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Section 114 notice

Section 114 notices are reports issued by the chief financial officer (or Section 151 officer) of a British public body to prevent certain types of expenditure. The notices take their name from section 114 of the Local Government Finance Act 1988.[1][2]

The most common type of notice is made under section 114(3) which restricts all spending except for that which funds statutory services.[3][4] Despite the fact that local authorities in the United Kingdom cannot go bankrupt,[5] issuing a section 114 notice is often described in the media as a council effectively declaring bankruptcy. Most councils under a section 114 notice will then pass a new budget to introduce cuts and reduce spending.[5]

Amongst other instances, section 114 notices have been issued by Hackney Council in 2000, Northamptonshire Council twice in 2018,[6] Croydon Council in 2020 and 2022,[7] Slough Council in 2021,[8] Thurrock Council in 2022,[9] and Woking Borough Council and Birmingham City Council in 2023.[10][11]

  1. ^ "Local Government Finance Act 1988: Section 114", legislation.gov.uk, The National Archives, 1988 c. 41 (s. 114), retrieved 27 November 2021
  2. ^ Statement of the Chief Financial Officer on Reserves, Robustness of Estimates and Affordability and Prudence of Capital Investments (PDF) (Report). Oldham Council. 26 February 2020. p. 28. Retrieved 27 November 2021.
  3. ^ Cite error: The named reference LGL was invoked but never defined (see the help page).
  4. ^ "Appendix 1 - Definition of a Section 114 Notice" (PDF). Oldham Council. Retrieved 6 September 2023.
  5. ^ a b Cite error: The named reference Sandford was invoked but never defined (see the help page).
  6. ^ Brady, Dominic (24 July 2018). "Northamptonshire issues second section 114 notice". Public Finance. Retrieved 13 April 2022.
  7. ^ "Croydon Council bans new spending under Section 114 notice". BBC News. 11 November 2020. Retrieved 27 November 2021.
  8. ^ Local authority financial sustainability and the section 114 regime (pdf) (Report). Vol. 2. Housing, Communities and Local Government Committee. 14 July 2021. p. 31.
  9. ^ "Thurrock Council issues S114 notice of financial distress". BBC News. 19 December 2022. Retrieved 20 December 2022.
  10. ^ Richard Partington (7 June 2023). "Woking council declares bankruptcy with £1.2bn deficit". The Guardian. Retrieved 7 June 2023.
  11. ^ Jessica Murray (5 September 2023). "Birmingham city council declares itself in financial distress". The Guardian. Retrieved 5 September 2023.

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