Council leader 'extremely confident' the authority will not face 'bankruptcy' notice
A council leader has said it is "most unlikely" his authority will ever need to issue a notice effectively declaring it bankrupt.
Councillor Peter Nutting, leader of cash-strapped Shropshire Council, was responding after a report from the authority's head of finance raised the potential of the need for a 114 notice – which prevents councils from spending money – if it does not make significant cuts to its budget.
Councillor Nutting last month lobbied Secretary of State for Housing, Communities and Local Government, Robert Jenrick MP, for extra funds after the authority revealed an £18m hole in its finances caused by the coronavirus pandemic.
Telford & Wrekin Council has also called for government help to cover a £19 million shortfall in its budget.
Councillor Rae Evans, Telford & Wrekin's cabinet lead for finance, said they were not expecting a requirement for a 114 notice – although that may change without government support.
It comes as Mr Jenrick announced £500m of support for councils – although it is yet to be seen how much Shropshire and Telford will receive.
Councillor Nutting said that the discussion around a 114 notice was because the council's officers have a legal duty to consider all eventualities.
He said: “Clearly Covid-19 is having an unprecedented impact on the council’s finances.
"The reference in the financial strategy to a Section 114 Notice is something officers have a responsibility to report to cabinet as it is one the options available to deliver a legal and balanced budget.
"Last week I talked to the Secretary of State Robert Jenrick MP about our position, and he has assured me that addition funding will be coming our way. A Section 114 Notice means we turn the tap off on spending until we can find a better way to balance the books.
"I can assure you that although it is something we have to consider, we have no intention of issuing a Section 114 Notice at this time. Shropshire Council has good reserves. It is most unlikely we will ever need to announce a Section 114 notice and I am extremely confident that will not happen either now or for the foreseeable future."
Cllr Evans said: “ Over the last 10 years we have been forced to make a £123 million of savings due to government funding reductions, we have done all we can to support our residents, business and communities over this time and specifically over the last 4 months of this pandemic.
“While the situation caused by the coronavirus pandemic is extremely challenging and the Council faces a £19 million shortfall this year, at this time we do not foresee the need for a Section 114 notice but this may change if government does not provide further financial support.
“We have made it very clear to government what money we need to fill our financial gap this year. “
