Cuts to services are essential to avoid issuing a “legal notice” says the City of York Council’s finance executive.
This week, Birmingham City Council issued a Section 114 notice effectively declaring itself bankrupt.
The “difficult” cutbacks planned for York council are required if it is to avoid going the same way, said Cllr Katie Lomas.
This week council officers warned that “immediate action” must be taken following predicted forecasts that the City of York Council would overspend by £11.4m next year.
A published council paper said the local authority would “exhaust its reserves” if it did not reduce its spending.
York Labour has blamed inevitable cuts to services on the Liberal Democrats’ management of finances during its time in office with the Green Party.
While the Liberal Democrats took no time attacking Labour, suggesting it was due to the new administration’s actions since it won power in May this year.
Cllr Nigel Ayre, Liberal Democrat group leader, said: “Labour may blame inflation and other factors but the reality is that these service cuts and hiked fees are down to their mismanagement of the council budget.”
Tough decisions
But inflation is not the cause of the blame, according to the council’s executive member for finance Cllr Katie Lomas.
“Liberal Democrats have been living for years in another universe, ignoring the structural problems of the council that led to them plundering almost £5m of reserves and contingency funding last year, without which they would have failed to balance the budget,” she said.
“This kind of nit-picking highlights how deluded they still are about the major financial problems the council faces.
“It simply cannot continue to fund core services with reserves that will run out.
“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.
“The changes being made now are extremely difficult, but they are essential if the council is to avoid issuing a legal notice to say it can’t fund running its services in future, as other councils have done.
“York needed new leadership to take these tough decisions to put the council back on a sustainable financial footing, and that is what Labour will do.”
Significant overspend
Details in the City of York Council report read: “This is a significant overspend that is of serious concern and it is very clear that the council cannot afford to keep spending at this level.
“The general reserve is £6.9m and, whilst we have other earmarked reserves that we could call on if required, continued spending at this level would quickly see the council exhaust its reserves.
“Given the scale of the forecast overspend, immediate action is needed to bring spending down to an affordable level, both within the current financial year and over the next four years, to safeguard the council’s financial resilience and stability.”
Car parking charges will be increased by 10p an hour, which will raise about £145,000, and recruitment, agency, and overtime will be frozen where possible.
Other measures will be reviewed on September 14.