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A council has warned it could be forced to declare bankruptcy after the government’s “devastating” decision to cancel the northern leg of HS2.
Cheshire East Council said it had spent £11m preparing for the high-speed line, including £8.6m that had been funded by borrowing.
In a report from the full council on 13 December, the local authority – which is under no overall control – said it would be required to write off the expenditure, including by expensing the £8.6m through its own revenue account.
The council said it could be forced to “trigger a [section] 114 notice” because of “insufficient funds, and inadequate reserves, to manage in-year expenditure”.
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The warning comes just weeks after Nottingham Council declared itself effectively bankrupt after issuing a section 114 notice, which means that all new spending – with the exception of protecting vulnerable people and statutory services – must stop immediately.
Birmingham City Council also issued its own 114 notice in September after being hit with a £760m bill to settle equal pay claims.
This year’s Conservative Party conference was dominated by the announcement that the northern leg of HS2 beyond Birmingham would be scrapped – prompting accusations of a betrayal of northern voters.
Prime Minister Rishi Sunak defended his decision by promising to spend the billions of cash savings on hundreds of other transport schemes across the country instead, including a new “Network North” project to join up northern cities by rail.
But Cheshire East Council said it “does not believe that government’s alternative…
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