Council told: Act now to avoid bankruptcy

AUDITORS have found “significant weaknesses” in Plymouth City Council's financial arrangements, warning that it may have to cut some discretionary services so it doesn’t run out of money.

- By ALISON STEPHENSON Local Democracy Reporter

Grant Thornton said the council’s reliance on reserves to balance the budget over several years was “not sustainable” and it needed to act now to avoid going to the government for additional financial support.

Plymouth is facing the same challenges as councils across the country with rising costs of adult and children’s social care, homelessness and provision for children with special educational needs and disabilities (SEND).

Eight English authorities have already issued Section 114 notices, effectively declaring them bankrupt, since 2018 and the Local Government Association has warned that many more are at risk.

In their interim external auditor's annual report presented to the council's audit and governance committee on Tuesday, Grant Thornton said a pipeline of savings across multiple years need to be identified to address the budget gaps that are predicted to rise to £30 million over the next four years.

The 2024/25 budget was supported by more than £9 million of reserves and £4.3 million this financial year.

“It is essential that the council mitigates the forecast overspend in 2025/26 to prevent further unsustainable and unplanned drawdown of reserves,” said the auditors.