UPDATED: Council orders moratorium on spending after warnings it could go bust

Cost-cutting actions include the postponement of ‘some routine repairs and improvement projects’ on the county’s roads and pavements and a freeze on the filling of non-essential vacancies. All agency and contracted posts will be ‘reviewed’, as will the renewal of computer equipment, building adaptions, staff training, printing and catering arranagements.

All but one of the county council’s departments are forecast to go over-budget by the end of the financial year, with children’s services and adult social care in particular struggling to make ends meet due to ‘significant increases in demand’.

Current forecasts indicate a £5.7m overspend, but leader Martin Tett warned this could rise to an ‘enormous’ £10m.

He told Monday’s cabinet meeting: “We have a pretty bleak budget situation at the moment to be honest with you.”

He warned that if spending is not curtailed the council’s reserves could be ‘decimated’ to around £10m, ‘which is catastrophically low’.

“Virtually all our reserves would disappear. This is an unsustainable financial position. It cannot continue. We will quite simply go bust, we have to take action’.

Chief executive Chris Williams said the council was ‘heading for serious trouble unless we take action now’ but admitted ‘it was proving incredibly difficult to keep costs down’.

He said: “Early last week I notified all budget managers that we would be introducing a moratorium on all non-essential spending. We are issuing instructions to all budget managers that no expenditure is allowed on non-essential and non-committed items until the end of March. We’re sorry to have to do this but as the leader said, unless we do this and take action we will be in an even more serious position next year.”

Mr Tett said the authority was not alone among county councils feeling the pinch from government cut backs and increasing social care pressures. And he warned that the national living wage could have an impact of ‘many millions’ of pounds when it is introduced, due to increased wages of contracted staff being passed on to the council.

Deputy cabinet member for transportation, Paul Irwin, said it was wrong that district councils get 80% of the New Homes Bonus – a government grant totalling several millions paid to authorities for increasing the number of homes in their patch.

He said: “We’re in a crisis and I can’t work out why district gets 80% of the New Homes Bonus.”

He said Aylesbury Vale District Council was talking about spending £6m ‘on restaurants at Waterside’, adding: “We can’t spend any money on treats.”

Mr Tett responded: “They are in a very different place to us. In particular we have responsibility for high cost, high demand services like children’s services and adult social care which are very expensive.

“I am concerned aspects of [central] government don’t fully understand the financial structure of local government – how radically different it is for county councils than other aspects of local government.”

In a statement released today (Tuesday), he added: “External pressures and demand for services mean we face a potential overspend, despite the fact we are a well-run, efficient council which has saved almost £100m over the past five years. It is precisely because we are well-run that we can see the early warning signs and react to them in time. This is not to do with us being inefficient, we are very efficient by and large.”