Cash-strapped Derbyshire County Council’s ‘last shuffle of the deckchairs to prevent another Titanic’
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This is but another chapter in a troubled tale and one which brings the ongoing struggles of local government to our very doorstep. Last week we had the news that Europe’s largest local authority, Birmingham City Council, had effectively declared bankruptcy. With this came a widespread discussion of “who’s next?”
Derbyshire finds itself in a tremendously difficult position but it does differ from Birmingham in a number of aspects.
Birmingham officials formally declared effective bankruptcy in the form of the much-dreaded Section 114 notice, stopping all but spending on statutory (legally required) services, prompting a trigger for central Government action and support.
Derbyshire is not at that level but has, in a roundabout way, achieved the same result. It has imposed restrictions on itself and is going to up its lobbying on central Government – but it has not issued a Section 114 notice.
Instead it is having a last shuffle of the deckchairs to prevent another Titanic, calling on its own staff to help bail it out of a repeat of Birmingham.
Birmingham was also not the first to feel financial strain to the point of a formal Secton 114 notice, with other councils, run by both the Conservatives and Labour, forced down the same route.
There will be much talk about the “colour” of Derbyshire County Council, being a Conservative-led council in financial turmoil while criticism was aimed at the Labour-led Birmingham for its demise.
It makes it a more awkward conversation for the Government which will not want to highlight Derbyshire’s troubles. But with the council saying more central funding is essential in order to keep its head above water this topic will be tough to ignore.
The call for more central funding is a drum the council has been beating, despite the Conservative-on-Conservative optics, for years.
Local government finances can often appear, even to the most invested, as simply moving numbers around on a spreadsheet or, if you like, beads on an abacus, to keep the train moving.
Money is shifted from pot to pot to ensure services are supported, with cuts redefined as savings or efficiencies, among other numerous jargon terms.
However, Derbyshire’s situation indicates that this apparent system, leaping through loopholes in order to keep moving, is finite.
It can use reserves for their very purpose, to bail it out in emergency situations, but this is not a process that can be repeated year after year, and certainly not in the quantities that have been required.
Council officials, primarily led by finance director Peter Handford (who left the authority during the last financial year after an esteemed tenure) had warned repeatedly, quarter after quarter and budget after budget, about the need to make savings and make them on time, and avoid the overuse of reserves.
During the height of the pandemic the council had faced intense financial issues but came out on the other side due to Government grants, but while these cash injections ended, the cash troubles have not.
The council has had a costly year with the final conclusion of its long-running saga to close the contract for the Sinfin Waste Plant in Derby, which it had invested in with the city council.
This ended with the county council paying £56.93 million for its portion of the broken facility. It has taken visible radical steps to try to bring down its expansive property empire, but this now may not be enough.
The council is looking to sell off its own headquarters on the hillside above Matlock and close all of its offices in the Chesterfield area.
It has cut £300 million out of its budget over the past 13 years but now faces a £46 million black hole with only £28 million left in its emergency reserves.
Cutbacks will have to be drastic and a question will remain over how much fat is there left to trim after years of reductions.
The council has struggled to meet the warnings of finance chiefs to make the required cuts in the required years, on time, and it is now paying the price.
A bigger issue is on the horizon: can the Government pay the price, and could this ultimately fall on taxpayers in future years? What services will be left behind and in what state? How many staff could find themselves out of a job?
The questions are endless and a difficult road lies ahead. The problem is that this is no longer a road less travelled.