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Medway Council to borrow more than £30m as it cuts services

Council bosses have asked the government for permission to borrow more than £30 million in the next two years to avoid effective bankruptcy.

Medway says it needs the cash to cover running costs as it battles to fill a giant financial blackhole.

Council tax is to go up by 4.99%
Council tax is to go up by 4.99%

The authority is also hiking council tax by 4.99% as part of a raft of measures.

The council today published its planned budget for next financial year which will see blanket increases in parking charges across the Towns.

Free swimming for under-16s and the over-60s will be scrapped, there will be a reduced events programme and Rochester’s visitor information centre will be closed.

But even with these measures and areas of cost-efficiencies, the council still asked the Department for Levelling Up, Housing, and Communities (DLUHC) for permission to raise local taxes above the usual limit of 5%.

This typically requires a local referendum but Medway appealed to do this without asking the public.

Medway Council leader Vince Maple says it was the right decision. Photo: Medway Council
Medway Council leader Vince Maple says it was the right decision. Photo: Medway Council

However, when Michael Gove’s department announced today which councils would be allowed to go ahead with this measure, Medway was not one of them.

The government will decide sometime this month whether to give Medway permission to borrow £14.8 million to cover running costs this financial year and £16.3 million for 2025/26.

This is exceptional as councils aren’t normally allowed to borrow for everyday expenditure.

The closure of the visitor information centre, including Rochester Art Gallery, is predicted to save the council just under £200,000, while a reduced events programme is expected to save £91,000.

The increase in parking charges are anticipated to give the council an additional £1 million for the next financial year, and the introduction of £5 entry fees for the Guildhall Museum and reduced hours at Upnor Castle and Eastgate House will give the council a further £147,000.

If the government turns the request down, Medway will have to go back to square one and redesign the budget.

MP Michael Gove, Secretary of State for Levelling Up, Housing and Communities.
MP Michael Gove, Secretary of State for Levelling Up, Housing and Communities.

This will either mean it will make even larger cuts into services and increase fees further, or have to file for Section 114 (S114), commonly referred to as bankruptcy.

Every department will be further assessed for potential cost-savings while the authority will look to increased its fees further.

Among the current plans are to raise parking charges by 60p per hour in all council-run car parks, the introduction of parking charges at country parks, and the introduction of entry charges for some attractions and reduced opening hours at others.

Council leader Cllr Vince Maple (Lab) was adamant weekly bin collections will not be changed in any way.

However, it was suggested in future there may be a charge introduced for garden waste.

Medway Council's Gun Wharf offices in Chatham
Medway Council's Gun Wharf offices in Chatham

Cllr Maple said he was optimistic the government would look at the work the council had done in working with the Chartered Institute of Public Finance and Accountancy (CIPFA) to come up with a plan for savings and efficiencies, and give Medway permission for the borrowing.

He said: “The report is very, very clear. If we don't get either element of that external support we cannot set a credible alternative budget.

“Those are not my words, those are the words of CIPFA. I would be amazed if DLUHC are not listening carefully.

“Every decision we're taking is a challenge and not one of those decisions has been taken lightly.

“We've gone through an extensive process with the CIPFA report, independent people who've come in and looked very, very closely at our finances, and they've got a series of recommendations.”

Cllr Maple also said that he knew some of the cuts and charges he would be introducing would affect families that were struggling.

Council leader Cllr Vince Maple
Council leader Cllr Vince Maple

He said: “We've had to take some very challenging decisions, and I think the people of Medway will understand that these decisions are with the backdrop of that report and the recommendations.

“We're very open and transparent about the situation we find ourselves in, but undoubtedly there are some challenges in here, some things that will impact on individuals and families.

“When it comes to, for example, the free swimming, it is disappointing that we're having to do that. Nobody wants to see a reduction and we will continue to have concessions available for both age groups.

“That is a difficult decision, like many of them we have to make, but in this particular case, I am positive about the alternatives that are available for residents across Medway.”

Medway called in CIPFA last year to pre-emptively look at ways they could make savings in the face of a £17 million overspend, reduced to £12 million.

Cash/money stock images from iStock.
Cash/money stock images from iStock.

The first line of the CIPFA report called the authority’s financial situation “grave” and said the council could not set a balanced budget without some sort of government intervention.

They recommended the borrowing of money to cover the council’s running costs and a higher than 5% council tax increase.

The full report of the council’s budget was published ahead of the next Cabinet meeting on February 13 where it will be discussed before being taken to Full Council on February 29, by which time the decision about the proposed borrowing is expected to have been made.

The report also showed that the council’s remaining £12 million overspend for the 2023/24 financial year will be met by using council reserves by removing £5 million from a ring-fenced pot and opening it up for any use.

This decision will reduce the authority’s level of reserves to less than £5 million in order to meet this year’s shortfall.

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