Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 50
50
Amend the section 114 process to mitigate long-term financial pressure from single-year budget deficits.
Recommendation
The Government must amend the section 114 process so that an inability to set a balanced budget in a single year because of financial pressure does not cause long-term additional financial pressure. This could be done by extending the requirements to a rolling two-year basis (that is, allowing councils to recoup losses in the following year), by incorporating the year- end accounts into the criteria (that is, ensuring councils are actually making a loss instead of merely expecting to), or by easing the use of some reserves to fill funding gaps. (Recommendation, Paragraph 192) 80
Government Response
A response document is linked to this report, dated 21 October 2025. Response attribution to this recommendation has not been verified. Read the response document ↗