Council faces ‘tough’ decisions to avoid bankruptcy

The local authority warned it must find another £60m of savings by 2027

A city council has warned it is being forced into “tough” decisions to avoid following others into effective bankruptcy.

Although Newcastle is not at imminent risk of going under, proposals to cut spending by another £15m over the next year have been signed off by the Labour-run authority's cabinet.

It will see council tax bills jump by the maximum 4.99% allowed, increased charges for parking and bins, and cuts to some crisis support teams.

The local authority warned it must now find another £60m of savings by 2027 due to rising costs and surging demand for social care services.

'Effective bankruptcy'

Councillor Paul Frew, the authority’s cabinet member for finance, told the Local Democracy Reporting Service: “We are not in section 114 consideration. But we need to make decisions now so that we don’t get into that situation in the future."

Local authorities including Birmingham and Nottingham have already had to issue section 114 notices, blocking any new spending commitments and effectively declaring bankruptcy, while the likes of Middlesbrough have asked for emergency government funding to avoid doing the same.

Newcastle City Council has cut £369m from its budgets under austerity measures since 2010.

The council’s latest budget proposals, which are due to be given the final sign-off in March, include:

• A council tax rise of 4.99%, including a 2% precept towards the cost of adult social care, amounting to a yearly increase of between £63.85 and £191.55 depending on your house’s banding;

• Ceasing the council’s crisis support service, which has a £100,000 annual provision to help people suffering emergencies through circumstances including domestic violence and financial abuse;

• Reducing a subsidy for the city’s school meals service by £537,000 and charging schools an extra 50p per meal;

• Higher charges for wheelie bins, garden waste collection, parking permits and car parking;

• The loss of 40 council jobs, including 20 currently vacant posts.