Salisbury City Council faces bankruptcy if it continues to overspend

The council made a loss of £468k in the financial year of 2023/24 which followed a £365k loss the previous year.

This damning news was revealed at a full council meeting on Monday, June 24, where newly-appointed responsible finance officer Steve Bishop said the council would become unlawful if it doesn't buck its trend.

RECAP: Follow live updates as the full council meeting unfolded

Three years ago the council had reserves of over £1m but this figure has dwindled to around £400k as a consequence of losing more than £800k in two years.

A budget monitoring report showed that, on the face of it, Salisbury City Council achieved a 'profit' of £345k for 2023/24.

However, this only arose after factoring in an irregular contribution of £716k from the Environment Agency for the River Park Project and £98k in Community Infrastructure Levy receipts to improve local amenities.

Since this money places obligations on the council, it must be ringfenced and excluded from overall profit. So, the council instead made a real loss of £468k.

"This is not good news as the Council’s reserves are not inexhaustible," noted Mr Bishop.

The full Salisbury City Council meeting was held in Guildhall on Monday, June 24. (Image: Newsquest)

The administration was not previously aware that the windfall was excluded from real profit.

A debate arose after Reform UK Cllr Ed Rimmer asked how the overspend has been allowed to happen.

Cllr Rimmer told the Journal: "The administration's responses were to state that they didn't understand the finances and then to seek to blame their nearly £800k overspend in the past two years on the previous administration who left office in 2021.

"They offered absolutely no policy as to how they intend to save £470k in the next year and simply tried to duck out of any responsibility whatsoever. It is crystal clear that the administration of this council are not in control of any aspects of the Council's finances. It begs the question; what is the point of this administration? They aren't governing; they aren't even scrutinising policy, let alone setting it."

Independent councillor Annie Riddle, who is part of the joint administration, passed some of the blame onto previous administrations and claimed the issue has been going on for the past eight years.

"Given that information, I don't see any point in raking over the coals of what's happened six, seven, eight years ago," Cllr Riddle said.

Conservative Cllr Charles McGrath, for Milford, slammed the leadership's "laughable" response and said the current administration is "treating residents with contempt".

He added: "The reserves have been depleted. We'll probably be making a similar loss this year. So clearly you just can't manage your budgets. I just think it's an absolute disgrace we've got to this position.

"How you can sit here and say it's been going on for ages I just think is incredible - I just can't believe it."

Cllr Charles McGrath laughed as he accused the administration of holding residents in contempt. (Image: Salisbury City Council)

The administration did not offer any immediate money-saving solutions and but Cllr Atiqul Hoque questioned whether the precept would rise.

"There is the fundamental problem which we have to resolve - whether we are a district council or a parish council. I think that is a longer, deeper issue for this council," said Cllr Ian Tomes.

Cllr Jeremy Nettle said the council had a wrong idea of the reserves as previous figures included money which was not actually available to the council but the new team has been "absolutely analytical" over the council's behaviour.

"I don't take any pride in saying that this shouldn't have happened. Under the old system, we wouldn't have seen this and that's the important fact," added Cllr Nettle.

Responsible finance officer Steve Bishop. (Image: Salisbury City Council)

The council overspent £71k on employer's national insurance costs to settle a historic liability for underpaid NI in previous years.

It also overspent £120k on buying the freehold of a new depot site in Tollgate Road.

Furthermore, £86k was overspent on tree surgery. The allocated budget for this work was £110k.

Mr Bishop claimed the council is in "safe but serious territory".