Barnsley Council facing £21m budget overspend next year – but will not have to issue ‘bankruptcy’ notice

The LGA (Local Government Association) estimates that councils in England face a £4 billion funding gap over the next two years just to keep services running, and almost one in five council leaders think it is very or fairly likely that their chief finance officer will need to issue a section 114 notice this year or next.

Half are not confident they will have enough funding to fulfil their legal duties next year, including providing statutory services.

Nottingham and Birmingham City Councils have both issued section 114 notices this year, effectively declaring bankruptcy, meaning all spending except for statutory services will be restricted.

In Barnsley, council leader Sir Steve Houghton CBE says that the authority is facing a ‘challenging’ time – but will not have to issue such a notice.

He told the Local Democracy Reporting Service that although Barnsley Metropolitan Borough Council (BMBC) estimates that it will have to spend £21m more than budgeted, tight controls on recruitment and procurement will mean the budget will be balanced this year.

Coun Houghton said: “We have a plan in place to balance our 2023-2024 budget. We’re estimating to spend £21.3 million more than we set in our revenue budget, which funds day-to-day running costs.

“We did predict some of this – we knew it was going to be an increasingly challenging time due to the broken local government finance system – and set aside some money to help pay for the pressures faced.

“We’ll support this with increased officer scrutiny of all spending, including tighter controls on procurement and recruitment spend.

“We are awaiting the chancellor’s settlement for local government by the end of December, which will give us a clearer picture of the scale of the challenge in the months ahead.

“Although we have a plan for this year and next, we are looking at a very difficult few years ahead, as the autumn statement predicted real-term funding cuts for local government over the medium term.”