Redditch hit with s24 notice over budget fears

Redditch Borough Council has admitted it faces “tough decisions” after auditor Grant Thornton took the unusual step of issuing a section 24 notice warning that the council may be unable to set a balanced budget.

This is a power under section 24 of the Local Audit and Accountability Act 2014 that is used when auditors are concerned about a council’s financial sustainability.

Grant Thornton said Redditch must take “urgent action to prevent both its general fund and housing revenue account balances being exhausted by the end of 2020-21”.

It warned: “Failure to take effective action will put the council at risk of breaching its statutory duty to set a balanced budget.”

Action by Redditch should include a full assessment of the deliverability of its planned £1.13m savings for 2019-20 and steps to “either prevent or minimise the further use of both general fund and HRA balances in 2019-20”.

Auditors also called for a financial plan for 2020-21 with further deliverable savings and income generation schemes, cost reductions, and council tax increases “that eliminates the planned £1.17m use of general fund balances and ensures there are no further calls on HRA balances”.

Grant Thornton said that in 2018-19 Redditch used £560,000 of balances, rather than the £89,000 planned, because of overspends and a decision to fund expenditure from balances rather than identify further savings. The council also failed to deliver £200,000 of £1.5m savings.

“From April 2021 the council will, even if all of the forecast savings are achieved, be spending £30,000 a week more than it receives, with no balances left and the budget gap growing to £1.33m in 2021-22,” the auditors said.

The council’s Conservative leader Matt Dormer said: “We know we have to make some significant decisions which could include raising council tax and reassessing our levels of services.

“We are not afraid to take the tough decisions required to protect the public purse and are putting the politics to one side to make the changes which will have an immediate positive impact on our services and residents – and provide long-term benefit to the borough."