A Statement issued on behalf of our Chief Executive Tom Horwood and Section 151 (Finance) Officer Peter Vickers
Today we have published a report that sets out the council's financial position. All district and borough councils face severe financial challenges in the next few years. This is because of:
- increased demands for services
- the state of the UK economy
- high inflation and interest rates
- a succession of government funding reductions over many years
Our challenge is greater and more urgent than most. This is due to our legacy of ambitious decisions to support infrastructure and regeneration. This has increased our need to finance the current council's £300 million debt.
What we're doing
We are imposing financial controls and seeking further external support and advice to help us tackle this challenge. This follows a detailed review commissioned by our new management team.
Our current financial position
We have made positive progress to balance the budget in this financial year (2023 to 2024). Find out more about our budgets and spending. Our financial position in the medium term (two to four years) remains a concern. We have robust plans to resolve our financial challenges reflected in the report. Based on this, we are not issuing a Section 114 Notice at this time. We will continue to work towards further financial sustainability. A Section 114 Notice will be reconsidered in time for the October council meeting.
Our immediate priority and focus are the financial and commercial considerations which place a strain on our service delivery. It is imperative that we commit to our savings targets and deliver them in a brief period. This is to give us a fighting chance to remain solvent in the coming years. There will be hard decisions to take in the coming months. We must protect crucial public services for our residents.
Leader of the Council, Cllr Julia McShane said:
"We have issued a report today related to our finances. I am aware our residents may find this worrying.
"I want to reassure you that we are taking this situation very seriously. I take comfort in the fact that officers and councillors are working hard to tackle the situation head on.
"Lots of positive work has already been done to close the budget gap for this financial year. These are challenging financial times for local authorities, and we will need to make some difficult decisions over the coming months. These decisions will involve reducing costs whilst sustaining crucial local public services.
"I want to make it clear that we remain committed to providing essential services to our residents.
"I am very aware that this report is a difficult read but by sharing this information you can see that we are being transparent and open with you. We will continue to share updates about what this means.
"I want to stress that we are taking the findings of this report very seriously. I am optimistic that we have identified the challenges we face early, and we will continue to tackle them."
Lead Councillor for Finance and Property, Cllr Richard Lucas, said:
"The report issued on our finances indicates that a key issue for Guildford is how we fund our borrowing with interest rates remaining high for the foreseeable future.
"This debt has come from historic, ambitious decisions to support regeneration and infrastructure projects.
"You could imagine this situation like your household mortgage repayments. The budget we had originally set aside to pay the interest on these debts, is now not enough to cover the costs.
"We have some tough decisions ahead of us. We are determined to take appropriate steps to protect your services. We are committed to being transparent with our residents. We will update you when there is more to share."
Published on: 12 July 2023