Leader vows Leicestershire County Council will not declare 'bankruptcy'

Leicestershire County Council leader Nick Rushton said its finances were more stretched than any time in the last 18 years

Leicestershire County Council's leader has vowed the authority will not declare effective bankruptcy despite facing its "toughest ever budget".

The council had already identified £76m worth of savings for over the next four years, but still needs to save a further £85m to balance the books.

Leader Nick Rushton said it was in its worst ever financial situation.

But he does not believe declaring effective bankruptcy, via a section 114 notice, would improve the situation.

He said: "All years have been bad since I've been leader and this is the most challenging.

"Not only have we this year had to use £10m of reserves, next year we're projecting [using] £12m reserves and then it gets exceedingly difficult moving forward.

"When you see the numbers, we will have to make some radical decisions. And of course, we'll also have to put council tax up by the maximum allowable."

The council has used £10m of reserves this year, according to Mr Rushton

Mr Rushton told the Local Democracy Reporting Service high inflation rates had put pressure on the council's budget and the national living wage increase announced in Chancellor Jeremy Hunt's Autumn Statement had also cost an extra £20m the authority was not expecting.

He added: "The problem is I've got no more income.

"I can put council tax up by the five per cent, but that amount only covers the national living wage increase.

"So all the other demands - in adult social care, children's social care, highway construction inflation, staff shortages - we get no more money for that.

"It's really difficult as a county, when your expenses go up with demand and yet your income is controlled by the government."

The council has had to invest an extra £127m into social care to keep up with rising demand and also tighten controls around recruitment, procurement and other spending.

It is also expected to lose 200 jobs over four years, but staff turnover means the number of compulsory redundancies will be lower.

'No magic money tree'

However, Mr Rushton said he firmly believed declaring effective bankruptcy via a section 114 notice would only make the situation more difficult.

"Declaring a section 114 does not solve anything," he said. "All it does is send unelected accountants and commissioners in to deal with the problems that you have not dealt with.

"They don't come with any money. There's no magic money tree that comes with commissioners. Otherwise a lot more councils would call commissioners in."

He added: "Also, to be honest, it's about prestige and reputation. To say we're bankrupt, it destroys your reputation with the government, it destroys your reputation with members of the public who elect you and expect you to run a balanced budget.

"That is why we will not do it. We will make the decisions necessary to ensure that our budget washes its face. It's pride, it's principle.

"We're going to do our best with the money we've got to provide the best service we can and not declare ourselves bankrupt, but it will necessitate tough choices. There's no point beating around the bush."

The plans will be discussed by the council's cabinet on Tuesday, with a consultation running to 17 January and final decisions made on 21 February.