Almost one in five council leaders and chief executives in England think it is “very or fairly likely” that a ‘bankruptcy notice’ will be issued this year or next, research has found.
But Bedford Borough Council said it is “not in a position” where it would need to issue such a notice.
A survey by the Local Government Association found that 17 per cent of council leaders and chief executives believe their chief finance officer would need to issue a Section 114 notice [known as a bankruptcy notice] this year or next due to a lack of funding to keep key services running.
A section 114 report is issued if a council’s statutory chief finance officer thinks their council’s expenditure will exceed available resources in a financial year.
The LGA said the circumstances that have led to a council issuing a Section 114 notice so far have been “unique” to each local area.
In a statement on the LGA website, cllr Shaun Davies, LGA chair, said: “No council is immune to the risk of running into financial difficulty.
“As our worrying survey shows, many now face the prospect of being unable to meet their legal duty to set a balanced budget and having Section 114 reports issued.
“If councils cannot thrive then our communities cannot thrive.
“While councils have worked hard to reduce costs, find efficiencies and transform services, the easy savings have long since gone,” he said.
The Local Democracy Reporting Service asked Bedford Borough Council how confident it’s chief executive, Laura Church, that a section 114 notice will not be issued in the next financial year.
Also, how confident is the council that it will be able to deliver all essential services in 2024/25.
A borough council spokesperson said: “Bedford is experiencing a large increase in demand in a number of areas including temporary accommodation, adult social care services, both in the number of residents requiring care and the complexity of care, and school transport.
“This is impacting on the financial position both in year and reflected in the MTFS [Medium Term Financial Strategy] in the period to 2025/2026.
“The Council is putting in place measures to manage the budget position in year due to the pressures described above.
“The Council is not in a position that it would need to issue a section 114 notice.
“We continue to deliver for local residents, including fulfilling our legal and statutory duties,” they said.
Cllr Shaun Davies’ statement added: “The government urgently needs to act to address the acute financial challenges faced by councils.”
However, the Daily Mail reported that the Levelling Up Secretary, Michael Gove, claimed it is “absolutely the case of each of the local authorities that have had to issue Section 114 notices have had failures of leadership management and governance, and some have taken risks that were not merited”.
by John Guinn
Local Democracy Reporter
