One council in "bankruptcy or survival" mode, two others declare themselves bankrupt, one council looking for millions in savings & another teetering on the brink of financial collapse, as Hartlepool Matters is told 2023 will see swathes of councils going bust, TWO of them could be on Teesside.
Wednesday 21st December 2022 08:32am
Two local authorities have reportedly declared themselves bankrupt within days of each other pilling pressure on councils across the country following fears 2023 will see the start of a wave of local councils declaring themselves bankrupt as inflation & soaring interest rates sees debts at some authorities soaring to dangerous levels.
Thurrock Council, who declared its section 114 notice to the government last week.
Thurrock Council became the latest authority in the country to declare its section 114 notification to the government last week, indicating that it was unable to devise a balanced budget for the financial year crippling local services & raising the fear of massive cuts to jobs & services in order to put the authority back on track.
However in what's been seen as the most unprecedented move of them all, Croydon Council who'd previously declared itself bankrupt twice, has also once again wrote to the government saying it cannot devise a balanced budget for the financial year, leading to the council having to declare itself bankrupt for the third time in two years under a section 114 notification.
Some local councils have borrowed themselves into oblivion, with the local tax payer left footing the bill
Whilst local councils cannot effectively wind themselves up into insolvency, its claimed that the submission of a section 114 under the local government act leads to commissioner's from the government being appointed to run key council services in order to maintain the basic functions of the authority,
local councils can then apply to the government for a financial "bail out", allowing them to receive extra funding from the treasury to maintain local services when the money pot runs dry....
However, its claimed that inflation has now seen some local councils who's finances were already precariously teetering on the edge seeing levels of debts on some local authorities books spiral completely out of control, with Thurrock Council reported to be one of the most indebted local authorities in the country, with loan liabilities reported to be TEN TIMES that of its actual yearly operational budget, stoking fears that a number of other local councils will be forced down the same route of bankruptcy as early as 2023, as many local councils find that unsustainable levels of borrowing taken out when rates were “cheap”, has now resulted in some councils being lumbered with crippling debts as interest rates climb ever higher..
In the North East of England, its claimed two local councils may be set to announce as early as 2023 that budget pressures could lead to there being no other option but to declare their own section 114 notifications to the government, leading to what could be the beginning of at least one authority being dissolved into a neighbouring council in order to maintain just a basic level of local services following claims services have been stripped to the bone, with nothing left to cut.
Hartlepool Borough Council is said to be sitting on debts amounting to almost 90% of its entire yearly operational budget.
Hartlepool Borough Council reportedly could go "bust" as early as the spring of 2023
Hartlepool Borough Council, one of the countries smallest Unitary Authorities is said to be resting on debts that amount to almost 90% of the councils entire yearly operational budget, with reserves said to be almost gone & the council now left lumbered with a number of "stalled" projects which have been funded through grants acquired from the nearby combined authority & risky borrowing.
Hartlepool Borough Council took on millions of pounds in unsustainable borrowing to fund the multi million pound project that's still not even off the drawing board, with claims the project has "stalled", with councillors insisting this isn't the case.
Concerns over the building of a new multi million pound leisure centre were already raised in a previous report, with councillors for the authority coming out to slam claims that the building of "the highlight" on Hartlepool's marina would be "scrapped", with claims now that the project has been knocked back due to COVID.
In reality, a council report recently revealed that inflationary pressures led to the project stalling, with concerns the multi million pound development could now be pushed back to 2024/25...... if Hartlepool has a council that far down the line...
Housing Growth & a decades worth of council tax increases that's added around £400.00 to the cost of the annual BAND D council tax bill for the area has left many residents calling for an inquiry over the management of the councils finances, with claims corruption in the authority is "rife", with a number of failed vanity projects & poor financial decision making from the councils chief finance officer all reportedly to blame for the councils financial crisis.
Finance officers for the struggling authority claim that should councillors now fail to agree a 5% maximum council tax increase next year, ripping up previous plans for a 3% increase before the government announced local councils could set rates even higher in the Autumn Budget as well as further drastic cuts implemented to the councils balance sheet, its claimed Hartlepool Borough Council will see little other alternative but to declare its own section 114 to the government in just months, in what many claim will spark government commissioner's investigating the stricken authority over claims its mismanaged the finances of the failing council for well over a decade, with eye-watering increases to senior salary pay that many claim is "unusually high" for such a small unitary authority, with Hartlepool likely to see itself as the prime candidate to see its local council dissolved & merged into another nearby authority in what many claim will restart the debate over whether Teesside as a whole could see a new "super council" emerge from the ashes.
Redcar council is said to be facing similar pressures as Hartlepool Council reinforcing the notion that should both authorities collapse, they could be dissolved into other nearby authorities.
Nearby Redcar & Cleveland Council (just 15 miles away from Hartlepool) could also be set to undertake a similar move into bankruptcy, that's if it fails to deliver upon swathing cuts to services to plug a huge budget deficit caused by inflation, interest rates & a collapse of its IT infrastructure when the authority found itself the victim of a cyberattack two years ago costing the local council just over ten million pounds to rectify....
Redcar & Cleveland Council reported recently that its council agreed to increase Council Tax by 3% for April 2023, with as much as £10.0 million pounds worth of budget savings to find in order to avert a financial crisis as the council wrestles with crippling deficits in almost every single department of the councils services.
Woking borough council is resting on crippling debts accrued through a failed redevelopment of its local town centre.
Further down the country, its claimed Woking council is now said to be in “bankruptcy or survival” mode, as it wrestles with debts totalling £745 million pounds, the majority of it said to have been accrued through the failed re-development of the areas town centre.
According to government ministers, Woking council is now on course to see itself branded as one of the very few local councils across the country with one of the highest levels of commercial debt a local council has ever been shouldered with & again seems to be highlighting that excessive borrowing from some local councils has come back to haunt them at a time where the first round of economic recession has left many local councils failing to learn their lesson, with many continuing to spend it like Beckham, as householders were then left shouldering the bills through increased council tax payments & bare bone frontline services.
Comments