By Carmelo Garcia – Local Democracy Reporter
Gloucester MP Alex McIntyre is “appalled” by the City Council’s dire need for up to £17.5m of emergency support from the Government.
The Labour MP believes there is “no way of sugarcoating” the situation at the authority and fears for the impact it will have on the city and staff jobs.
The council is expected to ask for between £12.5m and £17.5m as a way to avoid effectively becoming bankrupt.
Local authorities cannot technically go bankrupt but can issue a section 114 notice which means they would not be able to commit to any new spending.
Council chiefs are understood to have been in talks with the Ministry of Housing, Communities and Local Government about its dire financial situation for several weeks.
The authority says the financial challenges stem largely from the aftermath of the cyber-attack the authority suffered in December 2021 which made it difficult to get a clear picture of the council’s finances until recently.
Details of the full extent of the overspend have come to light as the council has caught up on getting its unaudited accounts from previous years checked by external auditors.
Mr McIntyre says he will do everything he can to encourage the department to “bail out” the City Council.
But he believes serious questions need to be answered about how it is possible to run such large overspends year on year without anyone noticing.
“There is no way of sugarcoating it – the council are in serious debt, having overspent their budgets for the last several years,” he said in a Facebook post published on Tuesday (December 2).
“They are asking the government for emergency funding to keep them afloat. Without that, the reality is bankruptcy.
“I am appalled by this news for a number of reasons. Firstly, the financial mismanagement that’s been exposed today will have an enormous impact on staff at the City Council, some of whom will lose their jobs.
“Secondly, the people of Gloucester will be seriously impacted by this mismanagement, with services cut, discretionary spending seriously limited and increases to charges like the green and bulky waste collections.
“To deal with the huge impact of this financial mismanagement, the City Council are proposing to take a number of actions.”
Some of these actions include:
Closing Blackfriars Priory as a wedding and events venue from May next year
Reducing opening hours at the Museum of Gloucester to four days a week
Reducing funding for events and festivals
Removing Councillor grants
Reducing the staffing and activity of the Community Engagement team
Introducing a mutually agreed resignation scheme for staff
“The council will be issuing a report in the coming days. I want to reassure residents that I will listen to their views and work on a cross-party basis for the good of our city and to ensure as many frontline services as possible are protected.
“I have only found out today from the City Council the findings of their internal investigations and I am disappointed they did not raise this with me as soon as they became aware of the extent of the damage that had been done.
“Since learning the facts this morning I have taken immediate action and have spoken to colleagues in the Ministry for Housing, Communities and Local Government to make the case for supporting us.
“I will be focusing my attention on doing everything I can to encourage the department to bail the City Council out with emergency funding.
“How did this happen? At the moment we know that the budgets for each year from 2021 were wrong. In reality this meant the council didn’t know what money they actually had to spend.
“Beyond this, things aren’t clear. There are serious questions to be answered about how it is possible to run such large overspends year on year without anyone noticing.
“The coming weeks and months are likely to be difficult for our city. If I am honest, I am angry about the chaos and anxiety this news will cause. The people of Gloucester deserve so much better than this.
“Gloucester is my home and it remains the privilege of my life to serve you all. I will take every opportunity I can to ensure we have the best possible chance of recovery.”
The council says it has a recovery plan to fund its operating costs by borrowing while selling off assets to reduce spending and increase income.
They say initial discussions with the Government over the support have been positive.
The City Council’s recovery plan will focus on taking early action to deliver savings and reduce costs, ensuring they have the right skills and resources in areas like finance and asset management.
They will also make sure reporting and accountability are stronger and more accurate and aim to keep decision-making clear and residents informed.
Resources cabinet member Declan Wilson (LD, Hucclecot) said: “We want to be as open as possible about the challenges the Council is facing.
“These are extremely difficult decisions, but they are necessary to balance the books and protect essential services. Applying for exceptional financial support will give us the breathing space we need to make changes and secure the council’s future.”