green bin waste collection service).
2) Central Government introducing new legislation that requires local authorities to provide a statutory service without properly funding it.
3) Central Government reducing the amount of funding that it gives to local authorities.

I refer you to the following website,

http://tiny.cc/t6tivz

This clearly shows how local authorities are funded, and how central government has been continually reducing the amount it gives to local authorities for the past decade.

If you want to know why CEC is not providing the level of service that you expect it to do so, then there is a simple way of finding out why. Arrange a meeting with your MP and ask her why her parties government have been underfunding local government for the past decade. And ask her what she’s going to do to change this now that she has the power to do so as a member of the Cabinet.

I wait to her back from you with what she has to say.
Alan Brough
Saturday 16th December 2023 at 7:36 pm
Stuart,
Let’s not play party political games as that ends in folly.
The fact that CE Council is on the verge of bankruptcy is somewhat telling - as is the fact that we are now being asked to pay for waste removal.

Also, you may have noticed that the road network is pitted and potholed and has been so for some considerable time - we haven’t yet felt the full ravages of winter.

Adult Social Care (which is where our money has allegedly been diverted) is a hollow sham - I know this having had recent, first hand experience of “the system” where lions are being led by donkeys!

CE Council can’t seem to find a Chief Executive who’s prepared to stay the course long enough to see out any sort of restoration of service and generally, they come and go wrapped in swathes of cash and superannuated pension pots.

I wouldn’t waste my time asking E=Mc2 why this situation prevails because she, like you, is part of the same, game that seeks to prosper from the hard work of others.
Vince Chadwick
Sunday 17th December 2023 at 2:09 pm
Alan, if you move around UK at all you will find the roads just about everywhere are in an appalling state and getting worse year by year. This indicates the problem of adequate funding of road maintenance does not stem from local authorities (unless you are claiming each and every one of them is useless) but from the policies of this government.

It's the same reason the NHS is in dire straits with record waiting lists and ambulances taking hours to attend call outs, and why our rail services have never been worse than they are right now.

Public services are woefully underfunded in UK, and have been since 2010. I'm not claiming that Cheshire East are perfect or anywhere near perfect (they aren't), I'm simply pointing out that the problems in funding do not stem from them. The underfunding is nationwide.

Of course, some folk are OK with underfunded pubic services. After all, many must have voted for it more than once for us to be where we are now.
Alan Brough
Monday 18th December 2023 at 9:04 am
Hi Vince,

I do travel (more than most) around this country and I work in the Transport sector so I have a pretty good understanding of road conditions.

I agree to some extent with what you are saying about Central Funding but you’ll recall that when the Tories took office there was a note left by an outgoing member of Labour staff on a Treasury desk suggesting that the pot was empty and so I don’t want to get into party politics because regrettably I don’t trust any of them.

I do think that Cheshire East roads are amongst the very worst in the country - to the extent that (as a motorist and cyclist) I’d consider them to be in a dangerous state of disrepair in many areas. You only have to look at Congleton Road in Alderley Edge, Chapel Lane in Wilmslow or the deepening sinkhole on South Oak Lane that threatens to swallow a vehicle in the near future.

But it’s not just roads where CE Council are miserly, their failure in Social Services is woeful, their cuts in Library services, bus service funding, waste collection and (most recently) Leisure provision is cause for considerable concern.

Whilst there can be no doubt that there is less money coming from Whitehall, my concern is about how the money that IS coming is managed.
Vince Chadwick
Monday 18th December 2023 at 5:36 pm
Alan, isn't that a bit like worrying about the last few percent of efficiency of your gas boiler when the real reason you are freezing is that the energy supplier has cut off your supply?
Alan Brough
Monday 18th December 2023 at 8:15 pm
No Vince,

If you want to use an energy analogy, it’s like being a customer of Bulb Energy which was failing badly and went bust, whilst other suppliers managed their markets better and were (are) better able to ride out the storm.
Vince Chadwick
Tuesday 19th December 2023 at 10:25 am
Alan, I take it your analogy paints Cheshire East as Bulb Energy?

In that case, why are the roads in other local authority areas at least as bad as those in Cheshire East?

