City council 'seeking second multi-million pound bailout'

Gloucester City Council (GCC) is looking to seek an additional £8m loan from the government, the BBC understands.

The council was awarded £15.5m from the Ministry of Housing, Communities and Local Government (MHCLG) in February after it effectively went bankrupt.

Sources have told the BBC council leaders revealed plans to ask the government for additional help on Thursday, but it is not clear whether this is to cover existing financial issues or if new ones have come to light.

A GCC spokesperson said: "We have not made a submission to MHCLG for further EFS (exceptional financial support) funding at this point."

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Financial issues at the council came to light last year when the authority found it had a financial deficit of £7m combined from both the previous and current financial year and it no longer had any cash reserves.

The Liberal Democrat-run administration said it had been caused by a number of factors, including an over-estimation of how much some services would make, poor investment performances and higher interest rates.

In February it was given permission to use £15.5m of EFS between now and 2027, which enables the council to borrow more money or sell off assets.

It is unclear if the additional £8m will be requested under EFS.

Council leader Jeremy Hilton is due to face a motion of no confidence next week which, if passed, could see him ousted from the role.

The vote was triggered by councillor Alastair Chambers, leader of the Community Independent group, who has accused Hilton of financial mismanagement and a lack of transparency.

"He has an excuse for everything and takes responsibility for absolutely nothing," Chambers said.

Hilton said the motion was "precisely the distraction Gloucester does not need" and he claimed there was a difference between "constructive challenge" and "perpetuating political psychodrama".

An independent government report published last month found there was a "lack of mutual trust" between the leadership and political parties on the council and it recommended the authority take a number of steps to improve its financial monitoring.

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