Latest news with #ExceptionalFinancialSupport
Yahoo
12-06-2025
- Business
- Yahoo
Crisis-hit Croydon Council needs reset, MP says
A "short and sharp reset" is required for Croydon Council to recover from poor performance and high debt levels, the minister for housing, communities and local government has announced. Jim McMahon has told the House of Commons the council's financial position is "deteriorating rapidly" after a report highlighted concerns about its ability to improve. McMahon said that failing to change course "would condemn Croydon's residents to a worsening position without an exit strategy" and he was "minded to" send in commissioners to run the council. Executive mayor of Croydon, Jason Perry, said he and the council "had done everything possible" to fix the finances "whilst protecting vital services". Perry added: "We have generated over £230m in capital receipts, including £130m of asset sales and have plans to sell a further £68m assets this year. "The council also raised council tax by 10% over the cap in 2023, to help meet the panel's demand that we close the gap in the council's finances." The council had been under review by the government's improvement and assurance panel, set up to provide external advice, challenge and expertise. McMahon said the council's general fund debt sits at around £1.4bn and it relies on the allocation of Exceptional Financial Support (EFS) through in-principle capitalisation directions to balance its budget. The panel's report has said there has been a lack of pace throughout the intervention, but the deteriorating financial position, which is not being gripped and tackled adequately by the council, is reaching a "financial crisis". McMahon added: "I am satisfied that the London Borough of Croydon is failing to comply with its Best Value Duty. I am therefore minded to exercise powers of direction under section 15(5) and 15(6) of the Local Government Act 1999 to implement an intervention package." Perry said, via a statement: "If at any time the panel or government felt that there was any action the council should be taking and was not, they had the power to instruct us. They never did. "Surely that means we are doing everything possible, and they agree with our actions? We have already made very difficult decisions and in my view the residents of Croydon have felt enough pain. "Despite all the improvements that have been delivered by the council and its staff, it appears the government wants to centralise control into the hands of commissioners." He said the council would consider all options before submitting its formal response to the government, the deadline for which is 25 June. Listen to the best of BBC Radio London on Sounds and follow BBC London on Facebook, X and Instagram. Send your story ideas to Croydon Council asks for £136m government bailout Council to make cuts to services to save £30m Croydon approves council tax rise of 15%
BBC News
10-06-2025
- Business
- BBC News
East Sussex County Council considering specialist accountants
East Sussex County Council is considering hiring specialist accountants to help it deal with financial difficulties and potentially apply for government Nick Bennett, lead member for resources and climate change, will decide on Tuesday whether to commission a £40,000 review by the Chartered Institute of Public Finance and Accountancy (CIPFA). The council faces a potential deficit of more than £37m in the 2026/27 financial a report, officers said a CIPFA review would likely be required should the council approach the Ministry of Housing, Communities and Local Government (MHCLG) to explore options for Exceptional Financial Support (EFS). The council has not yet formally agreed to seek EFS, reports the Local Democracy Reporting Service. A council spokesperson said: "CIPFA have been approached to undertake their assurance review early, to provide the council with a report that will support the work that the council may need to undertake with MHCLG."If EFS proves not to be required, or an option, the CIPFA review will provide external assurance as to the actions the council is taking to address the financial challenges the council faces."A CIPFA document says the team would work with the council to draw up an improvement plan after say the review's findings would also be used to inform the county council's annual budget-setting proposal comes amid some significant financial uncertainty for the report said the upcoming comprehensive spending review and potential changes to grant funding could impact the authority's could help by allowing the council to borrow money to fund everyday services - something councils are not usually allowed to councils can only borrow money for long-term investments, like building schools or buying equipment, not to cover day-to-day costs like wages or energy bills.
