Section 114s were introduced to beef up the powers of the s151 officers. But they can be a “career limiting move” and potentially indicate a failure of “cooperative working” inside a council.
The recent news of the issue of a report under Section 114 of the Local Government Finance Act 1988 has naturally attracted a great deal of attention.
I was a chief executive and director of finance in a London borough at the time that the legislation came into force. There had been much discussion about the need to give section 151 officers additional powers, which went back to the 1972 Act that abolished the specific statutory reference to every authority having to appoint a treasurer.
There had been considerable experimentation with section 151s and there was a feeling that the safe arrangements had been diluted. The 1988 Act made it clear that a section 151 officer should be a qualified accountant. It then added new powers to deal with situations where a council got into serious financial difficulties.
Section 114 was the “nuclear option”. It was amended by the 1989 Act to ensure that the section 151 officer had consulted with the monitoring officer and head of paid service before it could be issued.
There was initially quite a rush to flex muscles and to issue such a report, certainly a number of London Boroughs did so. It was the intention that such reports would only be called for in serious circumstances. There was a feeling then, as now, that generally authorities, even those in financial difficulty, can agree ways out of their troubles without the issue of such a report, which would clearly show some sort of failure of cooperative working within an authority.
Threats
I know that there have been threats to issue such a report but the number of times the section has been used after the initial enthusiasm is very small.
It will undoubtedly be interesting to see if the Northamptonshire report presages others, but I suspect that these will be very limited. It has been considered a career limiting move for section 151 officers generally in the past.
We should, however, be worried that it is a sign of the immense stress local authorities are currently under to balance their budgets, and it also poses a question about how long the current situation can continue.
There are still unsupportive noises in central government about the “unnecessary” level of reserves in authorities. But the system is now so uncertain that authorities need to keep a level of reserves if they are to maintain normal working. It is worth noting that 20% of education reserves have been used to bail out children’s service departments.
The current situation is unprecedented. There is greater than ever uncertainty about how local government is to be financed and the distribution of the retained business rates under the Fair Funding formula is clearly a big unknown and makes the provision of sound medium term plans extremely difficult.
Solutions
I noticed the The Telegraph opined this weekend that the solution was to move to small, local unitary authorities with social care delivered centrally. The burden of so many senior local government staff paid more than the prime minister would be removed at a stroke.
I can never understand why the salary of the prime minister is considered a comparator. If it were, the various “perks” of office should be included. A better comparator would be a similar sized and complex private sector organisation. (We could discuss the chief executive of Carillion as a better comparator, but I’ll let that pass).
There are, of course examples such as Northern Ireland where local authority powers, although recently enhanced, are limited and services such as housing and social care are provided centrally. But to do so on at the scale required by England would be difficult. Also a straight transfer of the financial burden would solve nothing. The Telegraph adds to its need for transformation the “incompetent” and sometimes “corrupt” use of planning powers.
The need for 5.9 % council tax rises, which have been already announced in many places and are self evident for most authorities, will step up the debate on the current state and efficiency of local government.
The LGA and others need to have robust answers ready to deal with these issues before they get out of hand.
Section 114 underlines the reluctance of many members to see services they know are greatly valued dismembered. The patience of many is running out and unless there are a number of outstanding issues resolved, and support given, there will be real trouble ahead.
Richard Harbord is a former chief executive of Boston Borough Council.
