Croydon Council has issued a second Section 114 notice which is a continuation from the one issued on 11 November 2020 due to the ongoing financial crisis it is facing.

By issuing a Section 114 notice, the council is required by law to consider the report within a 21-day time frame, and decide whether it agrees with the views in the report and what action if any it proposes to take. If the budget remains unbalanced it must then issue another notice.

This means it will continue to only spend on essential services with a daily spending control panel making sure this happens. The council will continue to deliver key services, protect and help vulnerable residents and honour its existing contracts.

Further information 

On December 2 issued a second Section 114 notice – this is a continuation from the one issued on 11 November 2020 due to our ongoing financial challenges. 

Councils are required by law to balance their budgets – if they can’t they must issue a section 114 notice, which bans all but essential spending. 

We’ve taken this action to protect vital services – we will continue to deliver key services, protect and help vulnerable residents and honour our existing contracts. 

We have been clear that we will need financial support from government if we are to balance the budget this year and to help rebuild a financially sustainable council by 2024. 

We formally submitted our request for financial support in the shape of a capitalisation directive (loan) to the Ministry of Housing, Communities and Local Government (MHCLG) on 15 December and await their response.  

About section 114 notices

Councils are required by law to have balanced budgets. If a council can’t find a way to finance their budget a section 114 must be issued. The issuing of a S114 notice bans all new spending with the exception of protecting vulnerable people, essential services and pre-existing commitments. 

How a section 114 notice impacts the council

The notice means we have had to stop all non-essential spending – and cannot enter into new agreements which will incur a cost. 

There will be no disruption to essential services. We are issuing this section 114 to ensure that we take action to balance our budget and vital services are protected - that includes our ongoing response to the Covid-19 pandemic.  

We 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 councils 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.   

Why a section 114 notice is necessary

We know that we cannot balance our budget this year. We are forecasting a £66m overspend and while we’ve taken significant steps to tackle our financial challenges, we will not be able to find the savings we need to make this year. We’ve issued a section 114 to make sure we can continue to provide vital services to our most vulnerable residents by stopping all but essential spending.  

Issuing further Section 114 notices

Second 114 notice

On December 2 we issued a second Section 114 notice which is a continuation from the one issued on 11 November 2020 due to the ongoing financial challenges. 

By issuing a Section 114 notice, we are required by law to consider the report within a 21-day time frame, and decide whether we agrees with the views in the report and what action if any it proposes to take. If the budget remains unbalanced we must then issue another notice.  

Extraordinary council meetings to discuss the reports were held on 1 and 16 December.  

We have been clear that we will need financial support from government if we are to balance the budget this year and to help rebuild a financially sustainable council by 2024. 

We formally submitted our request for financial support in the shape of a capitalisation directive (loan) to the Ministry of Housing, Communities and Local Government (MHCLG) on 15 December and await their response.  

Third 114 notice

Following discussions with the Chartered Institute of Public Finance and Accountancy, it has been agreed that we do not need to issue a further notice until our financial situation changes.

Steps being taken to tackle the financial challenges

We have already taken significant steps to tackle our financial challenges and this is one part of a wider action plan which includes making savings – you can find out more about our renewal plans in the November cabinet papers.

Your thoughts and opinions

You can contact your local ward councillor about this and their details are available in the find your councillor section

We welcome residents’ ideas and suggestions as we develop the Croydon Renewal Plan, which will set out how we are going to become financially sustainable in the future.  

You can take part in the public consultation on our savings proposals at www.croydon.gov.uk/savingsproposals or get in touch with us at croydonplan@croydon.gov.uk 

News

You can read more about this on our news website.

Documents

Section 114 report - 2 December 2020

Response to Section 114 notice (appendix 3) - 1 December 2020

Section 114 notice (appendix 2) - 11 November 2020

Extraordinary Council Meeting

An Extraordinary Council Meeting took place to discuss the section 114 notice on Tuesday 1 December.