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If Your Council is in Financial Trouble and Goes for a s114 Notice- what does it need to Do?

What does a Council need to do when it issues a s114 notice?

When a Council issues a Section 114 notice, it signifies that the council's financial situation is severe and requires immediate action to address the financial crisis.

This usually means that a Council is in a position where it cannot balance its budget on an annual basis.

A Section 114 notice is issued under the Local Government Finance Act 1988 in the United Kingdom. While the specific procedures may vary depending on the jurisdiction, generally, the following actions are typically taken when a council issues a Section 114 notice:

Consultation with the Chief Financial Officer (CFO): The council engages in extensive discussions with the CFO to assess the severity of the financial situation and explore potential solutions.

Financial Review: A comprehensive review of the council's financial position is conducted, including an assessment of revenue, expenditure, cash flow, and reserves. The review helps identify the root causes of the financial crisis.

Budgetary Control Measures: Strict control measures are implemented to curtail expenditure and ensure that no further financial deterioration occurs. This may involve freezing or cutting non-essential spending, imposing stringent financial controls, and reducing or postponing capital projects.

Emergency Measures: The council may need to take emergency measures to stabilize its financial position. This could involve staff redundancies, service reductions, and renegotiating contracts or agreements.

Engagement with Stakeholders: The council engages in transparent and open communication with key stakeholders, including central government, local residents, businesses, and community groups. This helps manage expectations, gain support, and explore potential collaborative solutions.

Recovery Plan Development: A recovery plan is formulated to address the financial crisis, restore financial stability, and ensure the council can fulfill its statutory obligations. The plan may involve a combination of cost-cutting measures, revenue generation initiatives, and long-term financial restructuring.

Approval and Implementation: The recovery plan is reviewed and approved by the council's governing body, usually in consultation with external advisors and auditors. Once approved, the plan is implemented swiftly to mitigate the financial crisis.

Monitoring and Reporting: Rigorous monitoring mechanisms are established to track the progress of the recovery plan and assess its effectiveness. Regular financial reporting and review are conducted to ensure ongoing financial stability.

Collaboration with External Authorities: The council collaborates closely with relevant external authorities, such as central government, auditors, and regulatory bodies, to seek support, advice, and potential financial assistance.

It's important to note that the specific steps and procedures may differ depending on local legislation and regulations. Consulting the relevant laws and seeking professional advice is essential when dealing with a Section 114 notice issued by a council.

Many Council's in the UK but especially England are currently in this position.

All Councils need to take account of what might need to be done in this situation.

Are you Ready?

This is a serious situation.

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