Bankruptcy not imminent for Teignbridge Council

Council's financial position is relatively healthy

Teignbridge Council has been warned it needs to act now to avoid long-term financial problems.

However its finances are in good enough shape to stave off ‘bankruptcy’ issues facing other councils.

It asked the Local Government Association to review its finances, at a time when councils up and down the country are struggling to make ends meet.

Six councils have so far issued Section 114 notices which effectively mean they are declaring themselves bankrupt and are unable to do anything other than deliver the most basic services.

Northamptonshire County Council did it in 2018, and since then notices have been issued in Slough, Croydon, Thurrock, Woking and Birmingham.

The councils claim it is because the system is broken, and not that they have been careless with their finances, although some have sold major assets and used the money for everyday spending.

It comes as government support for local authorities has been slashed by billions of pounds in the last decade.

Somerset Council has warned that it may also have to consider issuing a Section 114 as its budget deficit mounts.

During a meeting of the full Teignbridge Council, deputy leader Richard Keeling (Lib Dem, Chudleigh) read from the LGA report.

He said that although it was facing a challenging position, Teignbridge had a ‘sizeable cushion’ in its reserves amounting to more than £24 million.

“The levels of reserve are adequate in the short-to-medium term,” quoted Cllr Keeling. “Teignbridge’s financial pressures can be met from reserves and a Section 114 is not imminent, but the council needs to take action now to find savings to protect its long-term position.”

Cllr Keeling said Teignbridge was ‘above average’ and in a relatively healthy position. But, he said, prompt action was needed to protect that position.