Bucks council downplays bankruptcy fears after large authorities go broke

‘Bankruptcy’ is not on the cards for Buckinghamshire Council in the next two years, its leader has pledged.

Conservative councillor Martin Tett said the local unitary authority would not issue a Section 114 notice – a council’s declaration of effective bankruptcy.

He told the Local Democracy Reporting Service: “We are not going to issue a Section 114 notice. Certainly not this year, certainly not next year.

“I can’t guarantee that at some point in the future [we won’t], particularly if central Government changes and their funding for us changes significantly.”

Councillor Tett gave the assurances as local authorities across England face a £4 billion funding gap, according to the Local Government Association (LGA).

Nearly one in five council leaders and chief executives told the LGA that they fear that their chief finance officer will need to issue a Section 114 notice in the next two years.

Large local authorities have already issued Section 114 notices in recent months, including Birmingham City Council and Nottingham City Council.

Rising costs and demand for services such as adult social care and homelessness support have increased the financial pressure on local authorities, while some councils have suffered from financial mismanagement.

Unlike many other local authorities, Buckinghamshire Council is not forecasting a funding gap for the 2024/25 financial year.

However, councillor Tett said it was still under huge financial pressure and warned about the potential effects of a new central government on council coffers.

He said: “From our point of view, the real danger is that a Labour Government comes in that moves money up to other parts of the country, which is what happened with the previous Labour government.

“Were a Labour government to come in, history teaches us that they do not look favourably on areas like Buckinghamshire and that the likelihood is that funding will move to other areas.”

The council leader said the perception was that Buckinghamshire is a “healthy, wealthy county” where “everyone lives in a mansion at the end of a gravel drive”.

Councillor Tett added that such ideas were “nonsense” and “not true”, pointing to deprivation in parts of Chesham, Amersham, High Wycombe, Aylesbury and other areas.

Buckinghamshire Council is currently working on its budget for the 2024/25 financial year, which will be finalised in February next year.

Local authorities cannot go bankrupt in the same way as a person or business, but issue Section 114 notices when they expect their expenditure to exceed income.

After a council’s chief financial officer issues this document, the authority cannot spend without the officer’s permission.

The council’s leadership must also meet and discuss ways for the council to balance its budget, which could include measures such as spending cuts or council tax rises, if the Government allows it.

Birmingham City Council declared a Section 114 notice in September it is the largest local authority in England. The authority said that equal pay claims was a key financial issue it could not cope with.