Health check reveals that Cornwall Council is facing serious financial problems
Last updated: 21/10/2009
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Cornwall Council has produced a detailed
“health check” into the finances of the new authority.
The aim of the financial health check, which
was commissioned by Council Leader Alec Robertson when he first
took office at the end of June, is to provide a detailed picture of
Council finances and the challenges the authority faces.
The report covers the first five months of
Cornwall Council and the first two months of the new
administration. “This report shows that the Council has
serious financial problems” said Council Leader Alec
Robertson. “We are facing huge challenges in the second half
of this year and we need to take strong action to avoid another
large budget deficit. We are committed to tackling the
predicted overspend and are taking rapid and robust action to
address these problems”.
Mr Robertson said that the Council had
identified four key objectives:.
1 - Manage the 09/10
budget
Unsustainable spending habits have led to
reserves being depleted and borrowing has increased. The
Council’s first major problem is the predicted budget
overspend.
“It is imperative that the revenue budget is
balanced as a first priority” said Mr Robertson. “To achieve
the balance it will be necessary to change historic cultural
spending attitudes. Good intentions are simply not good
enough; we need firm action.”
2 - Contain reserves and limit
borrowing
Reserves have been depleted and borrowing has increased. Although
reserves and borrowing are within accepted limits they will soon
become dangerous if the present spending continues.
“We must stop the habit of looking at reserves
or borrowing as an easy option” said Mr Robertson. “All
services should be financially responsible for their own
expenditures. Capital and revenue must be clearly aligned to
support the Council’s priorities.”
3 - Control capital projects
through robust challenge.
The new Council has inherited an ambitious
Capital programme of £200 million for 2009-10. Grants and matched
funding are normally to be welcomed but care must be taken, given
the state of the revenue account deficit.
“We must insist on robust business plans and
evidence of value for money before approving any capital projects”
said Mr Robertson.
4 - Exploit opportunities for
improvement
Opportunities offered from the unitary transition should not be
ignored. “We must clearly take advantage of evident opportunities
to improve but only within the constraints of the first three
objectives set out above.”
Mr Robertson said that as well as the current
financial challenges facing the Council, the global economic crisis
meant there would inevitably be major cuts in public sector
spending over the next few years. “We need to tighten our
belts and ensure that we spend every single penny of council tax
payers’ money wisely” he said.
Adding that the Council was drawing up an
action plan to identify the key areas for making savings, Mr
Robertson said this would involve a series of measures which were
designed to cut overall costs whilst protecting frontline
services. These will range from re-negotiating existing
contracts to ensure that the Council is receiving the best value
for money to reviewing recruitment in all areas.
Story posted 20 October 2009.
Useful links
Council budgets and spending
Financial
Health Check Report August 2009