A first quarter finance review of Cheshire East Council spend shows it is facing massive deficits in 2022-23 of up to £12 million.
The review, published this week, forecasts a reduction in the council’s coffers of £11.7m – with the largest rise in expenditure in the council’s adults and children’s services.
And without Government help, council chiefs warned that “very difficult choices will have to be taken”.
“It illustrates in stark terms that, without further intervention, there is financial pressure of almost £12m above the agreed budget,” says Cheshire East Council.
National bodies Local Government Association and County Council Network have lobbied central government that local councils are experiencing unprecedented financial challenges.
They say this is driven by high inflation and rising demands for social care services to meet complex needs, as well as the ongoing impact from Covid-19.
The council agreed balanced budget in February 2022 was based on inflation of around 2% at the time.
Cllr Amanda Stott, chair of the council’s finance sub-committee, said: “Cheshire East Council has a good record of financial discipline, managing the increasing demand for services over recent years – particularly in social care – without incurring large overspends as seen elsewhere.
“However, local government and local residents are now facing unprecedented challenges.
“In line with most public sector organisations, we rely on government inflation targets when calculating our budgets.
“Target inflation remains at 2% but actual inflation is currently exceeding 10% – significantly higher than what could have been predicted when setting our budget in February this year.
“Of the many financial challenges facing local councils, including this council, adequate funding for adult social care services is perhaps the most significant.
“The LGA has recently called on national government to deliver the £13 billion pledged to tackle the crisis in adult social care.
“And the County Councils Network has included ‘reforming adult social care and health services’ as a key point in its recently launched five-point plan.
“The council is already working closely with national government on initiatives to address the financial challenges seen in ‘people’ services – including the Adult Social Care Trailblazer and the Delivering Better Value programme for high needs funding for children’s services.
“But without significant funding reform, inflationary pressures and increasing demand for these services will mean very difficult choices will have to be taken.
“We will work hard to support residents over the coming months.
“We are already planning for increased demand for services to support residents who are experiencing financial stress, through the cost-of-living crisis.
“This includes established support such as Household Support Fund, emergency assistance, housing benefit and council tax support. Residents can find more information at www.cheshireeast.gov.uk/costofliving
“But, at the same time as having increasing demands on our services, we as a council are also facing extreme financial pressures due to rising energy price rises, pay inflation and increased costs to deliver and commission essential services for our residents.
“Councils are required to live within their means.
“Options to rebalance the forecast for 2022/23 include use of reserves, using the proceeds from the sale of assets, increasing effectiveness of debt recovery, service efficiencies, pausing recruitment and increasing income generation.
“We must explore a range of options to reduce the local impacts, while continuing to lobby for national solutions necessary to protect vital local services.”
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