Derbyshire County Council could stop non-essential spending amid £46m debt

The council was already looking to sell off its 156-year-old Matlock headquarters

Derbyshire County Council could stop all non-essential spending and implement a recruitment freeze as a £46m budget black hole brings it to the "edge of bankruptcy".

It said the overspend had prompted "very painful" budget decisions.

Despite making £300m in savings in the past 13 years, its reserves have dropped to a "minimum level".

The authority blamed rising costs, including general inflation, and greater demand on services.

It has also faced "significant" extra pressure from a national pay award for staff.

With more than 30,000 staff, the council is Derbyshire's biggest employer and currently has 346 job vacancies advertised on its website.

A report to cabinet said the authority had used nearly £30m in reserves to meet next year's budget, on top of £55m to meet last year's.

The £28m left was considered to be the minimum level of general reserve for an organisation of its size.

The news comes after Birmingham City Council, Europe's largest local authority, declared itself effectively bankrupt.

Many of Derbyshire County Council's services are not statutory - meaning it does not legally have to provide them.

A freeze on all but statutory services may be issued if the authority cannot meet a balanced budget or if its reserves fall to "unacceptably low levels".

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The report recommends "significant actions" to cut Derbyshire's overspend, including potentially stopping or deferring projects, introducing vacancy controls, reducing expenditure on agency staffing and introducing expenditure controls across non-staffing budgets.

In an email seen by the Local Democracy Reporting Service, managing director Emma Alexander confirmed the recruitment freeze, saying that using reserves was "not a sustainable solution".

In a statement, Conservative council leader Barry Lewis said the authority had been taking steps to control costs but now needed to do much more.

"We are continuing to lobby the government for extra funding so that we can continue to run vital services to those who need them most, but we also recognise that even more difficult decisions will be needed to be made to try to balance the books," he said.

"This is a position that no-one who goes into public service ever wants to be in."

Deputy leader and cabinet member for corporate services and budget, Simon Spencer, said: "We'll continue to work hard to identify more ways to improve efficiency and realise savings while prioritising essential services for residents and supporting the most vulnerable people.

"But there's no doubt very painful decisions will lie ahead."

'Very worrying news'

Joan Dixon, leader of the council's Labour group, said: "Thirteen years of local government funding being cut to the bone by the Conservative government, combined with six years of financial mismanagement by the ruling Tory group at Matlock, have brought Derbyshire County Council to the edge of bankruptcy.

"Ultimately it will be the people of Derbyshire who will suffer with cuts to their valued and needed local services."

The report will go before cabinet on 21 September.

A spokesperson for Unison East Midlands said: "This is very worrying news from Derbyshire County Council and for their hard-working and dedicated workforce.

"The recruitment freeze, along with an already sizeable number of job vacancies at the council, will inevitably lead to already-stretched staff taking on more work and stress."

Finbar Bowie, of trade union GMB, said: "Workers at Derbyshire County Council deserve urgent answers.

"Why have the council's political leadership let the situation decline to this point and when did they become aware of the scale of the problem?"