What we know as Southampton City Council told it could go bankrupt

Senior council officer John Harrison warned councillors the authority must only pay out for “essential” services or risk running out of reserves by next year.

Cuts have already been made - street lights will be switched off in certain areas, council tax will increase and the Itchen Bridge toll is being hiked for non-residents.

But more savings are needed, Mr Harrison's report warned, with the officer branding the council’s budget as “inadequate” due to its use of reserves and risk of further financial pressures.

READ MORE: Southampton City Council could go bankrupt by next year - finance chief

Now, a row has broken out with council leader Satvir Kaur blaming “a huge £23m black-hole” for the financial woes - something she says was left by the former Conservative administration.

But Tory opposition finance spokesman John Hannides has accused the administration of “secretly” planning cuts later this year to balance the books - something Labour denies.

Cllr Kaur told the Echo: “Of course there is an increased financial risk to every council across the country right now which will only be resolved by a fairer funding deal from Government.

“Despite the scale of this challenge though, I’m pleased in Southampton, we’ve taken the majority of savings from efficiencies and making the council work more effectively, enabling us to prioritise frontline services people are relying on now more than ever.

“We are focused on bringing more investment into our city, and have a plan to grow our local economy, creating more jobs and opportunities, from maximising our marine and maritime, becoming a destination place to grow our visitor economy, to being leaders in future growth areas like the green economy.”

Cllr Satvir Kaur. (Image: Stuart Martin.)

The finance officer’s report said the council’s financial resilience is “much weakened” by its plans to use up £20m of reserves to balance the books, saying it would lead to a section 114 notice.

If issued, this notice would stop any new spending beyond statutory services and mean that the council must meet within 21 days to discuss what action will be taken.

In 2018/19, the authority’s reserves stood at £86m, but the report projects that they could be as low as £21m at the end of 2023/24.

The officer also said "there is every chance" reserves would be needed again by 2024/2025 at which point they would "expire completely".

Leader of the opposition Cllr Daniel Fitzhenry has now accused Labour of not setting out enough cuts to avoid losing popularity before the May elections.

However, he predicts that more cuts will come should Labour retain power.

READ MORE: Southampton councillor blasts 'abject failure' over bankruptcy risk

Cllr Fitzhenry claims Labour could even close St Mary's Leisure Centre having fought to reopen it. This is denied by Labour.

Speaking at a full council meeting on Wednesday, Cllr Hannides said: "It's time you came clean. The people of this city will witness the most draconian and savage cuts any of us have ever seen.

"The CFO (chief finance officer) clearly agrees with me when he goes on to say the authority is in a 'very uncertain' position financially.

"Warnings of this magnitude have never been expressed by a CFO of this council. Never. Massive cuts are coming."

Cllr John Hannides. (Image: Newsquest)

But Cllr Kaur told the Echo: “The Tories cannot go from causing our city’s financial problems, to now just complaining about it, with no alternative offer to residents.”

She accused the opposition of “trying to take people for fools” branding their comments as “nothing more than just cheap political shot”.

Additional reporting by Local Democracy Reporter Jamie Shapiro