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Ref: 387/07 15 October 2007
Split Cheshire Would Face ‘Appalling Financial Legacy’ - Government Told
Splitting Cheshire into two unitaries could cost council taxpayers a staggering total of £103m extra in just five years.
The ‘appalling financial legacy of partition’ was revealed today (Tuesday) in Cheshire County Council’s comprehensive analysis of the Districts’ case bound for Government when finalised.
It follows news that Chester City Council - the bidding authority advocating a split county – has withdrawn support for its own bid.
After considering a damning report from Deloitte - its own independent financial consultants - the council’s Executive agreed that its financial response was “over optimistic,” and could have an unknown impact for the new authority.
“There is now an overwhelming weight of evidence both from the results of our own review and those of Deloitte - that the two unitary submission will fail the Government’s affordability test “ said County Council leader Paul Findlow.
“There is hard evidence that the financial case for splitting Cheshire is seriously flawed and could have grave consequences for our council taxpayers and services.”
Deloitte found that only 5 out of 23 categories of cost or savings were considered to be of normal risk with everything else ‘intermediate or high’. Most areas of costs or savings in the district councils’ case posed an ‘adverse or significantly adverse‘ level of variance.
And the County Council’s scrutiny of the district’s submission suggests that far from saving £30m a year it could actually cost £11m annually. When combined with transitional costs of around £33m and other factors, it adds up to an estimated £103m over five years.
County projections show that the districts would not have enough money to pay for their proposals and maintain a safe level of reserves. In fact the two proposed unitaries risk running out on money by 2009-10.
Peter Nurse, Deputy Leader of the Labour Party said: “This would be an appalling financial legacy to inflict on the people of Cheshire – a legacy that can only be paid for with increased council tax, reduced services - or both.
“The Government must look at these figures very closely indeed.“
Other major omissions exposed by Deloitte and the County’s analysis included proposals to compensate parish councillors; the full cost of making claimed redundancies, harmonisation and introduction of new ICT systems and the assumption that disaggregation of well-established services will cost nothing.
And reliance on existing budgets for accommodation, ICT, communications, closedown of authorities, transfer of existing contracts and elections is at best imprudent and at worst naïve.
The Deloitte report not only agrees that a zero assumption for ICT is ‘high risk’ but stresses that £4m worth of savings are vulnerable without up front ICT investment.
Lib Dem leader Councillor Sue Proctor said: “This is the third unsuccessful attempt in nine months by the districts to justify a suspect and in some respects, credulous financial submission.
“It speaks volumes that Chester, the bidding authority, have withdrawn support for the financial case and decided to voice their concerns to their former partners - just three out of the seven Cheshire authorities.“
Ends
IC/LJ
Note To Editors: For further information please contact Councillor Findlow on 01625 828004, Councillor Nurse on 01270 624154 or Councillor Proctor on 01244 335943.
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