BBC News
17-03-2025
- Business
- BBC News
Council tax to rise across London as costs mount
All but three of London's local authorities are to increase council tax bills next financial year by just under 5%, the maximum allowed without a local Council will increase its council tax by 4.98%, while 28 other London boroughs and the City of London have levied maximum council tax increases of 4.99% from 1 in Wandsworth will see their bills rise by 2%, while council tax in Kensington and Chelsea will go up by 4%.Newham Council, which applied for extra support last year due to housing pressures from temporary accommodation, was allowed by central government to raise its bills by 8.99% in 2025-26. Cap on rises The 4.99% cap on council tax rises in England, which includes a 2% rise for adult social care, has been in place for the last three years. Usually a borough that wants to raise tax more than the cap has to hold a local referendum to approve the rise, but central government can authorise a higher increase. Seven London boroughs will also receive Exceptional Financial Support loans from the government of more than £418m for the next financial Councils, an umbrella body for the capital's local authorities, said boroughs in the capital received about 28% less in funding per Londoner compared to is calling for overall council funding to be restored to 2010 levels by 2028-29, requiring real-terms increases of 4% every Councils said emergency borrowing measures like Exceptional Financial Support put a burden on boroughs of further debts and would not be enough to return them to a stable financial added a combination of fast-rising demand for statutory services - where boroughs have a legal duty to provide support - and the increasing cost of delivering these services had led to substantial overspends in London council budgets in recent years. 'Consider impact' A spokesperson for the Local Government Association, which represents councils across England, said councils continued to face "severe funding shortages and soaring cost and demand pressures on local services".They added that councils had to make a "tough choice" about increasing bills to bring in "desperately-needed" funds."However, while council tax is an important funding stream, the significant financial pressures facing local services cannot be met by council tax income alone. "The Spending Review needs to ensure councils have adequate funding to deliver the services local people want to see." A Ministry of Housing, Communities and Local Government spokesperson said councils should "put taxpayers first and carefully consider the impact of their decisions"."That's why we are maintaining a referendum threshold on council tax rises, so taxpayers can have the final say and be protected from excessive increases," they reporting by the Press Association
Telegraph
15-03-2025
- Business
- Telegraph
The West Country experiment that proves Rayner's ‘mega councils' plan is doomed to fail
When a new unitary authority in Somerset was formed in 2023, it was hailed as the answer to the town hall's ever-increasing financial black hole. Yet only two years later, Somerset council is on course to hit a £190m budget shortfall by 2029 – forcing officials to impose an inflation-busting 7.49pc tax rise on citizens. At the same time, funding for public services from toilets to CCTV is being axed – meaning residents will never have paid so much for so little. The troubled financial state of Somerset is a stark warning to Angela Rayner whose 'mega councils' master plan – announced in the Devolution White Paper in December – is facing mounting scrutiny. Two-tier county and district councils across the country face being merged into one unitary authority, a local government body which is responsible for all services, in a bid to make much-needed savings. But, councillors have warned Ms Rayner that the alleged benefits from the scheme 'lack a serious and robust evidential base'. It is something Somerset residents can attest to. Since its 'unitarisation', services for public toilets, local theatres, CCTV and tourism visitor centres have been cut. The Liberal Democrats-run council has also been forced to introduce a new parking policy, which will impose Sunday charges at all car parks and scrap free parking. The cost of garden waste collection is rising too, from £68 to £73.50 next month. Meanwhile, the council tax rise will generate an extra £9m income and add an extra £129 a year on to the average household's bill. Desperate, the authority has been forced to start selling off its assets to make ends meet. These include a Marks &Spencer building in Yeovil, offices in Bristol and an NCP car park in Bournemouth. For the second year in a row, the council is using Exceptional Financial Support, which is funding granted by the Government. It has been given permission to sell assets or borrow money to a value of £43m. The authority has also cut 555 jobs to save £34m a year. Despite this, spending is still set to outstrip income by £101m for 2026-27, rocketing to £190m by 2029-2030. Martin Dimery, a Green councillor, said: ' Somerset county council was already in a financial crisis when it effectively absorbed the districts. This was due to the burgeoning costs of adults and children's social care against a backdrop of failing to keep council tax in line with costs. 