Cheshire East stares into financial abyss after HS2 blow
The authority fears it could go bust like Birmingham and Nottingham City Councils if the government does not reimburse the £11m the council spent preparing for the high-speed rail project.
In October, Cheshire East Council called on government to stump up for the money wasted on developing plans for an HS2 hub in Crewe, describing the local impact of the decision to scrap the scheme as “devastating”.
Now, a report published by the authority states that the financial impact of pulling the infrastructure project could force Cheshire East to issue a Section 114 notice.
Local authorities cannot go bankrupt like normal businesses, instead they issue s.114 notices when running costs exceed income.
In recent weeks, both Birmingham and Nottingham City Council have issued s.114 notices amid calls from councils across the country for a new deal between local and central government to rectify years of cuts. Yesterday, the government announced it would increase the revenue support grant available to local authorities by 6% next year.
A recent survey by the Local Government Association found that one in five council bosses fears their authority could go bust.
Cheshire East fears it could be one of them. The report states that the £11m spent in expectation of HS2 comprised £8.6m of borrowing and £2.6m of revenue, expenditure it must write off in line with local government accountancy regulations.
“The abortive costs are material in relation the council’s forecast levels of reserves. The requirement to fund this expenditure from revenue could therefore trigger a s.114 notice as the council could be placed in a position where there are insufficient funds, and inadequate reserves, to manage in-year expenditure.”
Cheshire East Council was contacted for additional comment.
Cheshire East was set to benefit from HS2, with up to 7 trains per hour proposed to call at Crewe station.
The council claims HS2 would have been a “catalyst for growth and regeneration”, unlocking 4,400 new homes and 5,000 new jobs in Crewe and adding £750m a year to the local economy.
But Cheshire East is a Tory council? I thought it was only Labour councils that went bust
By Tory fibs
HMG pulling the plug on HS2 north and therefore actually levelling the north down to the tune of £60/70billion as HS2 south and then not reimbursing council monies spent in preparation is actually a double blow in levelling down. A Blue Westminster will NEVER spend money on wales or the north. A Red Westminster ‘might’ spend money on Wales and the north.
By Anon
One thought – maybe the Council could speed up the conclusion of planning and legal -related processes associated with schemes that have secured a planning permission. The sooner they are built the sooner the Council will get its Council Tax (if residential) or the opportunity they have to retain business rates growth (with commercial).
By Anonymous
@Tory fibs (December 06, 2023 at 12:44 pm)
Whilst the Tories remain the largest group on Cheshire East Council, with 33 of 82 seats, the council has been run by a minority Labour-led administration since May 2019.
By and by
Cheshire East is Labour and been so for a few yrs now, hence its spend policy.
By Norbert Drongo
@Tory Fibs Cheshire East hasn’t been Tory since 2019. Nearly 5 years ago…
By John Smith
@Tory fibs: maybe do some research before you post! 3 people have stated now it isn’t Tory led! I was starting to comment saying the same so it would have been 4!
By Anonymous
Maybe if CEC didn’t spend so much money on things which are still over a decade away then they wouldn’t be trying to claw the money back! They need to get the rest of their house in order as well. I submitted a highways complaint back in August, only got a response last month saying they will respond within 20 working days!
By Cheshire East Resident
CEC are the only ones to blame for the wasted money. Ridiculously ‘pie in the sky’ plans for a new station when HS2 was only planning to add one extra platform and extend another. HS2 were investing in a tunnel under the whole of Crewe so the majority of trains would have bypassed the station anyway. How much was wasted buying B&Q car park and designing a laughable road bridge between weston road and gresty road? They should have been focused on spending money to improve current local facilities and services rather than dreaming of a new world 10 years hence
By Anon
CEC by far the worst planning department i have to deal with. If they made some decisions they will save a fortune on appeals and costs.
By MJ
When did the work the £11m was spent on start?
By Levelling Up Manager
£11.0m is not going to stop the LA going under. Its just a scapegoat for continued mismanagement. Perhaps all senior managers should take a 50% pay cut!
By Anonymous
Its the very cost of providing social services that is causing Councils to overspend on budgets
By Reality
Most councils are on the edge it doesn’t take a lot to tip them over , so HS2 a big issue for them . There have been two conservative councils which have issues 114 notices . But not surprisingly more labour councils under pressure cos they have faced significantly higher cuts in grant than conservative councils and have higher demands from deprived communities. One other things lots of house builders have invested hundreds of millions in this area on the. Promise of HS2 …they will not be happy !,,
By George
CEC don’t live in the real world. How did they think passengers would get from Crewe station to the town centre? They are very good at wasting council tax payers money. Do they not have a finance system to check where OUR money is going?
By Cloud cuckoo
Did Cheshire East have a contract with the Government. Sounds like they didn’t
By Anonymous
On many occasions over the last 10+ years, CEC have been warned by Mid Cheshire Against HS2, of the folly and likely outcome of HS2. It all started with CEC competing with Stoke City Council for ‘the station’. Not one penny of Council Tax payers money should have been spent on HS2, particularly when not one penny of private finance has ever been raised for the project, resulting in the the whole project being tax payer funded by central Government, with the exception of course of the local authority contributions, (which in the case of Cheshire East, is reported to be £11m) that the DfT, HS2 Ltd and the Government, have ‘hoodwinked’ out of them. We should all be very, very glad that HS2 Phase 2 has been cancelled, so that CEC cannot waste any more of our money on this ill-fated project, as they most surely would, if it had not been cancelled.
By Anonymous
Shame on the Tories yet again
By Anonymous
When Cheshire’s local government was reorganised in the late 2000s, they should have created three unitaries instead of two (a south, and east and a west so as to coordinate with Manchester, Merseyside and North Staffordshire.
By Rye&Eggs
HS2 is still very much needed and when the current shower of incompetents in government are voted out, I fully expect to HS2 phase 2 to be reinstated. CEC were absolutely right to start to buy land in anticipation of HS2, if they hadn’t they would have been pilloried for paying well over the current market rate when land costs rise closer to the time. With the HS2 phase 2 bill proceeding through parliament, there was zero indication the project would be cut up until a few weeks before the Tory part conference. The decision to cut it was is a purely political one and NOT informed by engineering or even cost. The problems CEC are facing were 100% created in Downing Street.
By Anonymous
Now is the time for a ‘fire sale’ of B & Q site adjacent to the station, that the council bought for £22.3 million in 2019 – most sustainable location for their new hospital
By Concerned Resident & Academic
they need to sell westfields and all the land and buildings in crewe that they bought with local council taxpayers money now to clear the debt.
By the works