Labour rebuff Tory claims council heading towards bankruptcy

CLAIMS Warrington Borough Council is heading towards bankruptcy without “urgent action” have been rebuffed by Labour’s finance spokesperson Cllr. Denis Matthews who accused opposition Tories of being “irresponsible” with their insinuations.

He also said it was time for the Warrington Conservative Group to accept a little responsibility for their Government’s actions after 14 years in their handling of the local government sector.

It follows a statement from Tory finance spokesperson Cllr. Ken Critchley saying the Warrington Conservative’s view was that the Council is heading towards a section 114 notice (Bankruptcy) unless urgent action is taken is now appears to be supported by the Council’s own risk assessment.

He said Warrington Borough Council’s own Strategic Risk and Insurance Report presented to the Audit and Corporate Governance Committee on the 18th January, concluded that the likelihood of an unstable financial position for the council
had become probable and the risk consequences of this were a section 114 notice, DULUC intervention, Breaches of Statutory requirements and reputational damage.

When pressed during the Audit and Corporate Governance Committee meeting on the risk, he said officers responded that, the risk reflects the situation that would arise if Warrington were not to take further action to address.
They went on to say, they would plan to take action to address, but it was wrong to say it could never happen because decisions that need to be made, may not be properly taken in time.

The Conservative group is now demanding to know what are these further actions, how quickly can they be implemented and what credibility should we place upon their delivery in time to avert the probable risk of an unstable financial position for the council with its catastrophic consequences for the people of Warrington.
The Conservative Group have long called for the council to divest of its poorly performing investment portfolio, in particular a property portfolio that is delivering an approximate a 1% net return.
They are renewing those calls for the council to dispose of its poorly performing assets and use the proceeds to rapidly reduce the debt and supplement its dwindling reserves with the premium that can be generated from the repayment of those loans.

Cllr Critchley said: “This Labour Led council needs to be open and transparent regarding the reality of its investments and the consequences and effects of the actions it now needs to take to avoid a section 114 notice (Bankruptcy)
“In our opinion, the council has dithered for to long and only now that the reserves have spectacularly dwindled and the prospect of a section 114 notice has become probable, they are finally considering the necessary actions.
He added: “The Labour leadership of this council has racked up a debt of £1.8 billion the third highest debt per head of any council in the country.
“It has continued to invest in its vanity projects, without apparent regard for the reality of its financial position.
“The meagre returns, it has made on its investments, appear to have delayed the necessary efficiency savings that should’ve been delivered years ago to stabilise the council’s finances.
“Let us hope it is not too late for the Labour leadership to wake up to the reality of the situation they have created and take all necessary steps to avoid a section 114 notice, which would be a catastrophe for Warrington a catastrophe that would sit squarely with the Labour administration.
“In our opinion, the starting point must be the disposal of the council’s poorly performing assets, a rapid reduction in the debt level and the use of the early repayment premia to shore up the rapidly diminishing usable reserves.”

In response to the bankruptcy claims, Cllr Matthews said: “It would appear that the Warrington Conservative Group believe that the conduct of our town’s finances operates within a vacuum.
“They seem to have forgotten that their party, under five different prime ministers since 2010, is in power.
“It would seem they are unaware that the core spending power available to councils, even after the recently announced uplift, is still 10% lower than in 2010/11.
“There seems to be a lack of acknowledgement that Warrington Borough Council has faced cuts of more than £200 million, as a direct result of the Conservatives.
“When the Local Government Association and numerous Conservative MPs are writing to the Chancellor calling on the government to act to support councils, I find it difficult to understand how the Warrington Conservative Group struggles to see the cause and consequence of Tory government actions.
“In 2010 WBC received £70 million in Revenue Support Grant Funding whereas we now receive less than £2 million every year. This helps to make Warrington the 6th lowest-funded council in the country.
“Let me again be clear. We are not in a position where we will need to issue a Section 114, despite the Council facing budget challenges caused by the negligence of successive Conservative governments.

“The sound management of council finances is of utmost importance, and our plans and actions will ensure our budget remains as stable as possible into the future.
“The Strategic Risk and Insurance Report Quarter 2 (2023/24), presented to the Audit and Corporate Governance Committee on 18th January, highlights the financial pressures being experienced across the local government sector. Indeed, it would be unacceptable if the risks faced by the Council were not clearly identified and reported upon.
“Local Conservative calls for a fire sale of the town’s investment assets only serves to make our medium to long term financial position less secure. The £23 million profit that these investments generate each year help to support the councils budget, and ensure further Tory austerity is not required for the people of Warrington.
“It is, in my opinion, irresponsible of Warrington Conservatives to insinuate that the Council is heading towards effective bankruptcy.
“After nearly 14 years of Tory failure in their handling of the local government sector, surely it is time that the Warrington Conservative Group accepted a little responsibility for their governments actions.”