Medway Council has reported that the prospect of issuing a section 114 notice has become “very likely” as it faces a budget gap of nearly £40m in the next financial year.
A report, which is to be presented to the council’s cabinet on 26 September, has outlined that Medway is currently facing a projected budget deficit of £38.75m for 2024/25, which may rise to £71.8m in 2027/28.
In addition, the report stated that the authority predicts an overspend in 2023/24 of £17.3m. However, Medway’s general reserves balance stands at £10m, “so it will not be possible to assume the use of reserves to close the projected gap” and instead a savings programme will need to be implemented.
As a result of the financial pressures facing the authority, the report rated the risk of the authority issuing a section 114 notice as “very likely”.
Vince Maple, Medway Council’s leader, said: “We have set out clearly the enormous financial pressures facing Medway Council.
“Our medium-term financial outlook is just a forecast and we have a number of options that we can take in the coming months and years to help address the forecasted gap.
“This will involve difficult and bold decisions and we will keep Medway residents involved and updated on progress.”
Medway Council stated that the budget gaps are due to the increasing cost of social care services, inflation, increased construction costs and cost-of-living pressures.
Financial pressures
In addition, Maple highlighted that a contributing factor to the financial pressure is that Medway Council is one of the lowest funded unitary authorities in the country per head of population.
“With other councils, we will be pressuring central government to increase their funding for us and give us a fairer deal particularly to fund critical services such as adult health and social care and children’s services,” Maple added.
In August, the council called for the government to enter a “new deal with local government” to increase funding for services alongside “sufficient” funding for other valued services.
Also, just a day prior to making this call, Medway reported that “urgent actions” such as ceasing non-essential spending were required to prevent its forecasted overspend for 2023/24 exceeding reserves.
The news of Medway’s likelihood of issuing a section 114 notice comes as local government minister Lee Rowley stated that “local government needs to be squeaky clean about the use of taxpayers’ resources, with an endless focus on efficiencies”.
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