Cumbrian council facing 'severe' financial pressures

A Cumbrian council faces "severe" financial issues and requires immediate government support, according to a new report.

Copeland's local authority has been scrutinised by The Chartered Institute of Public Finance and Accountancy (CIPFA) Accountants for the Department for Levelling Up, Housing and Communities.

They have stated that the council is at risk of a Section 114 notice, which would mean it cannot spend money as the budget for this exceeds reserves.

The report says that for the next financial year there is a forecast budget gap of £4.2m.

In addition, the report states that the council will have to make heavy use of its financial reserves.

Reasons behind the financial situation include a cyber-atttack in 2017 and a successful appeal on business rates made by Sellafield two years ealier, which cost the authority £13m.

The report calls for the authority to change its approach to financial management and will have a greater chance for financial stability once local government reform is completed in Cumbria.

The review was carried out because Copeland requested extra financial support from the Government for the next two financial years.

Kemi Badenoch, the Minister of State for Equalities and Levelling Up Communities, has written to Copeland's Mayor, Mike Starkie, asking for a response from the council in the next month.

Mr Starkie added: “The council has a long history of poor financial management and staff retention. This was something I overhauled when I came into office and unearthed a £13m black hole in the accounts.

“A significant chunk of this was a result of the successful Sellafield Ltd rates appeal, for which the council had not made adequate provision. We flagged then to the government we were within days of bankruptcy and at that time had £2.9m written off by government to keep us afloat.

“This was followed in 2017 by a devastating and crippling cyber attack which took the council systems down for 12 months. This added to the financial pressures on top of the loss of the £3m a year revenue support grant."

He pointed out that many changes had been introduced since his election, including the building up of reserves and the end of a Private Finance Initiative situation.

Mr Starkie said: “We have been in constant dialogue with the government, explaining that we need exceptional financial support. The government will provide this by allowing us to capitalise as they recognise the huge improvement in the financial management in the borough. They are helping us to help ourselves in our last budget before local government reform.

“Despite the financial pressures the council has faced over the last six years, we have made no cuts at all to services. We have improved many services, and kept council tax and increases to the fees and charges below the rate of inflation. There’s been a clear determination that the financial burden was not passed to our residents.”

The report can be read in full here.