York’s chief financial officer has said continuously borrowing from reserves has led to the city’s difficult financial situation.
Cuts are planned by City of York Council to deal with its forecasted £11.4m overspend that would exhaust its reserves.
The Labour administration and the opposition group of Liberal Democrat councillors have, subsequently, pointed fingers at each other.
Liberal Democrats accuse Labour of causing the damage since coming into office in May.
But Labour says the Liberal Democrat and Green coalition managed council finances without considering long term implications of their decisions when they were in office.
To get an apolitical point of view, the Local Democracy Reporting Service asked two of the council’s most senior officers for their assessment of the situation.
Debbie Mitchell, the chief financial officer, said: “If you look at our history, in terms of our budget position, our pressures and areas of overspending are recurring and they’re national issues, predominantly adult and children social care.
“But our mitigations to balance our budget have been one-off [payments].
“We need more government funding; we do very badly out of any government grants and government funding.
“But if you look at our last three years, for example, we overspent by just under £5m last year and that was funded by contingencies and other one-off reserves.
“We overspent by £2.5m the year before and we overspent by £1.3m the year before that.
“So you can see it’s gradually been getting to a position where the overspend has been increasing.
“So now we’re at a position where we’ve used spare money, one-off money.
“But once it’s gone, it’s gone.”
Difficult decisions
This appears to echo finance executive Cllr Katie Lomas’ recent comments.
“The old Liberal Democrat administration managed the council’s finances as though they wouldn’t be around to worry about the consequences, which has proven to be the case,” Cllr Lomas said.
Ian Floyd, the council’s chief operating officer, feels confident the situation will be properly handled.
“It’s a very difficult financial position but it’s not one that we can’t manage, I would say,” he said.
“That will require difficult decisions to be made and a number of those decisions will require political leadership.
“What I’ve seen so far demonstrates the ability to take that political leadership.”
Liberal Democrat leader Nigel Ayre defended his party’s record, however.
“Only two months ago they laid out their new budget, splurging on new council officers and pet projects that were never affordable,” he said.
“Attention to detail is the bedrock of sound financial management.”
Cllr Ayre added: “Under the leadership of the Liberal Democrats over the last four years the council came in on budget, every year.
“Whether through the Covid pandemic, through the Liz Truss economy crash, through the sky-high inflation following the Ukraine war, without having to make the sorts of drastic in-year cuts that have been threatened, despite similar in-year pressures.”