Yesterday Guildford Borough Council adopted the Liberal Democrat administration’s balanced 2024/25 budget and a revised Medium Term Financial Plan. The budget, which included a 150% increase in the size of the hardship fund for struggling residents, was opposed by Conservative and R4GV councillors.
As a result of the balanced budget the council has avoided bankruptcy for the current and upcoming financial years and is now on a much sounder financial footing than when the Lib Dems took majority control just nine months ago.
The Lib Dems, now with a full team of councillors committed to working constructively together and with responsibility for all portfolio areas since being elected in May 2023, found they had inherited a perilous set of council finances. Capital project borrowing dating back to pre-2019 was severely impacted by the high inflation and interest rate catastrophe that was the economic disaster caused by the Conservative government under Liz Truss.
Having avoided what is known as an S114 notice (effective bankruptcy) last October for the current financial year, the council executive knuckled down to tackling the £18 million shortfall they found in the Medium Term Financial Plan and have reduced it to just £2 million over the next four years, with a plan in place to reduce it to zero.
Leader of the council, Julia McShane spoke with cautious optimism about the results of nine months of hard work.
“In October last year we avoided effective bankruptcy when our administration was able to produce a balanced budget for this current financial year. Now, after months of work by my colleague Cllr Richard Lucas and the finance team led by GBC’s S151 (finance) officer we have seen our revised Medium Term Financial Plan and our proposed balanced 2024/25 budget voted for by a majority of councillors. The good news is that this will allow us to start rebuilding council reserves and has mitigated the risk of an S114 notice for the term of the Medium Term Financial Plan.
“We have shown that Guildford Borough Council and its finances are safe with the Lib Dems. We will always put residents first, especially those who need our support, as we promised in our manifesto. We are prepared to take tough decisions to balance the books and we will always be transparent and honest, even if this means we have to face criticism from those who wish to see us fail.”
The council meeting also saw an amendment proposed by opposition councillors to reduce the planned increase in council house rent by 2.7%, but this amendment was rejected by councillors after they were warned that it would reduce income to the housing fund by £8.75 million over the next ten years. Liberal Democrat councillors also pointed out that the previous year’s rent increase had been less than half that of inflation, and that a modest increase this year was necessary to ensure the housing budget had the funds to pay for building new council houses and upgrading existing houses to lower energy bills for tenants.
Cllr Richard Lucas, Lead Portfolio Holder for Finance, has worked alongside the finance team at the council to ensure that the debt portfolio can be managed long-term and that key services to residents, especially the vulnerable, have been protected, whilst at the same time making sure that the longer term future of the council is secure.
“We have pruned the capital investment plan by nearly £100 million but without cancelling any investment required on our existing properties. We are looking at an asset disposal plan of £50 million worth of property sales over the next 2-3 years to reduce our capital borrowings whilst ensuring that any building required for service provision is protected from sale. We have also increased the rigour of how we manage interest payments on large schemes.”
“The Lib Dems now in overall control have been able to do a deep dive into the finance portfolio and were concerned to find poor reporting processes and a lack of investment in skills and capacity for a new finance IT system, meaning that service heads were in the dark when it came to knowing what state their budgets were in at any moment. We have fixed that and, even better, the new monthly financial monitoring reports are now published on the GBC website so that residents can see for themselves exactly what the council is doing with their money.”
Cllr Julia McShane added: “I would like to thank the residents of the borough who elected us with a majority to lead the council in May 2023 and I hope we have shown they were right to put their trust in us. We are the right people to ensure our borough is well run on both a financial and an organisational level. I am proud of our Lib Dem team of councillors and the core values we share. We are committed to protecting services especially for those most in need of support. We pledge to continue our tireless dedication in putting our residents first.”