Colchester City Council’s Chief Executive, Pam Donnelly, has said today that the council is facing an unprecedented financial situation caused by post pandemic recovery, the cost-of-living crisis and spiralling energy costs.
The Covid pandemic created huge financial pressures nationally, which the city council is not immune to. The country has also been impacted by the war in Ukraine and a severe cost-of-living crisis, which is affecting businesses and residents across the city, including the council and its staff.
The council has an in-year budget gap of £450k due to pressure from increases in the living wage. Next year the council will need to make significant savings.
The council must transform its services and how it works to ensure it meets savings targets and continues to deliver services for residents. Quick and decisive action now will mean financial stability for the future.
Alongside a statement below from the Leader of the Council, Cllr David King, Pam Donnelly, Chief Executive of Colchester City Council, said: “The council has never faced a combination of spiralling costs and demand growth on this scale before. We are a high-performing, financially well-run council, however there is no doubt that we face a huge financial challenge.
“We have experienced more than 12 years of national austerity and cuts to our core budgets, which means there is no longer any capacity to trim from council services, and this limits the options in balancing our books, which we have a legal duty to do.
“This budget situation is one of the biggest challenges I and Cabinet colleagues have ever faced, and quick action must be taken to safeguard the financial stability of the authority for the future. Some of these proposed actions have now been set out publicly by Cllr King.
“We’ve recently made a £200k saving, by implementing a new management structure; we plan to use £1.7m from the council’s reserves, and we’ve identified other savings to help us through next year – but that will not be enough.
“Balancing the budget is not the only thing we need to do. We are also comprehensively reviewing every area of the council, leaving no stone unturned, in our drive to deliver modern services for a modern city, making sure we offer the best value for money for our residents.
“This will mean that we will look to deliver some of our services in a different way, working with our communities and residents to co-design service provision, where appropriate, in a community setting – putting residents and communities in the driving seat of what services they need and how they could be delivered. There is a lot of work to do in this area, but it is well underway.
“Over the coming months, we will see more transformation that will deliver multiple benefits. It will change how we deliver services and the way in which our staff will work, but ultimately it will put us on a secure financial footing for the next few years. The Leader of the Council, Cllr David King, has today provided an update on some of the action being taken and plans being considered to do just that.”
Colchester is not alone in dealing with these pressures. Most councils are facing the same problems.
Financial plans will be discussed at the council’s Scrutiny and budget meetings in January 2023.
Leader of the Council addresses financial situation
Following the statement above from Colchester City Council Chief Executive, Pam Donnelly, the Leader of Colchester City Council, Cllr David King, has provided an update on plans to address the unprecedented financial shortfall facing the council.
Cllr King said: “The fallout from the Covid pandemic, the impact of the war in Ukraine and a severe cost-of-living crisis are making life tough for many. Residents and businesses are feeling the impact of these unprecedented times. We, as a local authority, are no different. Despite being a high-performing, financially well-run council, we must fulfil our legal duty to balance the books.
“‘Three principles will guide us: We will take the decisions needed to ensure the long-term financial stability of the council; we will do all we can to preserve the services that residents need and value most, including help to those most at risk from the cost-of-living crisis, and we will recognise that the best decisions are made by working with others, with those most affected, including partners and our staff, and with all political parties.
“Some key decisions have already been taken. We have implemented a new management structure, saving £200k a year. But we will need to go further, to look for more change and cost reduction; to raise fees and charges in line with inflation; to stop staff recruitment for most services, and to use £1.7m from the council’s reserves to buy time for radical and deeper work.
“Councils up and down the country are facing the same massive increases in costs, due to spiralling inflation and the increase in the price of energy. Like them, we need Government to help or more councils will go bankrupt.
“Colchester will find a way, but we must close a budget gap in excess of £5m a year. It will be painful and it will require cost reduction and income raising, while we look at ways in which we can further transform our services – including our waste collection and recycling services – not just to provide financial stability, but to ensure we can continue to offer modern services for a modern city.”
The council’s financial plans will be discussed at the council’s Scrutiny and budget meetings in January 2023.