Southampton City Council avoids bankruptcy as support agreed

The Department for Levelling Up, Housing and Communities has agreed to a £121.6m support package for the council, it was announced yesterday.

The council now has Government permission for 12 months to generate money through the selling of assets including car parks or office buildings, or by taking out loans.

Of the money the council raises, £39.3 million will be spent to balance its budget for the coming financial year. 

A huge chunk of the money - up to £52 million - will also have to cover a potential equal pay claim liability which the council says is an "unintended consequence of different working practices" over a number of years. 

This is expected to make sure that jobs equivalent to other jobs within the council are "treated fairly".

But the leader of the council accepted that "women do tend to be impacted more through equal pay claims".

READ MORE: Southampton City Council set to sell car parks and offices

The full amount will be determined by an equal pay audit. 

Council leader Lorna Fielker thanked officers for their "excellent work" to secure the agreement, adding that the support gives the authority time to transform how the council works to "put us on a stable footing moving forwards".

She went on to slam the Government however, accusing it of stealing £500m from residents by reducing its support for local authorities over the last 14 years.

She said: "This is not a government bailout, it is permission to use Southampton’s own money in a different way. 

"This demonstrates that the work the Labour Administration has been doing, initially led by Cllr Kaur, has been proven right and judged by officials as the correct way forward.

"However, the fact is, this is only needed because of the huge cuts to our budgets since 2010.

"Over £500 million pounds have been stolen from local residents, that could have been spent on things that people value most in our communities. 

"The heart of local government has been ripped out by this Tory government and every person who lives and works in Southampton has been impacted by it.

"Our Labour administration is fighting to put that heart back."

Cllr Lorna Fielker (Image: Newsquest)

The Government has also instructed the council to spend up to £10.6m to cover transformation and improvement costs, up to £12.2m for potential restricting costs and up to £7.5m for 'potential unforeseen events that cannot be funded from reserves'.

The budget shortfall for the current financial year is £7.7m.

The council will be subject to an external, independent review, and will need to provide the Government with a detailed transformation and improvement plan within the next six months.

The support is a one-off package that cannot be relied on next year, and allows the authority to use capital funding to offset its revenue expenditure.

Cllr Fielker added: "We will continue to introduce changes to make Southampton City Council more sustainable.

"How we do things may feel different, but Southampton Labour still remain ambitious for our residents and local businesses.

"We will create jobs for people living in Southampton, ensure more homes are built and firmly put Southampton on the map as a destination. Generating local wealth, that stays in the city benefits us all. 

"But we will not let the Conservatives off the hook for bankrupting the nation. They have brought Local Government to its knees and created an horrific cost of living crisis, that we are all paying the price for.”

When asked whether their plans to transform how the council works could be delivered in just a year, Cllr Fielker said the Government's backing showed it was possible.

She said: "The fact that the Government has said 'We agree that those plans look sound. They look like you’re going to be able to deliver what you need to deliver' gives us that confidence.

"We’ve got a programme that we’ve got confidence in, we’ve got a programme Government has confidence in.

"We know it is going to be difficult and challenging and we will come and speak to people all through that process."

This comes as Conservative leaders in the city including MP Royston Smith condemned the Labour administration for the council's current financial woes.