Cheshire East stares into financial abyss after HS2 blow
The authority fears it could go bust like Birmingham and Nottingham City Councils if the government does not reimburse the £11m the council spent preparing for the high-speed rail project.
In October, Cheshire East Council called on government to stump up for the money wasted on developing plans for an HS2 hub in Crewe, describing the local impact of the decision to scrap the scheme as “devastating”.
Now, a report published by the authority states that the financial impact of pulling the infrastructure project could force Cheshire East to issue a Section 114 notice.
Local authorities cannot go bankrupt like normal businesses, instead they issue s.114 notices when running costs exceed income.
In recent weeks, both Birmingham and Nottingham City Council have issued s.114 notices amid calls from councils across the country for a new deal between local and central government to rectify years of cuts. Yesterday, the government announced it would increase the revenue support grant available to local authorities by 6% next year.
A recent survey by the Local Government Association found that one in five council bosses fears their authority could go bust.
Cheshire East fears it could be one of them. The report states that the £11m spent in expectation of HS2 comprised £8.6m of borrowing and £2.6m of revenue, expenditure it must write off in line with local government accountancy regulations.
“The abortive costs are material in relation 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.”
Cheshire East Council was contacted for additional comment.
Cheshire East was set to benefit from HS2, with up to 7 trains per hour proposed to call at Crewe station.
The council claims HS2 would have been a “catalyst for growth and regeneration”, unlocking 4,400 new homes and 5,000 new jobs in Crewe and adding £750m a year to the local economy.