Braced for cost crisis
A COUNCIL is in a stable financial position but also braced for impacts of inflation and the cost of living crisis.
Calderdale Council’s new chief financial officer set out the council’s financial position to scrutiny councillors, indicating the risks it faces, the opportunities it has and preparations which have been made for a financial buffeting which is on the way.
Chris Forrester particularly outlined threats the council faces in the face of the cost of living crisis and expected high inflation, which could impact on revenue the council needs to run its services and the cost of goods, staff and services to complete its capital programme.
The authority had a stable base, with borrowing giving it some ‘wriggle room’ as so far the council had not borrowed substantial amounts of money, although it had relatively low reserves which it had used instead.
This meant Calderdale was better placed than some councils who had done the reverse.
But the authority relied heavily on its Council Tax receipts to fund its services and these were likely to be impacted.
“The council is very, very dependent on this for the service expenditure, so if we started to see a significant pressure on people’s budgets in the area in terms of bad debts, people defaulting it would have a real impact on the council,” he said.
A lot of work was being done by the council to pre-empt this, to identify people at high risk and work with them before it reaches crisis stage.
“It’s frequently not their fault they have ended up in that situation.
“We also put aside bad debt provision, so we’ve already made that provision, that has been increasing to try and take into account some of these pressures for people,” said Mr Forrester.
Mr Forrester said Council Tax in Calderdale funds ‘an awful lot of services’ – in the past it used to get revenue support grant which was much more significant and other grants from central Government.
If people really started to struggle with these financial pressures, and if there was not more central government intervention either through councils or directly to them, it would impact on the council’s budget position, he told members of the council’s Strategy and Performance Scrutiny Board.
Inflationary pressures will also affect capital projects – for example the cost of steel and concrete had gone up massively – although there is not much councils can do about that.
If the situation got really desperate, the council would prioritise schemes and shelve, at least temporarily, others where it contractually could – others would just have to be seen through, said Mr Forrester.
Another budget concern is the high proportion of its budget the council spends - much of this a statutory duty on social care, particularly for adults, and ways at trying to use funds more effectively will be explored.
The council would aim to grow its reserves where it could, close, monthly monitoring of budgets and ensuring agreed savings are met remained important and ongoing transformation in the way the council works, taking its staff with it on what needs to be a speedy journey, are among other targets, said Mr Forrester.
Councillors asked questions on a range of issues also including commercialisation, business rates and investments.
Mr Forrester, who has worked for Wolverhampton, Herefordshire, Bromsgrove and Redditch Councils, has experience in local government both in metropolitan authorities like Calderdale, unitary district councils and shared services.
He replaced Nigel Broadbent, who retired at the end of the last council year.