There is a Rumour…
Readers will be aware that Newham, and the mayor in particular have been the subject of concerns with regard to her financial management.
Readers will recall that the Budget Working Commission had a number of unanswered questions about the mayor’s finances.
Whispers have reached Open Newham, that there will be a section 114 Notice issued. This, if we are correct, will be issued by the chief finance officer, in this case, the Director for Corporate Resources, Conrad Hall.
To those readers who are unfamiliar with the intricacies of the Local Government Act, a s114 Notice generally prohibits any further spending save in the following circumstances.
existing staff payroll and pension costs
expenditure on goods and services which have already been received
expenditure required to deliver the council’s provision of statutory services at a minimum possible level
urgent expenditure required to safeguard vulnerable citizens
expenditure required through existing legal agreements and contracts
Spending that is not essential or which can be postponed should not take place and essential spend will be closely monitored.
The chief finance officer of the council has a unique power and responsibility that overrides the powers of the elected members or the mayor. He may, indeed, he MUST, suspend discretionary expenditure if he believes that the council does not have a balanced budget.
A s114 Notice is rare, but not unheard of. In the year 2000 one was issued by Hackney; in 2018 by Northamptonshire; followed by Croydon in 2020; and Slough in 2021. It is an admission that the council’s finances are in “acute distress”.
Councillors then have 21 days from the issuing of a s114 notice to discuss the implications at Full Council.
If our information is correct, that would put the emergency council meeting slap in the middle of August. That would be convenient.
A s114 Notice is the precursor to Whitehall stepping in to oversee the finances. This can be that Whitehall effectively takes over the council’s finance management, but this is rare. More likely would be the appointment of ‘experts’ to work with the council with whom the council would be obliged to cooperate.
The mayor and the councillors would effectively lose all control of the budget.
This is not the first time that rumours have suggested that Newham’s finances have reached breaking point. We hope that they are unfounded, but we are not confident that they are.