A review into Thanet District Council’s finances has revealed “significant challenges” due to a further erosion of reserves.
In a report due to be discussed by cabinet members on Thursday, “multiple financial risks” facing the local authority are highlighted as well as the need to take steps to improve financial management.
It follows an independent review by consultants into the financial management governance at the council.
The report to members states TDC has suffered a series of unexpected financial burdens, which has “further eroded” reserves to the cost of more than £10 million.
The document said: “Even though, in general, budgets have been managed well, there have been instances of one-off costs and overspends that have undermined financial stewardship and diminished reserves.
“In the past six years, these included the Transeuropa costs, animal export claims, a hand-arm vibration fine and costs, and a grant repayment incorrectly claimed, which together amounted to around £9 million.
“More recently, legal costs of around £733,000 and the port berth 4/5 project overspend of £825,000 (current estimates) have further eroded reserves.
“These events have an obvious impact, but they also serve to undermine confidence in the council’s financial management – its ability to exercise good stewardship of resources.
“No matter how robust we claim our financial management to be, as long as these events continue to occur, the evidence suggests we have some way to go.
“They also restrict the council’s ability to think more positively and creatively about the future. “Low reserves, that take regular unexpected hits that diminish them further, does not engender a sense of stability and optimism that could enable investment in services and initiatives.”
The key findings by the consultants was TDC’s reserves are low in relation to others and that its financial challenges are significant.
The review also points out that while the finance team is well-regarded and the council’s reserves have been well managed, greater collective ownership of financial management would further enhance the effectiveness of budget management and the control of reserves.
“Any changes in financial management need to encompass more than just updating or altering policies and rules, they need to be embedded by changing the corporate culture,” the report said.
It added that a new financial management system would contribute towards positive changes but is not a “silver bullet” to resolving all issues, and that some processes needed to be simplified.
While the situation looks bleak, the report states that the financial management review should be seen as a step towards improving things.
Cabinet members are due to discuss the report on Thursday, September 23, at a meeting at 6pm.
To see the full report click here.