Is district council risking bankruptcy? Warning over "tough" new budget

St Albans district council is risking “bankruptcy” after a new budget promising more than £30million for regeneration projects was passed this week, opposition councillors have warned.

The new budget involves rises in council tax and parking charges, while staff could be cut as part of a new digital customer service model to save the council £700,000.

The proposals were voted through during a meeting of full council on February 24, which the Lib Dem administration's leader described as prudent but forward-facing, despite Tory opposition concerns about the council’s level of debt.

Council leader Cllr Chris White said the council had to make “tough decisions” during the budget setting process, adding the authority would prioritise tackling the climate emergency, as well as building new social housing and providing new community facilities.  

The council said the new budget will achieve net savings of £0.7m this year, but an average council tax rise of £5 or 2.7 per cent will be introduced, while parking charges will also increase by 15 per cent.

The district council will make a significant saving by introducing a new digital model to deliver customer services, which is expected to include job cuts.

The council has said the upgrades would result in a loss of around 17 full time equivalent members of staff, with a saving of £565,000 a year. The council will initially invest £1.5m into the project, with the full savings emerging in the next financial year.

Other savings include £26,000 from the closure of toilets at Verulamium Park, and the closure of Spicer Street toilets which could be sold as part of a potential regeneration business case.

Cllr White said: “I’m pleased to see the challenges are essentially in the margin, and that there is broad agreement to the way forward – and the byword is forward. 

“Forward to a better run council; forward to a council which delivers better – far better – for its residents and customers; forward to more social housing and zero-carbon social housing; forward to a council which works with businesses and the newly re-endorsed BID, works with the chamber of commerce, with parishes, with the town council, with STANTA [St Albans Enterprise Agency]  to make this wonderful district even better. 

“Forward to new community facilities looking after the needs of local residents in their own areas, not just in the city centre or the centre of Harpenden. And finally forward to a council which is part of, and leads, the battle against climate change. 

“The budget balances. It’s a prudent budget but it’s a budget that is forward looking.”

In a £56m capital budget, the council is committing a further £20.8m to the City Centre Opportunity Site (CCOS) South, which includes development in and around the former police station, and £10.1m a year for the CCOS North site which could include a new theatre and city centre plaza.

Other schemes to receive significant budgets include £5.8m for the development of Harpenden Public Halls, and £2.3m for Fleetville Community Centre.

£52.3m of this section of the budget will be funded through borrowing, with receipts from the sale of land contributing £2.9m.

In response, Conservative group leader Cllr Mary Maynard questioned how successful the administration had been on its corporate priorities, claiming it had failed on climate change promises, and in regards to building social houses. 

She had a bleak warning for the administration, saying the council was taking on too much debt and risked not being able to fund the projects.

Cllr Maynard said: “As a result of all of this, the metrics we have looked at for future years place us firmly in the same financial camp as councils who are going bankrupt. You are taking on huge levels of debt, and you won’t be able to repay it. You need to stop now or we will be bankrupt and run by central government.”

Elsewhere in the budget, the council believes it can save £450,000 this year and £1.08m in the future from more “efficient and commercially viable leisure assets”, through contract renewals. The Maltings Theatre is also expected to be handed over to an operator to reduce the council’s costs by £15,000 a year.

Other plans to generate income include a new strategy to be more proactive in advertising opportunities for businesses to operate from parks and green spaces, with hopes of bringing in £60,000 next year and rising to £90,000 by 2026.

Changes to the Charter Market which will see traders use a mix of gazebos and traditional stalls is also expected to cost £90,000 a year, while work on the long-delayed Local Plan will set the council back £180,000 a year.

During Wednesday’s meeting, the Conservative group proposed amendments to restore the number of planning committees, to pause plans to sell the Spicer Street public toilets until replacements have been identified as well as ensuring any excess charges from garden waste increases be held in a separate fund.

The administration accepted the last amendment, as well as amendments to ring fence income from Lockey House to fund regeneration projects and to produce a report to outline how income will be used to close budget gaps within the proposals.

The budget with amendments passed by 30-21.