£1.4m overspend forces council to use reserves

The rocketing cost of housing, energy and interest rates has forced Gloucester City Council to use part of its reserves as the authority faces a £1.4m overspend this year.

The council says it is feeling the consequences of the wider economic impacts of higher interest rates and energy prices.

This has led to the council being faced with further financial challenges due to significant cost rises, higher levels of homelessness, and increased borrowing costs.

Civic chiefs are facing a forecast overspend of £1.1m in the planning and housing portfolio, £382,000 in culture and leisure services and the council is £362,000 over in its corporate and funding portfolio.

The key pressures affecting the council include temporary accommodation costs for the homeless which saw a £451,000 overspend in the first quarter of this year. It is expected to total 1.233m by the end of the financial year.

They say these costs have escalated as an increasing number of people are finding themselves unable to meet the cost of keeping a roof over their heads.

The council’s report, which was written before Aspire’s collapse, said the spike in energy costs and the cost of living crisis have led to the leisure provision.

They had an overspend of £292,000 in the first quarter and were forecast to be £675,000 over budget by the end of the financial year.

There has also been a drop off in income from planning applications as development costs increase and the boost of small planning applications caused by Covid home-working falls away.

The income for the first quarter was only 26 percent of what was expected causing a budget pressure of £86,000 in the first quarter. It is forecast to be £287,000 by the year end.

Increased interest costs relating to council projects is also forecast to cause a £362,000 pressure on the council’s budget. The council continues to hold an earmarked reserve balance of over £4m.

Opposition councillors say the Conservative administration’s financial management of the council has been unbelievably poor and fear the situation could be worse as the accounts have not been audited for the last two years.

Liberal Democrat group leader Jeremy Hilton (LD, Kingsholm and Wotton) said: “A large proportion of the council’s cash put aside for a rainy day has been blown in the first quarter of this financial year.

“Without urgent action to balance the books the council is set to overspend by 3.7% on its gross expenditure. There could be other surprises the administration is sweeping under the carpet.

“We know the Conservatives sleepwalked into the closure of the GL1 leisure centre and the Oxstalls tennis centre and the taxpayers of Gloucester cannot afford another financial disaster.”

The council is considering purchasing property to increase the availability of temporary accommodation and reducing the reliance on expensive hotel rooms. It has also applied to the Government for funding to meet the rising energy costs of heating the Barton and Twyver pools at GL1.

Councillor Declan Wilson (LD, Hucclecote) said: “The Conservatives have blown our emergency reserves, which have taken years to build up, in just three months. There is now a debit balance of £400,000.

“It leaves the council vulnerable to just one more financial shock and then we start cutting services just to balance the books. We need an explanation from the Conservatives.”

Deputy council leader and performance and resources cabinet member Hannah Norman (C, Quedgeley Fieldcourt) said housing is an issue they take very seriously and one of their statutory duties is to provide accommodation to those most in need is a daily priority.

“Although there have been some rises, the increase in numbers approaching us for accommodation has not been significant, but we have seen a rise in the cost of placements due to high inflation.

“This means that delivering on our duty is costing the council a lot more than it was a year ago.”

Planning and housing strategy cabinet member Stephanie Chambers (C, Quedgeley Fieldcourt) said they are always looking at innovative ways to improve housing services in the city.

“Gloucester is a vibrant and attractive city in which to live, but rent increases in the private rented sector, allied with cost of living challenges, have limited the availability of affordable homes for residents,” she said.

“We are always looking at innovative ways to improve housing services and are currently directing our resources to ensure we can implement a range of solutions for these challenges as quickly as possible.”