Section 114 Notice

What is a Section 114 Notice?

Councils are required by law to have balanced budgets. If a council cannot find a way to finance their budget then a Section 114 (S114) must be issued. 

The issuing of a S114 notice bans all new spending with the exception of protecting vulnerable people and statutory services and pre-existing commitments.

Croydon’s reason for issuing the notice

The council’s 151 officer has filed a Section 114 Notice because the council already knows it will be unable to balance its budget in the next financial year (2023/24), which councils are required to do by law. 

A Section 114 will stop all but essential spending - making sure the council can continue to provide vital services to its most vulnerable residents. 

The council has today published a report ahead of a cabinet meeting on 30 November, which sets out its financial situation, including the background to the S114 Notice. 

In the report Croydon says it is in a financially unsustainable position and will not be able to balance its budget across the next 4 years without a new package of government support

You can read the Medium Term Financial Strategy report.

What the notice means for Croydon 

It means the council has to stop spending, it cannot enter into new agreements which will incur a cost.

However, the council can still spend money on:

• existing staff and payroll costs, 
• expenditure on goods and services which have already been received 
• expenditure required to deliver the council's statutory services at a minimum possible level
• urgent expenditure to safeguard vulnerable residents contractually committed expenditure 
• expenditure through ring-fenced grants 
• expenditure that will improve the council’s financial situation, that is necessary to reduce overall costs.  

The effect on council services

There will be no disruption to essential services. The council is issuing this Section 114 now to ensure that we take action to balance our budget and essential services are protected.

Refunds

If you are owed by the council we will still fulfil contractual obligations.

Next steps for Croydon

A council meeting will be held to discuss the S114 Notice in the next 21 days. 

The council has already begun to reduce non-essential spending and this new budget will work harder to reduce the council’s overspend and begin to put the council on the right track. 

Croydon’s plans on its financial problems

The council has published a range of savings proposals in the cabinet papers.

They include some changes to services, as well as plans to sell assets – and also to invest in transforming our council so that it is smaller, more efficient and delivers core services well while offering residents value for money. 

But even if the council does all these things, Croydon will still need extra help from government and that is why the council has asked them for a new model of support.  

You can find details of the council’s request to the government in section 6 of the Medium Term Financial Strategy report.

Decisions on whether your council tax will go up

Council tax is set at the annual council meeting next Spring and no decisions have yet been made. The council has asked the government for support and awaits their response. 

If you need to speak to someone about this 

The council will be opening a budget engagement for residents, businesses and partners to tell us their views on our budget plans and also share any ideas they have.

The survey will open from 1 December and we will be promoting it across all the councils channels with details for you to get involved. 

If you want to speak to someone about Croydon’s situation, you can contact your local ward councillor. You can find details of your ward councillors.

News

You can read more about this on our news website.

Documents

Section 114 report - 22 November 2022