Derbyshire County Council on brink of bankruptcy

Derbyshire County Council has declared a halt to non-essential spending and imposed a hiring freeze in response to a severe budget shortfall of £46m.

On Thursday, September 21, the cabinet will review a report that explains the financial challenges they are facing this year.

These challenges are mainly due to external factors like high inflation, which has caused costs for fuel, energy, and materials to go up. Additionally, the council has seen a big increase in demand for their adult social care and children’s services.

The expected pay increase for their staff in 2023/24, which is determined nationally, is putting a significant strain on their local council budget. The Cabinet report projects that they could overspend by approximately £46.4 million in 2023/24.

It also highlights that they’ve used a substantial portion of their reserves in recent years to balance their budgets. As a result, their reserves have dwindled, leaving them with less money for unexpected expenses and emergencies.

Over the past 13 years, the council has implemented £300m worth of reductions to ensure budget stability. Furthermore, for the current financial year, they are reducing £16m and they have already outlined plans to cut a total of £46.7m over the next five years.

Several of the council’s services fall outside of mandatory obligations. These include managing a museum, like the currently closed Buxton Museum and Art Gallery due to essential building repairs, aiding voluntary organisations, and providing financial support for bus routes.

In June, the council announced plans to potentially sell its 156-year-old Matlock headquarters for conversion into a hotel. In July, it revealed the closure of all 10 Chesterfield area offices, considered reducing opening hours, and the possibility of introducing charges at household waste tips, while in the same month, the council paid £56.93m to settle the contract for the unsuccessful Sinfin Waste Plant.

The council is reviewing expensive placements, including schools and support for children with special educational needs, in search of more cost-effective alternatives. This decision follows three cases in July where the council had to compensate families nearly £27,000 collectively due to their failure to provide adequate support.

Council leader Barry Lewis said: “The reality is that the financial pressures we are facing, along with other councils and households, are now greater than ever experienced before, with most of these pressures being simply outside our control. We’ve been taking many measures over the past few years to make sure we carefully control our costs, such as vacancy control measures, but now we need to do much more.

“But despite this intense pressure on our budget, we are ambitious for Derbyshire, committed to supporting people through the cost-of-living rises, helping to drive our local economy, working towards a devolution deal and working with partners to get the best value in all that we do.”