The road in the worst condition that I have come across recently is not too far away. It's Charcoal Road, from Bowdon traffic lights along past Dunham Park, which has more pot-hole than tarmac surface. That road is within the boundaries of Trafford Borough Council.

When visiting family in Worcestershire and Cornwall we have found the roads to be (generally) in no better condition than our local ones. Are those local authorities 'Bulb Energy' organisations as well? Or is there a common cause? Is it mere coincidence that road maintenance has got worse since 2010, in line with the year on year reduction in public spending by this government? And this has not just affected roads, as I pointed out earlier.
Richard Mason
Tuesday 19th December 2023 at 1:11 pm
I wonder if the following effectively paraphrases conversations:
National Government (NG): We are going to provide a state of the art transport system which will directly benefit the North, bringing hundreds of jobs and millions of pounds worth of income. But we need local councils to be ready for this and develop the infrastructure and opportunities to take advantage of these benefits.
Local Councils (LC): Great, we want our region to benefit, do we get any financial assistance to kick start activities which are required?
NG: You can take out a loan at very preferential rates due to the fact that this is linked to our vital national project.
LC: Great, lets get started, we can improve areas where lack of central government funding has allowed them to fall into decline and really take advantage of this opportunity.
NG: Fooled you. We aren't going to give you a new railway anymore.
LC: But all our work and the loan we took out to do this - what happens to that?
NG: Bad luck! As the national project isn't happening then you can't have preferential interest rates and in fact some of the money needs repaying immediately.
LC: But you made the decision to cancel the project and you promised us the deal to benefit the area. Is there compensation?
NG: Ahh, but you agreed to take out the loan, so all your responsibility. No chance of any compensation at the moment, but we may be able to find something to keep you sweet just before we call the next general election.
Stuart Redgard
Tuesday 19th December 2023 at 3:34 pm
#Alan Brough,
If you spent time actually attending council meetings rather that just reading headlines you would understand that CE Council is NOT on the verge of bankruptcy’’. That’s just your own personal opinion which is not based on facts and figures.

And please don’t accuse me of playing party politics. I am not, never have been and never will be a member of any political party.
Richard Mason
Wednesday 20th December 2023 at 8:59 am
@Stuart
Are council meetings generally well attended? - Town council or CEC do you know? I've been to CEC a couple of times but not Wilmslow.
Hilary Pinnock
Wednesday 20th December 2023 at 4:23 pm
......And what happens to all the poor folk who had land and property compulsorily purchased?
Robert Taylor
Wednesday 20th December 2023 at 4:47 pm
@Alan Brough
You say "I agree to some extent with what you are saying about Central Funding but you’ll recall that when the Tories took office there was a note left by an outgoing member of Labour staff on a Treasury desk suggesting that the pot was empty and so I don’t want to get into party politics because regrettably I don’t trust any of them."

I say - that was Tory joke and cobblers by Dodgy Dave and Boy George. It is real terms finance reduction in the public sector since 1979. That Is The Situation.
Simon Worthington
Thursday 21st December 2023 at 12:15 pm
£11million. Some on preparing Crewe for the trains!!! Same as when Crewe was going to be the northern interchange for the Europe trains 30 years ago. Same old story. Time for councils collectively to inform the government that unfortunately they cannot take further responsibility for x,y or z and dump it back on Westminster. I suggest they start with refusing to house any homeless arrivals!!
Perhaps ditching all non productive activities such as diversity and the lunacy of net zero.
Oh, any idea where the expensive and elusive “Dr.” Matt Tyrer is?
Stuart Redgard
Thursday 21st December 2023 at 6:14 pm
#Richard Mason

I'm unable to give a definitive answer to your question as I don't know what your definition of 'Well attended" is. I routinely attend full CEC council meetings and other sub-committee and full WTC and other sub-committee meetings. And when I do, I am usually there to raise matters of concern or ask questions.

For me, it's about engaging in local politics and not being an armchair or uninformed/misinformed critic, which on this occasion appears to be the position of Alan Brough. If he is prepared to provide the facts and figures then I would be happy to engage in a reasonable debate with him. But so far he has failed to do so.
Stuart Redgard
Thursday 21st December 2023 at 6:23 pm
#Richard Mason
A very eloquent and succinct summary of events so far about the abortive costs expended by CEC on HS2.

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