'It wouldn't take a lot' for Sheffield Council to go bust accountants warn

Sheffield councillors have been warned not to make any rash decisions as authorities nationwide go bust.
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Accountancy firm Ernst and Young says Sheffield Council has been financially well managed but Covid has brought a huge amount of extra cost and uncertainty.

Stephen Clark, partner at Ernst and Young, warned a scrutiny meeting that councils could quickly go under.

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"I would encourage you to constantly scrutinise and make the right decisions, however difficult and unpalatable they may be.

Coronavirus warning sign in Sheffield city centre.Coronavirus warning sign in Sheffield city centre.
Coronavirus warning sign in Sheffield city centre.

"Some councils are finding themselves in the territory of going bust. Sheffield Council is not there at this point in time however, it wouldn't take a lot before it would get there.

"That's not through mismanagement, it's because of the huge seismic spend that you are going through and the various pressures that you have.

"Large councils tip pretty quickly, typically in about three years, and poor decision making can wipe out reserves easily.

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"It's often been the reckless pursuit of ill-informed decisions backed by a lack of governance and structure and push back from officers."

Mr Clark said there were some very important regeneration and investment decisions ahead but said making no decisions at all was equally dangerous.

"If you think you are making the wrong decisions, or not making the decisions you should be, these are the things to watch out for.

"You have choices, you might not like what some of those choices are but you do have choices.

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"It's taking the advice of professional officers about what is a sound investment. Your reserves are not in too bad a place, it's about making judicious use of them in the right way and examining those decisions.

"Where you've got projects that are not delivering, chop those off at the legs pretty quickly and don't allow them to drain cash out.

"The council makes multi-million pound decisions on big projects, it's a huge facilitator of investment and regeneration in the city and those involve some big cash sums.

"It's being risk aware - not all chickens hatch, you've got to take some risk but have an exit plan and don't fritter away money which you could spend elsewhere."

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