GBC to Set ‘Strict Controls’ on New Spending to Tackle ‘Extremely Concerning’ Finances

Published on: 13 Jul, 2023
Updated on: 16 Jul, 2023

By Emily Coady-Stemp, local democracy reporter

and Martin Giles

Guildford Borough Council will bring in “strict controls” on new spending and aim to get its finances in order with a special budget to be set this month.

The authority considers that the issuing of a section 114 notice, effectively declaring itself bankrupt, is not necessary for the financial year 2023-24 but concern remains about a projected growing deficit in future years.

Overall debt of around £300 million is expected to rise further, as is the deficit, the difference between income and expenditure, currently £3 million for this year but expected to rise to £18.5 million over three years, without corrective action

See report here

Relying on the council’s reserves should avoid having to issue the 114 notice in the short term –  a move which nearby Woking pursued last month due to a forecasted £2.6 billion debt and a £1.2 billion deficit. But GBC is clearly worried and a dedicated financial task force will be established as Guildford Borough Council admitted it finds itself in a “very difficult financial position”.

The Liberal Democrats, who won sole control of the council in May’s elections, said rising interest rates, which have triggered substantial increased interest payment, and accounting issues unearthed by a review of council finances were the main causes of the financial problem.

A special meeting of the authority’s corporate governance and standards committee will outline the plans on Tuesday, July 18.

The special budget, which should be brought to full council on July 25, will aim to get the council’s finances in order and will include “strict controls on all new spending, and in-year reductions in spending”.

See also: Woking Launches Public Survey on Cuts

But where the spending axe will fall has yet to be identified. Like all councils, there are certain functions a borough council has to fulfil by law, such as waste collection, housing management and planning, so it will be discretionary services such as parks, the museum and cultural sponsorships (eg the Yvonne Arnaud Theatre) that will be under scrutiny.

Despite the challenges it is understood that the council remains committed to the major Ash Road Bridge and Weyside Urban Village projects.

‘Our residents will always be our highest priority’

The Lib Dems said the highest priority would be to protect public services.

They added: “Above all, we will not shy away from making the tough decisions to make sure residents are protected from cuts to core services.

“Our residents will always be our highest priority, and we will be honest and realistic about the choices that need to be made to keep the council financially stable.”

Cllr Julia McShane

The council’s leader, Cllr Julia McShane (Lib Dem, Westborough) said though she knew the report was “a difficult read” she said the council wanted to be open and transparent about the challenges ahead.

She said:  “We have issued a report today related to our finances. I am aware our residents may find this worrying.

“I want to reassure you that we are taking this situation very seriously.

“I take comfort in the fact that officers and councillors are working hard to tackle the situation head-on.”

“…nowhere near” the situation of nearby Woking…

Guildford’s former leader, Cllr Joss Bigmore (Residents for Guildford and Villages, Merrow) said the budget was delivering on what the previous administration had started at the end of the last financial year.

Cllr Joss Bigmore

He said the council was “nowhere near” the situation of nearby Woking, which in June issued a section 114 notice.

But he said a full review of the finances had shown some errors in the accounts.

Cllr Bigmore added: “That’s made the situation even more urgent.”

The former leader, who was in charge for two years as part of an arrangement with the then residents and Lib Dem coalition, said: “Our balance sheet is very solvent.

“It’s just a matter of managing cash flow, to manage the interest payments.

“With strong leadership and decisive decision-making, it should be no problem.”

He said he “hoped” the current administration could show the leadership and decision-making needed, Cllr Bigmore told the LDRS: “I hope they do, for the sake of every resident in Guildford.

“I think across the chamber, all the group leaders met with the chief executive, the leader and the lead officers for finance and everyone is behind helping.”

He agreed the administration would have to make some “difficult decisions” about services, which could be unpopular with residents.

“But they need to make them, otherwise they will be issuing a section 114,” he said.

The Lib Dems pointed to previous Conservative administrations carrying out “high levels of borrowing”, as well as central government issues including rapid rises in interest rates after the budget put out by former Prime Minister Liz Truss and Kwasi Kwarteng, and a delay to council account auditing.

The council said spending controls would be brought in, immediately limiting all new spending, a review of major projects and borrowing would be carried out and the council would look at selling council assets.

Plans also include “expanding and strengthening” the council’s finances team and continuing the collaboration with Waverley Borough Council to reduce costs.

“It’s extremely concerning at the moment”

Cllr Philip Brooker

The Conservative group leader on the council, Cllr Philip Brooker (Worplesdon) said he had not yet seen the papers for Tuesday’s meeting, but said he thought one area the council could look at tackling was the “significant amount” spent on consultancy fees.

Of the budget situation as a whole he said: “It’s extremely concerning at the moment.”

The corporate governance and standards committee will take place at 7pm on Tuesday, July 18, at the council’s Millmead offices.

See also: 20% Car Parking Charge Hike Planned for Woking

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