Southampton City Council has warned that a section 114 notice is a “major risk” for the authority in 2023/24 as its financial position has become “very uncertain”.
In a budget report, John Harrison, executive director for finance and commercialisation, outlined that the authority has used £20.6m from its reserves to balance its budget for 2023/24. He detailed that the significant drawdown has left a forecast of only £10.3m of unallocated balance in the medium-term financial risk reserve.
Harrison, Southampton’s s151 officer, wrote that given the significant risks, particularly of further demand for services and cost of living pressures, the amount of reserves is “inadequate”. He added that “use of reserves to such an extent also compromises the capacity for ‘invest to save’ and to achieve savings through transformation work”.
“The authority is in a very uncertain position financially, and one where its financial resilience is severely weakened to the point where, in my opinion, a s114 notice is a major risk during 2023/24,” Harrison stated.
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He also outlined that given the financial risks, “there is every chance” that reserves will be needed to balance the authority’s budget in 2024/25, “and hence they could be fully utilised ahead of this point”.
In the report, he stated that Southampton City Council must “take all possible action” to reduce the financial risks it faces by continuing with an “essential spend only” regime. This means the authority should avoid new commitments where possible, continue to make savings plans and aim to reduce budget pressures in year.
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