On Wednesday 7 June 2023, the Section 151 Officer and Interim Director of Finance issued Woking Borough Council with a Section 114 Notice in response to the unprecedented financial challenges facing the authority.
The notice is required because the expenditure of the council is likely to exceed the financial resources available, and therefore it can no longer balance its budget for the remainder of this financial year and subsequent years.
The council faces an extremely serious financial shortfall owing to its historic investment strategy that has resulted in unaffordable borrowing, inadequate steps to repay that borrowing and high values of irrecoverable loans.
A Section 114 Notice stops all but essential spending, making sure the council can continue to provide vital services to its most vulnerable residents.
What is a Section 114 Notice?
Councils are required by law to have balanced budgets. If a council cannot find a way to finance its budget then a Section 114 Notice must be issued.
The issuing of a Section 114 Notice restricts all new spending with the exception of protecting vulnerable people and statutory services and pre-existing commitments.
Why has a Section 114 Notice been issued?
The Notice is recognition that the legacy of extraordinarily high and disproportionate levels of debt means the council’s expenditure has surpassed its annual income.
The council can no longer balance its budget for the remainder of this financial year and subsequent years. The challenges it faces are so significant that it cannot simply deal with them on its own and it must approach the government to explore the prospect of financial support and to seek views on the provision of such support.
How does the Notice impact on our finances?
It means the council must stop spending and it cannot enter into new agreements which will incur a cost.
The only allowable expenditure permitted under a Section 114 Notice would include:
- existing staff payroll and pension costs.
- expenditure on goods and services which have already been received or where a contractual commitment or legal agreement exists.
- expenditure required to deliver the council’s provision of statutory services at a minimum possible level.
- urgent expenditure required to safeguard vulnerable citizens.
- expenditure funded exclusively through ring-fenced grants or other external funding which does not commit the council to significant future expenditure which is not a statutory service
- expenditure necessary to achieve value for money and / or mitigate additional costs.
- any other items as authorised by the Section 151 Officer that fall within the statutory constraints that apply.
Services to the community
A Section 114 Notice restricts all new spending with the exception of protecting vulnerable people and statutory services and pre-existing commitments.
Difficult decisions lie ahead as we seek to balance the council’s budget and address the unaffordable debt.
All outstanding contractual obligations must be fulfilled. Our suppliers should submit invoices to us in the usual way.
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Further information will be published on this website as and when it is available.