Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 49
49
Not Addressed
Section 114 notices prove unproductive for long-term local authority financial unsustainability.
Conclusion
The process of issuing and responding to a section 114 notice is not a productive solution to financial unsustainability caused by long-term underfunding and increasing responsibilities. The need to avoid a section 114 notice can itself lead to poor financial management. (Conclusion, Paragraph 191)
Government Response Summary
The government states s114 notices are part of a wider system but acknowledges that financial flexibilities can help manage pressures, having invited views on such flexibilities and promising further detail in the autumn, without directly addressing the committee's criticism of the s114 process itself.
Government Response
Not Addressed
HM Government
Not Addressed
Section 114 notices exist within a wider system of checks and balances that highlight local authority financial risk. Government recognises that, in some cases, financial flexibilities can help enable local authorities to manage budgetary pressures over a multi-year period, for example in managing unexpected pressures that arise. However it is important that any financial flexibilities are balanced with the aim of supporting long term sustainability and ensuring Value for Money. Through the FFR 2.0 consultation, we invited views on how financial flexibilities could support local authorities in the context of reform, during the transitional period . We will set out further detail on this in the autumn.