Cheshire East “desperately needs” to avoid a section 114 notice – the equivalent of a council declaring bankruptcy – because if Government officials run the council, residents’ interests “come second to balancing the books”, councillors have said.
Several councillors at Thursday’s Finance Sub-Committee meeting feared the prospect of a section 114 notice could become a reality.
Alsager’s Coun Reg Kain said he was unclear about whether using the exceptional financial support – which incurs costs – would any be better than issuing a section 114, a report issued by a public body chief financial officer to prevent certain types of expenditure, issued when the council does not have enough cash to cover its expenditure.
He asked: “I want to know why exceptional financial support, which is going to still bring about the cuts that we’re going to suffer, is better than a 114, because I can’t see us avoiding a 114.
“I’m very sorry, but crossing my fingers is not good enough.”
Coun Ken Edwards (Bollington) said: “I’m very, very gloomy, and I think that we’re going to need the additional financial support.
“I think we’re going to need to continue to work on re-profiling the capital programme but other than that, frankly, I think we’re crossing our fingers to avoid a section 114 situation.”
The council applied to the Government in February for exceptional financial support of £17.6 million.
One of the key requirements for that was it had to produce an improvement and transformation plan and submit it to the Government, which it has done.
If the council cannot rein in its spending it will have to use the conditional exceptional financial support to avoid the issuing of an s114 notice.
Other councillors warned that a section 114 – which prohibits new expenditure, except for that required to provide statutory services – was to be avoided.
Coun Jill Rhodes (Crewe) said: “Exceptional financial support just requires us to increase our fiscal borrowing, but a section 114 is commissioners coming in.
“Those commissioners have to be paid by the council, but you lose political control – the council is run by commissioners.
“Democracy is probably not best served by a 114 notice and commissioners.”
Coun Janet Clowes (Wybunbury) said that if members thought what the council was going through now was bad “it is infinitely better than the violence of a slash and burn approach, which tends to be what happens when Government officials come in”.
She said: “All they’re interested in is balancing the books, whatever it takes.”
She added: “We need to do everything in our power to avoid a 114. On the other hand, it would be quite wrong to ignore the elephant in the room.
“This report refers to the potential of asking for more exceptional financial support. That comes with its own costs, as we’ve discussed, but would be a balanced decision that has to be made when we know what the Government settlement is going to be in December.”
