Cheshire East Council is to receive a £17.6m financial support package from the government after the authority announced it had worryingly low reserves, writes Belinda Ryan.
The cash-strapped council applied to the government for the exceptional financial support in the form of a capitalisation direction earlier this month.
Several councils across the country have been given the support in varying amounts.
It is not extra cash and the council would, over time, need to pay back expenditure capitalised under the agreement.
A Cheshire East Council spokesperson said: “Cheshire East Council, like councils across the country, has been experiencing unprecedented financial pressures.
“This results, in part, from increased demand and costs for special educational needs which have not been met by increased high-needs funding.
“There is also continued financial uncertainty following the government’s announcement, in October, of the cancellation of HS2 north of Birmingham and spending already incurred by the council in preparation for HS2 phase 2.
“The council has been in discussion with government for a number of months about these particular issues.”
Cheshire East is still seeking compensation for that HS2 spending and this financial support announced today by government (Thursday) is separate from that.
The spokesperson continued: “Earlier this week, the council approved a balanced budget for 2024/25.
“These plans include spending money from reserves to cover the impacts of additional financial pressures.
“However, this means that the council’s general fund reserve is now insufficient to adequately protect the council against future risks.
“The additional financial support announced today is a capitalisation directive.
“It provides the council with the facility to spread the cost of any additional emerging pressures, up to £17.6m, to future years, effectively providing an alternative to reserves should the need arise.
“This reduces the risk of a Section 114 notice.”
He stressed: “The support is not in the form of cash. The council would need to pay back expenditure capitalised under this agreement, in the longer term.
“Reducing these financial risks will enable investment in providing the required organisational capacity and resources in 2024/25 for a council-wide transformational change programme to create sustainability in the medium-term.
“The council has taken positive steps throughout 2023/24 to demonstrate compliance with the Financial Management Code and this work must continue as part of the wider transformation programme.
“We must also ensure that the required savings and income set out in the medium term financial strategy 2024-2028 are delivered in a timely manner.”
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