'Far from saving money, Somerset county council has brought all the former districts down with the sinking ship.' The town hall plans to find savings of £47m this year and Bill Revans, the leader of the council, has admitted there will be further impacts on services. Somerset is far from the only cash-strapped unitary authority. Nottingham city and Birmingham city councils have both declared effective bankruptcy. Meanwhile Thurrock, which issued a Section 114 notice to declare effective bankruptcy in 2022, has debt of about £1.5bn. 'Crippling financial problems' Cllr Jeremy Newmark, of the District Councils' Network (DCN), said: 'Many new large unitary councils have experienced crippling financial problems. 'Claimed savings promised by the proponents of mega councils lack a serious and robust evidential base. Given that reorganisation will incur substantial upfront costs, we must be clear that any savings may not emerge for many years.' A Conservative Party spokesman said: 'Last year, we set out five key tests that any restructuring should meet – and Labour have failed at every hurdle. In addition to the extra costs, the mass postponement of elections is unprecedented and entirely wrong.' Somerset council has previously pointed to the fact that it has one of the highest rates of pensioners in the UK, with roughly 25pc over the age of 65. This means the town hall has particularly suffered with the rise in adult social care costs. Somerset's rural location makes matters worse, as it can be a round-trip of 90 minutes for a carer to see one customer in their home. Elliot Keck, of the TaxPayers' Alliance, said that reorganisation risked 'simply papering over the cracks,' rather than dealing with the root of issues such as social care costs. Jonathan Carr-West, of the Local Government Information Unit, said: 'The scale of financial challenges faced by councils is so great that even the maximum potential savings from reorganisation will not by themselves be enough to put local government on a sound financial footing.' Almost half of councils in England risk falling into bankruptcy without action, according to the National Audit Office. But a report says local government reorganisation risks simply reinforcing the status quo. The report, conducted by Inner Circle Consulting for the DCN, found it would be 'a hugely costly and disruptive process that will simply create larger versions of semi-functional or dysfunctional arrangements that aren't delivering for those that need it the most or for the nation as a whole.' 'It's like running up a down escalator' Mr Revans this week told a Government committee that unitarisation had produced significant savings, but rising costs negated these: 'The cost pressures of social care are rising at a rate faster than our ability to make savings. It's like running up a down escalator. We are making these savings, but cannot do it fast enough to meet the demands.' A spokesman for the County Councils Network highlighted that there are 'very specific reasons' for why certain unitary authorities are struggling, but that in cases such as Buckinghamshire, Cornwall and Wiltshire, unitarisation has been a success. A Ministry of Housing, Communities and Local Government spokesman said: 'This Government inherited a crumbling local government sector and existing, long-standing financial pressures are seriously impacting councils like Somerset. 'That's why we're giving them additional support to help manage these pressures.'
BBC News
09-03-2025
- Business
- BBC News
Cumberland Council criticised for £23m borrowing as tax rises
A council has been criticised for approving plans to borrow £23m while raising council Council approved its budget this week, meaning families will pay £4.99% more council tax - between £1.16 and £1.76 more each councillor Gareth Ellis said he believed it was not a budget for residents, but for a council that was "knee-deep in debt". Councillor Barbara Cannon, who is responsible for finance at the Labour-led authority, said the council was facing "significant financial pressures" but would continue to protect its most vulnerable residents. She said funding was "insufficient" and there was no alternative but to ask for Exceptional Financial Support (EFS) from the Government totalling £ said that borrowing was not a "dirty word" because it helped in areas such as providing infrastructure, the Local Democracy Reporting Service disagreed with Labour leaders' claim that it was a "balanced budget", because it required such extensive borrowing. 'Huge debt' Independent councillor Robert Betton raised concerns about the council tax increase at a time when people were "struggling with the cost-of-living crisis".For residents on low incomes who may need help paying the tax, the budget includes funding worth £22m a year for the Council Tax Reduction meeting at the civic centre in Carlisle approved a gross revenue budget of more than £800m, of which the net budget of £333m is paid for through council tax, business rates and government to a report presented to councillors, the main change for the 2025-26 financial year was the introduction of the second homes premium, which would see council tax double for second homes from 1 Lib Dems and Green parties proposed amendments to the budget but they fell when put to a vote. Councillor Mike Johnson, the leader of the Conservative group, said the council was in debt to the tune of £244m, most of which was inherited from the former Cumbria County said: "If the budget is approved it will continue to increase." Follow BBC Cumbria on X, Facebook, Nextdoor and Instagram.
