A senior Conservative has warned that speculation over Stoke-on-Trent City Council’s financial shortfalls is damaging to businesses and could deter inward investment.
Councillor Dan Jellyman says reports the authority may face a £25 million budget shortfall next year – and could potentially be heading towards ‘effective bankruptcy’ in 2025/26 – are far too premature and may lead to companies thinking twice about setting up in, or relocating to, the city.
Earlier this month, Daily Focus reported that city council chiefs were seeking urgent talks with Secretary of State for Levelling Up, Housing and Communities Michael Gove over plans to deal with the possible £25 million shortfall in 2024/25. That is on top of a £8.5 million deficit in the current financial year.
Conservative Group Leader Cllr. Jellyman said: “There was a decision made to release a financial report which effectively says there is potential for the council to go under in 2025/26
“How much damage is that doing to the city in terms of trying to attract private investment?
“As a council you need to grow the local economy to get more funds, especially under the current system and with spiralling costs.
“If you are a business looking at projects like the East-West precinct site – Etruscan Square – or considering developing Spode, you are looking at five to 10 years ahead for a return on investment.
“And the council has just said we might not be here in two years! Why would you bother to have discussions with the council?
“It is different if have to declare you are going bankrupt and there is no way out of it. That can’t be helped.
“But they are not saying that – they are saying we might go effectively bankrupt in two years’ time.
“That creates real uncertainty – you wouldn’t then as a company put millions of pounds into the city – you’d look at another authority instead.”
Cllr Jellyman added: “There are three areas of predicted overspend – adult social care, children in care and staff costs. I don’t think any of those are insurmountable they just require the right decisions to get to where we need to be. We need to radically transform services now to make them more cost effective.
“I’m happy to co-operate with the current administration to get things done. I sit down regularly with the Council Leader to discuss matters – I think that is the first time that has happened in the city since 2010. That’s positive because we all want things to succeed.”
Council Leader Jane Ashworth responded: “When Labour was elected we said right from the start we’d tell the truth. It’s better to tell the truth about the financial position than to pretend everything is on the up when it very clearly isn’t.
“Saying a council can go effectively bankrupt is a media term. A council can’t go bankrupt but you can impose severe measures so that only the most statutory services can happen.
“We are not at that position yet but that might be the outcome and that’s partly because since 2010 £250 million has been taken off our council budget, while demand for services has risen. So we are looking at all ways to deliver services in a more effective and efficient manner.
“That said, whenever we get the opportunity, we talk about the city being open for business. For instance, we have just set up a £325,000 powering up initiative which is supporting businesses with grant funding of between £10,000 and £50,000.”
