Government intervention

Central government intervention into the finances, investments and related governance of the council, Section 114 notice, Grant Thornton Public Interest Report, part 2 meeting documents, the Improvement and Recovery Plan.

Contents

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.

On Wednesday 7 June 2023, the Section 151 Officer and Interim Director of Finance issued us with a Section 114 Notice in response to the unprecedented financial challenges facing the authority.

The notice was required because our expenditure was likely to exceed the financial resources available, and therefore we could no longer balance our budget for the remainder of the 2023/24 financial year and subsequent years.

We faced an extremely serious financial shortfall owing to our 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 we can continue to provide vital services to our most vulnerable residents.

Section 114 Notice (PDF, 277.04 KB)

Why a Section 114 Notice was issued

The Notice was in recognition of the legacy of extraordinarily high and disproportionate levels of debt that meant our expenditure surpassed our annual income.

How the Notice impacts on our finances

It means we 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.

Suppliers

All outstanding contractual obligations must be fulfilled. Our suppliers should submit invoices to us in the usual way.