By Carmelo Garcia – Local Democracy Reporter
There are concerns Gloucester City Council could “go bankrupt” if party politics is not put aside as they seek a bailout of up to £17.5m from the Government.
Councillors were given an update on the authority’s dire financial position at a special meeting at North Warehouse last night (December 18).
And the City Council will today (December 19) submit its application to the Government for a loan of between £12.5million and £17.5m which was agreed by council leaders last week.
The exceptional support fund application and a robust financial recovery plan is the only way the council can avoid having to issue a section 114 notice.
While local authorities in the UK cannot technically go bankrupt, such a notice indicates their expected income is not enough to meet their expected expenditure and they would not be able to make new spending commitments.
Deputy leader Declan Wilson (LD, Hucclecote), who is the cabinet member responsible for resources, said their talks with the Government about a bid for emergency financial support have gone well.
If the application is accepted, a robust recovery plan will be needed and they must show how the budget will be reduced and borrowing repaid, he added.
The council is understood to have been working closely with the Ministry of Housing, Communities and Local Government over the last six weeks.
And the Chartered Institute of Public Finance and Accountancy (CIPFA) has been providing the support to make sure they are doing the process right.
However, the meeting heard how CIPFA are concerned that the authority is in no overall control, meaning proposals could be voted down by the opposition.
“They are concerned that with no overall control that we might have trouble getting decisions through,” Cllr Wilson said.
“I’ve said this before and I’ll probably say it many more times. This is where we discover how serious we all are and how determined we are to do the best for our city.
“We have to work together on this. I really hope all parties will really work together because this is the only way we are going to do this.
“We are going to have to forget about the politics, […] we need to work together.”
The multi-million pound overspend was discovered after the council’s accounts for the last three years were checked by external auditors.
“The whole background to this financial mess is that since the cyber attack this council has struggled to meet deadlines to submit its accounts and get them audited,” Cllr Wilson said.
He explained the council has been operating on imperfect financial information and many important decisions have been made using estimated numbers which were wrong.
Council leaders have since agreed a plan which means they now have proper financial reporting, robust budget monitoring and trustworthy financial information.
Their recovery plan will look at making savings, which could involve selling assets, and improving commercial income, ensuring there is sufficient capacity and resilience in the finance and asset management team along with better governance.
Labour leader Terry Pullen (L, Moreland) told the meeting his group would support the recovery plan but said the worst thing about the dire financial situation is that no-one is yet to apologise to the citizens of Gloucester.
He said the responsibility for the financial mess lies with the previous Conservative administration but said it was most concerning that the Liberal Democrats were also running up a bill of £2.5m.
“No-one has said sorry,” he said, “sorry for the incompetence, sorry for the cuts to essential services that we believe are coming, sorry for the increased charges, sorry for selling assets, sorry to those hard working council staff who look like they are facing redundancy before Christmas, and sorry to the people of Gloucester.
“We’ve got into this mess because of gross financial mismanagement. Because the council didn’t have capacity in its finance team.”
He said a council report suggested the authority had been running on best estimates.
“Frankly, if you ran a business on best estimates, it would have gone out of business a long, long time ago.”
Conservative group leader Stephanie Chambers (C, Quedgeley Fieldcourt) said the Lib Dems accused them of “spending money like drunken sailors” when a £1.5m financial “black hole” was revealed in September.
However, the overspend during the Lib Dem administration is almost £7m.
“Just two months later we are told in the period of their administration, there was a £4.3m overspend and a £2.5m [overspend] already this year,” she said.
“And now we are looking for a £17.5m loan from the Government.”
And the Lib Dem council chiefs did not listen to her concerns over the projected income from The Forum when this year’s budget was set, she added.
“It was very obvious The Forum was not open and was not going to bring in £4m, even to a lay person like me,” she said.
Community Independents group leader Alastair Chambers (Matson, Robinswood and White City) said the council was on the brink of bankruptcy and was “being kept alive only by a begging bowl sent to Government”.
“Residents are being told to pay more, higher bin charges, higher bulky waste fees, concessions scrapped, services cut,” he said.
He asked where the missing millions were and said they should “sound every alarm possible to make sure people are listening”.
The council voted to note the report. A decision on the emergency loan is expected from the Government in February, 2026.