COVENTRY MESSAGE BOARD

Richard Brown said increased social care costs and inflation had affected the authority's budget



Coventry City Council has said it could effectively declare itself bankrupt next year without additional funding from the government.

Richard Brown, the cabinet member for finance, said the council had forecast a £30m budget shortfall.

He added increased social care costs and inflation had affected the budget.

It would mean the Labour-run council would only deliver services it has to by law, such as education.

Labour councillor Mr Brown said issuing a Section 114 notice (where a council cannot commit to any new spending) could be avoided this year.

He said the government had offered a settlement of 3%, but the amount would not cover "anywhere near what the gaps are".

The BBC understands councillors have already discussed money saving options such as cuts to street lighting, the introduction of garden waste collection charges and increased ticket prices for events like the Godiva Festival.

When asked about these options, Mr Brown said "everything is on the table".

He claimed the council had been historically underfunded and had received £120m less each year since 2010, putting it among some of the most poorly funded in the country.

But the government disputed that, suggesting the council received an increase in spending power of up to £30.5m last year.

A statement from the Department for Levelling Up said: "We stand ready to speak to any council that has concerns about its ability to manage its finances or faces pressures it has not planned for."

Across the border at in Warwickshire, the Conservative-lead county council is facing a likely budget shortfall of £12m, which could be as bad as £106m in a worst-case scenario.

Coventry council spending decisions criticised amid financial woes



Coventry City Council's opposition leader has criticized the authority's spending decisions after news it could effectively go bust next year without extra funding. Cllr Gary Ridley criticized decisions worth millions made over Coombe Abbey, Tom White Waste, Birmingham Airport and the City of Culture as 'dubious'.

But he also said inflationary pressures are causing many of the wider problems UK councils are facing right now. And the Conservative group leader called for a change to how councils are funded so they can plan more easily for the future.

It comes after reports yesterday (3 October) that the Labour-run city council could issue a Section 114 notice, effectively declaring bankruptcy, next year without more government help. Cllr Richard Brown told the BBC social care and inflation costs had hit budgets and said the authority faces a £30m gap which won't be covered by a planned government settlement of 3%.

Commenting on the news, Cllr Ridley said: "We’ve seen reckless spending from Labour locally with subsidies for Coombe Abbey, Tom White Waste, Birmingham Airport, the City of Culture and other dubious spending decisions. "It’s also clear they are now faced with a massive bill for equal pay claims as a hangover from their failed deal with the unions on bin strikes.

"However, it’s clear there’s a big problem in local government right now which is largely driven by inflationary pressures. "The one thing government should do is to move to a multi-year financial settlement.

"This would give local authorities greater flexibility to respond to sudden shocks and to plan further into the future. "As a member of the Local Government Association, I have been making that case, along with other leaders, for some time now."

Coombe Abbey hotel and Tom White Waste were bought by the council for millions of pounds in 2017 and 2020. The sites have also had significant loans - £5.8 million to Coombe Abbey as of 2021 and £22 million for a new recycling plant approved to Tom White Waste last year.

In 2021, Coventry City Council made an emergency loan of £5.7 million to Birmingham Airport as part of a £32.8m package from Midlands councils that have shares there. And last October the council loaned £1 million to the City of Culture Trust - a figure that had to be written off when the trust collapsed in February.

A Department for Levelling Up spokesperson said councils received a boost in core spending power of 9.4% last year, including £30m for Coventry, and they were ready to speak to councils concerned over finances.