'People need to know': Redditch Borough Council in financial crisis - The Redditch Standard
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19th Aug, 2022

'People need to know': Redditch Borough Council in financial crisis

Ross Crawford 17th Mar, 2022 Updated: 17th Mar, 2022

A SENIOR Redditch Conservative councillor says the borough could be heading for bankruptcy under the current – Conservative – administration.

Coun David Thain (Con, West) says the people of Redditch deserve to know just how bad the authority’s financial situation is.

“One of the reasons I originally joined the Conservative Party was because I believe in fiscal responsibility,” said Coun Thain.

“However, this Council’s Conservative administration is now patently failing in this regard.”

Coun Thain was handed the finance portfolio in 2019 after auditors Grant Thornton issued the council with a ‘Section 24’ notice, warning it was in danger of breaching its statutory obligation to set a balanced budget.

The authority was also ordered to save £1.5million over three years.

“I took the Council out of a Grant Thornton imposed financial ‘Section 24’ and gained a good ‘Value for Money’ recommendation for the Council, thus avoiding a potential bankruptcy situation,” said Coun Thain, a former deputy leader of the authority.

“Grant Thornton later commented that the Council was ‘moving towards a more sustainable financial position’.

“However, since I have been removed from Council’s financial portfolio post in 2021, the council is now, March 2022, once again, veering headlong towards another Section 24 – almost certain to be imposed by Grant Thornton – and possible, later down the line, bankruptcy.”

He said much of the problem lay in the administration’s failure to heed their own officers’ advice and instead stick to an election promise not to raise council tax by the full amount permissible, limiting it to 2.2 per cent instead of the recommended 2.9 per cent.

That decision saved council tax payers a few pence a week, but taken collectively over the years it’s blown a huge hole in the council coffers.

AUDITORS Grant Thornton in a letter to Redditch Borough Council sent in January highlighted ‘ significant budget gaps’ which needed to be filled.

They also questioned the number of ‘inadequate explanations to our questions and the number of amendments required to the Statement of Accounts’.

At the last full council meeting councillors heard the authority was facing a gap of nearly £1million in its finances in the next financial year, 2023-24.

Compounding this has been the decision to introduce new finance software.

This state-of-the-art kit has had teething problems with staff who have trained on it finding themselves in demand, leading to a rash of departures to other local authorities.

This has forced the council to replace them with freelance contractors – at premium rates.

The auditors Grant Thornton have been scathing about the state of the authority’s finances, stating ‘further significant work is required’.

Council Leader Matt Dormer (Con, West) said: “I have nothing to hide on finance and we would be in a better position if Covid-19 hadn’t come along.

“The biggest challenge at the moment is staff, and because we haven’t got enough staff we are in trouble.

“It’s a perfect storm, a multitude of problems coming together, but we will get out of it.”

He added the council was bringing forward plots of land for sale, the proceeds of which would go straight into helping balance the books.

“There are still difficult decisions to take, there is still a challenging situation out there but we know what savings we have to make and I am confident we will get through it.”

Bill Hartnett, who was leader of the Labour opposition in 2018 when the council tax promise was made said: “I said at the time they’d given themselves a 100 per cent pay rise, decided not to put the council tax up by the correct amount and also reversed a number of fees and charges, particularly on cremations and burials which would still have Redditch among the lowest quarter in the country.

“The loss of council tax was terrible as it’s compound interest year on year and you’ll never get that money back.

“Worst of all it was blatantly against officers’ advice and I think that’s what alerted the auditors.

“If you keep cutting services to the bone when you reach the marrow the leg will break.”

Councillor Mike Rouse, the current Conservative portfolio holder for finance said: “I share and have spoken many times about concerns with the council’s finances, all of which is on record.”

 

 

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