Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 20
20
We recommend that the Government consider changing the section 114 regime to provide Chief Finance...
Recommendation
We recommend that the Government consider changing the section 114 regime to provide Chief Finance Officers with intermediary measures that can be applied at a much earlier stage to highlight concerns before a council’s finances deteriorate so far as to require a section 114 notice. We also recommend that Chief Finance Officers report to both the Executive and appropriate scrutiny committees on a quarterly basis on the state of local authority finances and, in particular, draw attention to potential serious financial problems. (Paragraph 90) Local authority financial sustainability and the section 114 regime 43
Government Response
Acknowledged
HM Government
Acknowledged
Section 114 notices are an important and effective part of the local government finance system as both a legal mechanism and as a spending control for councils that have particular issues in setting or maintaining a balanced budget. However, Section 114 notices exist within a wider system of checks and balances, such as the statutory requirement for Section 151 Officers to report on the robustness of budget estimates and adequacy of reserves as part of the annual budget setting process; or the additional powers and duties afforded to external auditors under the Local Audit and Accountability Act 2014, for example to issue statutory recommendations or reports in the public interest, to highlight concerns about an authority’s finances. This means we would expect councils to take a number of steps to address financial challenges before reaching a point where issuing a notice is necessary.