Cheltenham council ‘not at risk of bankruptcy’, borough chief say amid finances row

A row has broken out between a former Cheltenham mayor and the Borough Council’s leader who has stressed the authority is not at risk of “going bankrupt”.

Liberal Democrat leader Rowena Hay has responded to an open letter sent by ex-Lib Dem Wendy Flynn.

The now Green Party activist said in her letter that she “could not overstate how serious the financial situation now appears” at the Borough Council.

The former mayor highlighted four issues which she believes “should alarm every resident and councillor”.

These include a projected over spend of around £500,000 and a £1.17 million budget gap for the coming financial year.

She also said there was a third consecutive disclaimed audit opinion as external auditors could not sign off the accounts for 2022/23, 2023/24, or 2024/25 “because too much information was missing, incomplete, or unreliable and a specific audit finding that the council has not documented its assessment of the risk of a section 114 notice”.

Section 114 notices are issued when a council can no longer balance their budget and means they cannot commit to new spending – however Borough Council chiefs are clear they are not in this position.

“At a time of overspending, falling reserves, rising borrowing, and unreliable accounts, this omission is extraordinary,” Ms Flynn’s letter reads.

“And yet, residents are being told there will be no cuts to services.”

Her letter goes on to say this is not credible.

“When a council is overspending, facing a seven‑figure budget gap, operating with dangerously low reserves, and unable to produce auditable accounts, it cannot guarantee that services will be protected,” she said.

However, Cllr Hay has met the open letter with disappointment and believes it was “written purely for political purposes”.

She described it as “factually inaccurate” in a public reply to her in which she said the Borough Council is “not at risk of a section 114 or going bankrupt”

“Yes, money is tight but point to pretty much every council in the country and you will find the same issue – increasing demand with less money to deliver services,” Cllr Hay added.

She also explained that the council’s finance director provides an assessment of the financial position and the level of our reserves.

“These are publicly available and do not point to a risk of having to declare section 114,” the letter reads.

“As for our accounts, after not addressing a national shortage of external auditors and with so many delayed accounts across the country, the Government created what they called a ‘backstop’ to sort out the mess they created.

“In the timeframe set, the auditors simply ran out of time to gather all the information they needed before the deadline so had no choice but to declare what they did.

“I can assure you we are working closely with our external auditors to plan for completion of the 25/26 accounts after the end of this financial year.

“Turning to our savings target of £1m, for context the council budget that we set for 2023/24 when you were a Green Party councillor contained a savings target of £1.3m, yet you abstained voting, raising no concerns at that time.

“Why was that? In this same budget, the level of general reserves was £1.3m, pretty much what they are now.

“Why did you not describe the council’s reserves as dangerous back then? In fact, it is a matter of public record that you supported the Conservatives in their proposed budget.”

Cllr Hay said she does acknowledge Cllr Flynn’s strength of feeling in her letter and has asked her to “channel your energy into joining with me and councillors of all parties to lobby the government for a better deal for Cheltenham”.

“For over 15 years we have suffered with swingeing cuts in funding with successive governments passing the buck by forcing increases in council tax,” she said.

Borough Councillors are due to debate the budget for the upcoming year this afternoon.