Guildford Borough Council has confirmed that it has avoided issuing a section 114 notice “at this time” as the council has successfully delivered savings to balance its budget.
In July, Guildford warned that due to an auditing error, the council would need to consider issuing an s114 before October as it was concerned that it couldn’t balance its 2023/24 budget.
A Financial Recovery Update, which is to be presented to the council’s Executive on 5 October, outlined that between July and October Guildford has managed to identify around £3m of potential savings and additional income for 2023/24 to balance its budget.
The update stated: “Some of these savings are secured and should be sufficient to cover the budget shortfall in the current year, allowing for known risks. The risk of a s114 report in October 2023 has therefore been removed.”
In July, Guildford’s former section 151 officer, Peter Vickers, warned of the potential issuance of an s114 as an audit of its 2020/21 accounts identified errors related to the accounting for Covid-19 grants and the Collection Fund. The impact of the error was that the council’s usable reserves were around £20m less than when the 2023/24 budget was set.
Therefore, the council’s updated medium-term financial position considering the error was a remaining in-year deficit of £1.7m and a budget gap of £18m over the MTFP period to 2026-27.
Richard Lucas, Guildford’s lead councillor for finance and property, said: “It’s fantastic news that we will not be issuing a section 114 notice.
“We have identified savings and additional income to balance this year’s budget gap. Controllable spending has been reviewed, contracts revisited, and income streams updated. Increased demand for parking and garden waste are two of the areas that have contributed to our recovery plan. This work will continue in the coming months.”
Not out of the woods yet
However, the Financial Recovery Update outlined that although the immediate threat has been resolved, Guildford still faces a budget gap in its MTFP period and will need to continue to work on delivering savings.
“Further significant work is still required to avoid the other potential s114 trigger-point which is the statutory requirement to set a balanced budget in February 2024,” the report said.
In July, Guildford warned that the main concern for the council over the medium term is the increased need to finance its £300m debt.
A report at the time said: “Guildford Borough Council’s challenge is greater and more urgent than most councils due to these factors and a legacy of ambitious decisions to support infrastructure and regeneration that have increased our requirement to finance the council’s overall debt, c. £300m, which is expected to rise further.”
The report outlined that the council’s £300m of debt is made up of short-term and long-term borrowing loans, with a “significant element” of its capital programme using short-term funds.
The report highlighted that the costs of capital financing are “significant” in 2024/25 at 74% of the projected £8.7m deficit, and 83% of the £5.9m 2025/26 estimated deficit.
“Moving forward, our focus is to close the gap in the 2024 to 2025 budget and beyond. There is still a lot of work to be done to improve our financial situation before the next review in February, when an updated report will be taken to the full council meeting.
“We continue to work towards a sustainable financial future,” Lucas added.
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