Rutland Council: ‘We do not want to take on other people’s debt, that is not part of the plan’
Rutland councillors have raised concerns about what may happen if the authority merges with other councils that are carrying heavy debts.
The local government reorganisation is hanging in the air and at Rutland County Council's latest audit meeting, members of the committee expressed their fears of what might happen if the authority is told to join forces with other councils that have bigger debts.
The authority, which is the smallest in the country, has an annual budget of around £50m and debts of £21m. In comparison, neighbouring Leicestershire County Council has a budget more than ten times bigger and much bigger debts at around £250m. Councils often incur debts to pay for capital projects such as new buildings or school extensions and often have taken out loans from the government to cover the cost.
Speaking at the meeting, Cllr Ray Payne (Lib Dem) said the balance sheets of councils the authority may eventually merge with is a concern and there needed to be careful analysis of other authority's finances.
He said: "I am confident we're in a good place. Bluntly I am not so confident everybody else is going to be in such a good place and we will need to make sure we know exactly the financial situation we may be working with. We do not want to take on other people's debt. That is not part of the plan."
In response, cabinet member responsible for finance, Cllr Andrew Johnson (Lib Dem) said the council may not have an option as the process is 'being directed by the government and they are not giving us a choice'.
"I think there is inherent risk in the process that we need to understand, but I would not want to mislead the public into thinking that we will be in control. As we might not. We might be directed to do it."
Cllr Payne replied: "Taking that on board – first of all, we have to make sure our ducks are in a row and make sure we are in a position as far as possible to demand the information we think we are entitled to. It may well be that this committee needs to say to the secretary of state that we need some more information.
"You cannot expect us to hand over our residents' money. We are the custodians of this, it is not ours. Maybe make the central government realise that things are a little bit more complicated in local government than they realise."
Another issue is that over the past few years there has been a crisis in the external auditing of local government accounts, which has meant that many authorities have not had their accounts audited. The situation has become so bad that the previous Conservative government decided to allow some councils to 'disclaim' their accounts, which means there is no assurance that they are accurate.
Rutland County Council has been one of the few councils whose accounts have been fully audited and given assurance and finance boss Kirsty Knutton said the authority's balance sheet was 'pretty straight forward'.
But she said there was concern among local government finance bosses of the implications of the local government reorganisation, particularly those authorities with unaudited accounts.
She said: "Often what will unpick a council's balance sheet, what won't surprise you is anything capital related and how debt is being financed, so that can go back years.
"It tends to be capital assets and pensions that unpick a council's balance sheet because of the values involved and the complexities around it."
Cllr Johnson said Rutland had been in touch with Liberal Democrat run council Somerset and Dorset, which has already converted to unitary to find out what happens regarding finances.
He said: "It appears the approach the government took then, was on the day of completion the new authority adopted what they had been told and given as a balance sheet and as a set of assumptions."
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