Council s151 officer warns financial implications of HS2 cancellation could trigger section 114 notice

The s.151 officer for Cheshire East Council has warned that the financial impact of cancellation of the northern portion of High Speed 2 (HS2) has put the local authority at risk of issuing a section 114 notice.

Alex Thompson's comments were attached to a report prepared by the council's Executive Director of Place, Peter Skates, on the implications of the HS2 cancellation and the Government's replacement 'Network North' plan.

The full council at Cheshire East is due to consider the report today (13 December).

Thompson said the council would have to write off more than £11m it spent preparing for the railway project.

The Government cancelled plans to build the high-speed rail network north of Birmingham in October.

Under the original plans, Cheshire East would have benefitted from a 'hub station' built in Crewe, Cheshire, capable of serving up to seven HS2 trains an hour.

The council was also set to benefit from an hourly HS2 service to London from Macclesfield, and the scheme was set to unlock 4,400 new homes, 5,000 new jobs and an additional £750 million of additional GVA (gross value added) to the local economy, according to Skates.

The report for a meeting of full council said the replacement plan includes "no specific mention of investment in Cheshire East or Crewe, or recognition of the direct and devastating impacts for the town and borough caused by the decision to cancel HS2".

The council is now seeking a 'fair and equitable' deal to compensate for the losses from the decision to cancel the infrastructure project and replace it with Network North, a proposal to invest £36 billion into transport in the North.

The s151 officer said Cheshire East's £11m investment in preparing for the project included £8.6 million in the capital programme, funded by prudential borrowing and £2.6 million of direct revenue expenditure.

Writing off the spend would involve expensing the £8.6 million of capital costs through the council's revenue account, he added.

Thompson said: "The abortive costs are material in relation to the Council's forecast levels of reserves.

"The requirement to fund this expenditure from revenue could therefore trigger a s.114 notice as the Council could be placed in a position where there are insufficient funds, and inadequate reserves, to manage in-year expenditure."

He said that critical to the negotiations with the Government was the "need for appropriate and sufficient financial compensation and/or flexibilities" to mitigate the financial impacts to the council of the decision to cancel HS2.

A spokesperson for the Department for Transport said: “Cheshire East is set to receive significant additional support from a new £4.7 billion fund to transform local transport across the North and Midlands, as well as a £110 million uplift of over 11 years for local road maintenance.

“This is on top of a funding boost of more than £2.2 million for buses – all part of our Network North plans.”

Adam Carey