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Council's Executive backs application for Exceptional Financial Support

Council and democracy

Thursday, 18 January 2024
Middlesbrough Town Hall

Middlesbrough Council is to apply for special support as it works to recover its financial position.

At a meeting of the Council’s Executive on Wednesday, January 17, elected Mayor Chris Cooke said his focus was on achieving long-term stability and resilience while avoiding further Government intervention.

The Executive unanimously approved a report recommending an application to government for permission to borrow £6.3 million plus a small contingency to cover its budget gap for 2024/25, the subject of recent consultation.

Sums to cover future risk, which may or may never be called on, make a total of £15 million in Exceptional Financial Support (EFS).

The move comes as the authority works to make savings of around £14m in a drive to balance its budget for 2024/25.

Despite considerable progress, a shortfall of £6.3m for 2024/25 remains.

The gap is the result of a number of complex issues including spiralling care package costs in adult and children’s social care, depletion of the authority’s financial reserves in recent years and long-term high inflation.

The Council’s Director of Finance therefore recommended an application for Exceptional Financial Support to enable the Council to set a legally balanced and robust budget for the coming financial year.

If approved by the Department for Levelling Up, Housing & Communities (DLUHC), EFS will allow the Council to borrow to cover some costs while continuing a wide-reaching programme of transformation in the way services are delivered.

Failure to set a balanced budget would see the Director of Finance required to issue a Section 114 notice under the Local Government Finance Act, a move which would see statutory duties reduced to the core minimum and severely impact the Council’s ability to deliver non-statutory services.

Backing the report’s recommendation, Middlesbrough Mayor Chris Cooke said he would do all he could to avoid the need for a S114 notice.

He said: “This is a route we want to avoid at all costs.

“The issues we currently face were identified early and the Council has  been in constructive dialogue with DLUHC over the scale of the problem and the need to apply for EFS for some time.

“EFS will not be a silver bullet to fix all the Council’s problems but it will buy us the time we desperately need to achieve long-term stability and resilience.

“This is not an admission of ‘effective bankruptcy’ and it’s not a hand-out or emergency bail-out from the Government, but it is permission to borrow in a way that wouldn’t normally be available to us.

“This is a necessary step in our ongoing programme of transformation to permanently reduce our costs which have been running above our income levels for a number of years and cannot be sustained.

“This approach will avoid us having to issue a Section 114 notice which could see decisions taken away from elected officials to Commissioners with each Commissioner costing Middlesbrough Council up to £1,500 a day.

“This could also see front-line services which the people of Middlesbrough value being slashed at a stroke such as levels of area care, neighbourhood safety and school crossing patrols.”

If the application for Exceptional Financial Support is accepted, the offer will be voted on at a meeting of full Council on Wednesday, February 28.