An external review into cash-strapped Cheshire East Council and the way it operates makes 'grim reading', the Conservative opposition group leader has said.

The LGA corporate peer challenge warned Cheshire East could be facing effective bankruptcy unless it acts soon.

Labour, which has run the council with the Independents since 2019, laid the blame at the door of the former Conservative administration, saying the general reserve was £22m when the council was formed in 2009 and had fallen to £10m in 2019 by the time Labour took over.

Conservative group leader Janet Clowes today hit back at those claims.

Cllr Clowes said: "This report makes grim reading.

"The Conservative group has consistently raised concerns about the fiscal sustainability of Labour-led Cheshire East Council, culminating in December 2024 with a notice of motion to council requesting an urgent LGA corporate peer challenge.

"Concerns regarding low levels of general reserves were first triggered in 2020, when the Labour-led council failed to transfer capital reserves to boost general reserves, as had been approved at the February 2019 budget council meeting, following important, planned infrastructure investment."

Cllr Clowes said the peer reviewers had identified consistent patterns of overspending and repeated failures to deliver the budget targets of the council's own mid-term financial strategies.

She continued: "To compound the council's financial fragility, the report has highlighted the challenges of historic overspending on the children's special needs (DSG) budget, where Cheshire East is a national outlier with a DSG debt at the end of 2023/24 of £80m.

"The recent Ofsted ILACS judgement of care leavers support as 'inadequate' and all other areas as 'requiring improvement', is also raised as an area requiring urgent attention."

The Tory group leader pointed out the peer reviewers also highlighted weaknesses in the council's governance systems, limitations in effective scrutiny and the tendency of departments and service committees to work in silos.

"The Cheshire East Labour group's attempts to blame this scenario on the Conservative administration of 2009-19 and inherited low reserves at that time do not bear scrutiny," said Cllr Clowes.

"The current Labour-Independent administration inherited a council with a balanced budget, a surplus DSG (special needs) budget position with a nationally recognised care leaver support scheme.

"We are now in a situation where Cheshire East Council must find £100m savings over the next four years, in addition to paying the £80m DSG debt."

Cllr Clowes said Cheshire East has never had levels of general reserves that would resolve this level of fiscal demand and debt and, while all local authorities are experiencing financial pressures, 'this council remains a national outlier'.

"However painful, Labour must acknowledge this if we are to move forward," she said.

And she stressed: "The report is clear, if Cheshire East Council does not act at pace, there will be no alternative but to issue an S114 notice.

"The Conservative group is not in control of the council, but as the largest group we take our role as the voice of constructive oversight and scrutiny very seriously.

"We acknowledge the pivotal role of our dedicated staff in addressing the 18 peer review recommendations and in developing an effective transformation plan.

"However, all elected members must be part of this painful but essential re-design process to deliver a long-term sustainable council. Our residents deserve no less."

The peer review can be read in full here.