Another council issuing Section 114 notice demonstrates dire reality of local authority finances

Care England, the largest and most diverse representative body for independent providers of adult social care in England, expresses deep concern over the announcement that Birmingham City Council has declared itself effectively bankrupt.

Professor Martin Green OBE, Chief Executive of Care England said:

“The announcement made today by Birmingham council is a dire wake-up call that the current structures in place to support local authorities by the Government are not fit for purpose. This occurrence is indicative of a larger pattern, with more and more councils either having already, or looking to, serve Section 114 notices. The threat of financial insolvency looms over authorities across England.

 

Following on from our warnings just last month that there is not enough money in local systems, we are now witnessing the devastating impact that is currently unfolding in Birmingham and across the country, with local care providers and the individuals they support facing the consequences.

 

This event is the latest, in a long list of examples, highlighting how the Government has failed to meet the needs of local communities and provide them with the necessary funding to support a strong social care system. Without Government intervention, all authorities in England are at significant risk.”

Birmingham County Council is by no means the only local authority to currently face extreme financial hardship, with Woking, Thurrock, Slough, Croydon and Northamptonshire having also issued Section 114 notices in recent years.

On top of this, Kent, Guildford, Hastings, Southampton and Bradford have reported to have cautioned they may be at risk of serving a Section 114 notice in the near future.

As a result, as many as one in ten local authorities have already served, are looking to serve, or have taken urgent action to mitigate serving Section 114 notices after significant concerns have been raised about their statutory obligation to balance their books

Martin Green continues:

“Councils serving Section 114 notices represent a drastic need for full reform into the current practices of how the Government supports, and governs, local Councils. Whilst this must be backed by the proper funding, there must also be assurances on how that money is managed at a local level, wherein the Government upholds robust accountability measures and enables thorough auditing of councils themselves, to avoid instances such as those seen in Thurrock recently. Failure to do so is putting essential services at risk.

 

Already, parts of adult social care are on the precipice of collapse. Crippled by historic chronic underfunding, providers and councils alike are forced to operate on a knifes-edge as the Government offers insufficient support. The Government does have the prerogative to significantly rejuvenate the financial health of councils, and subvert the risk to our public services if they address the social care funding crisis head-on.

 

Time and time again Care England has warned that the lack of money going to local systems fails to meet the levels of care needed locally. Local authorities are required to find an equilibrium between a legally balanced budget and delivering public services but are restricted by inadequate central government funding, and their ability to raise the necessary funding locally. Time has run out for Birmingham, and the Government must immediately unlock essential funds for all local authorities to ensure adult social care and our public services are uninterrupted.”

Note: A Section 114 notice is issued when a Local Authority notifies the Government that it cannot meet the spending commitments for the financial year.  As a result, the Council must cease all expenditure, and cannot enter into new contracts that will incur a cost, aside from exceptional reasons including the funding of statutory services. The Local Authority must hold an emergency meeting within 21 days of serving a Section 114 notice to undertake a thorough review of their budget and either pass a new budget or suggest other necessary actions, that reduce spending. The Government does hold the ability to intervene in how council services are run, however, this does not need to be practised as a result of Section 114 notice being served.