Three quarters of senior finance officers expect at least one other council to issue a section 114 notice in the next 12 months, according to a Room151 survey.
Last month, Northamptonshire County Council’s director of finance issued a 114 notice imposing immediate spending controls on the authority.
Room151’s Local Government Finance & Treasury Current Affairs Survey, sponsored by investment manager CCLA, found that more than half of respondents expect one or two more notices in the next year.
Presenting the findings to Room151’s LATIF north conference in Manchester this week, John Kelly, client director at CCLA, said that a further 20% expect between three and five further section 114s, with 3.5% expecting between five and 10.
However, when asked about their own council, 56% of treasury officers said they were either confident, or very confident, of financial sustainability.
Kelly said this result “doesn’t suggest there is any panic or any need to get unduly worried at present”.
Elsewhere in the research, 36% of those surveyed said that they had begun to invest in higher yielding instruments, due to the current funding squeeze, compared to 30% who said there had been no impact.
One respondent said: “We have seen a contraction in the number of counterparties but have been reviewing counterparty limits to make better use of those we have to ensure diversification of our portfolio.”
Another answered: “The overall level of cash available for treasury investments has significantly dropped and, yes, we are considering higher yielding instruments in addition to being very conservative.”
Three quarters said their auditor has provided no advice or training on the impact of the forthcoming IFRS9 reporting standard.
Kelly said: “It is not an ideal situation where the industry has been as left on its own as it seems to have been in this instance.”
