Bedford Borough Council’s Executive heard that the authority cannot set a legally balanced budget for next year unless the government approves emergency financial support (EFS).
A refusal of EFS could trigger formal bankruptcy-style procedures.
The statutory Section 25 report presented to the council’s Executive last night (Monday, January 26), said: “It is clear the council is not able to set a balanced budget for 2026/2027 without the need for EFS.”
“The section 151 officer believes this course of action is a last resort,” it added.
Read: Bedford Borough Council faces £59 million funding gap up to 2030
EFS does not provide additional funding; instead, it gives councils government permission to borrow or sell assets to cover day-to-day running costs.
Julie McCabe, the council’s executive director and section 151 officer, said: “The basis of the budget is based on an application for exceptional financial support or EFS of £25 million for 26/27, over and above an amount of £22 million for 25/26.”
Crucially, the Section 25 report said: “If the application for EFS is not approved at the end of February, a balanced budget will not be able to be set, and the section 151 officer would be under a duty to issue a notice under section 114 of the 1988 Local Government and Housing Act”.
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A section 114 notice effectively freezes all non-essential spending and usually prompts external government intervention.
The report revealed the scale of the current financial crisis, with the council’s overspend this year reaching £14.3 million, up from £11.4 million two months earlier.
Reserves are also below the council’s own recommended safety threshold.
The General Fund balance stands at £11.1 million, below the minimum risk-assessed range (currently £12.8 to £15.6 million), and overall reserves are in the bottom quartile compared to similar councils.
At the same time, borrowing is set to rise sharply. Long-term debt is planned to increase from £104 million now to as much as £227 million by 2028.
The council’s Improvement Plan (approved earlier this month) is intended to restore financial stability.
Ms McCabe said: “This plan is an outline plan at this stage; it needs to go further. It needs to look beyond 26/27 and have greater ambition if we are to get to a point where the council is financially sustainable in later years.”
Councillors must take the Section 25 report into account before setting the budget next month.
By John Guinn
Local Democracty Reporter
