Croydon Council has today issued a section 114 notice due to the severe ongoing financial challenges facing the authority.
This significant step will mean all new non-essential spending will be stopped while an emergency budget is drawn up to find further savings in this and the coming years.
In a letter to councillors, finance director Lisa Taylor outlined the serious issues facing the council including a potential budget shortfall in the current financial year of around £66m.
Issuing the notice is recognition that despite all efforts to do so the council cannot now balance its budget this year, which it is required to do by law.
The council had previously acknowledged its worsening financial situation, and has set in train a number of improvement and savings programmes to help put it back on a stable financial footing.
It is also in talks with the government about the financial support necessary to balance the budget and transform the council.
What does the S114 notice mean for council services?
It means that no new expenditure is permitted, with the exception of that funding statutory services, including safeguarding vulnerable people, although existing commitments and contracts will continue to be honoured.
Council officers must therefore carry out their duties in line with contractual obligations and to acceptable standards, while being aware of the financial situation. Any spending that is not essential or which can be postponed should not take place and essential spend will be monitored.
The only allowable expenditure permitted under an emergency protocol would include the following categories:
- existing staff payroll and pension costs
- expenditure on goods and services which have already been received
- expenditure required to deliver the council’s provision of statutory services at a minimum possible level
- urgent expenditure required to safeguard vulnerable citizens
- expenditure required through existing legal agreements and contracts
- expenditure funded through ring-fenced grants
- expenditure necessary to achieve value for money or mitigate additional in-year costs
The council will have 21 days from the issue of a Section 114 notice to discuss the implications at a meeting of full council.