CIPFA’s guidance to CFOs has been modified to allow councils under budgetary pressure due to the pandemic the time and spec to explore alternatives to freezing spending via a S.114 notice.

Councils have legal responsibility to balance their budget, with S.114 notices issued when spending is likely to exceed resource. The temporary modifications to guidance proposed by CIPFA would mean that it should not normally be necessary for S.114 notices t be issued while informal discussions with the government are in progress.

The institute is proposing two specific modifications:

• At the earliest possible stage a CFO should make informal confidential contact with MHCLG to advise of financial concerns and a possible forthcoming S.114 requirement.
• The CFO should communicate the potential unbalanced budget position due to Covid-19 to MHCLG at the same time as providing a potential S.114 scenario report to the council executive (Cabinet) and the external auditor.

CIPFA’s CEO Rob Whiteman said: “With the pandemic accelerating demand across all local services, any freezes on spending in any local area could potentially be highly disruptive and not an effective tool at this time. Temporary change to S.114 notice process creates space to explore other options or financial support that may be available to local authorities, while allowing financial directors to meet their statutory responsibilities.”