DIFFICULT FINANCIAL DECISIONS FOR CHESHIRE EAST COUNCIL

Labour Leader Sam Corcoran laments the extremely challenging financial situation Cheshire East Council finds itself, and explains why the council will need to make some very difficult decisions this year.

Since 2010 the government has repeatedly cut funding to councils, leaving many to warn that they could effectively go bankrupt in the coming months. For Cheshire East Council, funding cuts amount to a 63% fall compared to the last Labour government’s settlements, equating to 75 million pounds a year less in real terms. The cumulative effect of 13 years of funding cuts means that Cheshire East Council is well over half a billion pounds worse off in that time, and we are all paying the price.

The cross-party Local Government Association has warned that a combination of high inflation and high interest rates, which has increased the cost of delivering services, alongside a huge increase in the demand for services, such as adult social care and children’s services, will create a 4 billion pound funding gap by March 2025. all councils are being forced to make difficult decisions and Cheshire East Council is no different.

It is a legal requirement that councils must set balanced budgets. Less money, whilst costs and demand increase, means that budgets are extremely stretched for non-statutory services such as street cleaning and green space maintenance, as funds are prioritised towards the statutory services that councils must provide by law.

Labour Leader, Sam Corcoran said:

‘The cost-of-living crisis isn’t just affecting individuals, rising costs are also affecting councils. An inflation rate of 10% wasn’t accounted for (who could have foreseen the economic crash precipitated by Truss’ disastrous ‘mini-budget’) - so all our budgets have been under pressure ever since.

‘Whilst funding cuts, higher costs and the rising demand for services are affecting all councils, there are specific issues for Cheshire East Council which will mean that the budget setting for the 24-25 financial year will be extremely difficult.

‘Cheshire East Council has low reserves compared to many councils. The General Reserve was £22M when the council was formed in 2009, but these reserves were unfortunately depleted by the former Conservative administration by over half, leaving only £10M in 2019 when the Labour-led administration took control. It has been the Labour-Independent joint administration who have stood firm in protecting the Council’s reserves, and to their credit have also managed to increase the reserves to £14M in March 2023.

‘The depletion of the reserves pre-2019 has left the council with a minimal financial buffer to absorb unexpected financial shocks. And a financial shock has now occurred, with the government’s cancellation of HS2 coming to Crewe. £8M of capital expenditure may now have to be written off if the government does not compensate the Council for its unexpected losses. HS2 had cross-party support in the Council with over £2M of the £8M being spent before the Conservatives lost control of the Council in May 2019.

‘Labour, and the Independent group too, are absolutely committed to doing everything that we can to keep tight control of the Council’s finances, and really difficult decisions will have to be made.’

Cllr Sarah Bennett-Wake, from Macclesfield, said:

'Nobody comes into politics to make cuts least of all Labour councillors. After years of Tory austerity, crashing the economy and the cost-of-living crisis, local councils are being forced into doing the government's dirty work for them.' 

Labour Councillors will always prioritise, protect and support the most vulnerable people in our communities. Every avenue will be explored to keep Cheshire East on a sound financial footing going forward.

The consultation for Cheshire East Council’s 2024-25 Budget is now open. The Council is suggesting a 4.99% increase in Council Tax, which includes a 2% rise to support adult social care. The consultation is available online on the Council’s website, and paper copies are available in libraries. The survey will record people’s preferences and has free text boxes to capture any ideas for potential cost savings and/or increasing revenue.

Pictured - Labour Leader, Sam Corcoran.