Mark McLaughlin delivered his stinging criticism in issuing an unprecedented second Section 114 notice this morning prohibiting any new expenditure, which was agreed with the two government-appointed commissioners overseeing the council’s finances.
Mr McLaughlin - who only joined the council in December and will leave at the end of this month after resigning - also suggests that ‘unachievable savings’ were ‘knowingly adopted’ as part of the 2017/18 budget.
Now the crisis-hit county council faces a potential budget shortfall in this current financial year of £60-70m. Finding such savings will ‘go beyond cuts to staff pay and numbers’ because ‘no immediate remedy is available’. This means that services for vulnerable children, young people and adults are likely to be hit.
The Section 114 notice for 18/19 follows the first being issued back in February for 17/18, which was believed to be the first instance of such a notice being ordered in two decades. With this latest update, it appears the stricken authority is again in uncharted territory for local government.
In a letter to councillors, Mr McLaughlin says the first Section 114 was ordered to avoid an ‘unprecedented negative General Fund balance’.
He writes that this position is still at risk, largely because of the need to account in the present day for ‘poor or ill-advised decisions taken in the past; in setting and managing the budgets in 2014/15, 2015/16, 2016/17 and 2017/18.’
He adds: “In terms of the approach to financial decision-making that had been adopted by the county council, it was clear that this was factually wrong, ill-informed, out of step with other public sector organisations, and inappropriate for informing the decisions made by a large public sector organisation with such serious responsibilities.”
Mr McLaughlin criticises the use of reserves for day-to-day expenditure, maximising the use of capital receipts and for ‘assuming a future review of local government finance would result in fairer funding’. He says that difficult decisions ‘were put off in this expectation, with the gap between income and expenditure met through one-off interventions’.
And the cash crisis goes beyond this financial year, as the forecast for the 2019/20 budget is ‘equally stark’ says Mr McLaughlin.
He adds: “At the present time the forecast need for further savings, on top of those required in the current year, is in the order of £54m. Meeting this challenge will require a depth of insight, perspective and leadership that was not apparent in the setting of the 2018/19 budget.”
An extraordinary Full Council meeting will now take place on Wednesday August 1, with a further meeting later in the month specifically to discuss the Section 114 notice.