Alarm bells are ringing for Council finances


The extent of the council’s financial difficulties are exposed once again in the next three years’ budget report which goes to policy committee this evening, 13 February.

The policy committee makes recommendations as appropriate on matters reserved to full council for decision, including constitutional matters and the authority’s budget and overall strategic direction.

The report, Budget 2017-20, makes for grim reading. If recommendations are accepted, it will be put before a full council meeting on 21 February.

The budget position for the next financial year 2017/18, which starts on 1 April 2017, includes the following bad news:

  • £1.704m of savings previously agreed in 2016/17 and earlier years can no longer be delivered,
  • a further £7.7m (37%) of savings may be undeliverable,
  • £11.141m of reserves will be used to balance the budget,
  • a proposal to ‘use a property based transaction’ to retain reserves was considered but has been rejected after due diligence [ref 1],
  • the chief finance officer (CFO) does not consider that the remaining reserves after balancing the budget are adequate.

The interim finance director Rachel Musson is the appointed chief finance officer (CFO) and section 151 (s151) officer. The s151 officer has legal responsibilities for the proper administration of a local authority’s financial affairs. These duties are set out in acts of parliament.

The interim finance director states the actions that will need to be taken in the coming weeks:

Unless the council is able to produce a realistic plan for reducing the budget requirement for future years by the second quarter of 2017/18, the s151 officer will be required to produce a section 114 report [ref 2]. 

A section 114 report is a serious step, as the committee papers explain:

The publication of such a report starts an immediate ‘prohibition period’. This means [that] everyone who has delegated authority to spend the council money immediately has those powers suspended during the prohibition period, and only the CFO can authorise new commitments [ref 3].

Explanations for the deteriorating financial position revealed during the course of the year are given in the report:

  • a reduction in the revenue support grant from the government,
  • the 2016/17 overspend on children’s services, estimated at £6million,
  • an increasing demand for adult social care,
  • some expected savings have not been realised,
  • increases in national insurance, pension costs and national living wage which are outside the council’s direct control,
  • changes to information security and data protection costs.

In addition to the finance director’s advice, the interim managing director Simon Warren raised a note of concern about “…the operating and statutory risks as perceived by the managing director…” [ref 4]

A robustness and resilience review has been carried out by the interim managing director which has identified common themes that affect the council’s resilience and need urgent attention if the council is to be able to respond to the risks highlighted by the CFO. It is therefore critical that a sustainable improvement plan, adequately resourced, directed by CMT (Corporate Management Team) and overseen by councillors, is implemented as a matter of urgency.

And he goes on to add that “a significant risk to the satisfactory delivery of a sustainable improvement plan is the high number of interim and temporary staff in key positions”.

Note: when the report was produced the final ‘local government finance settlement’ for 2017/18 was still awaited, as was the ‘fire authority precept’ (the amount paid to the fire service by the council). An updated version of the budget report may be required when these figures are known.

The policy committee meeting will take place on Monday 13 February at 6.30 pm in the Council Chamber, Civic Offices, Bridge Street, Reading RG1 2LU.

It is expected to be webcast.


  1. Budget 2017-20. Appendix 4 annex b para B17
  2. Budget 2017-20. Appendix 4 para 1.11.  (Section 114 of the Local Government Act 1988) More details are also set out in Reading Borough Council Constitution para 2.1.19.
  3. Budget 2017-20. Appendix 4 para 1.12
  4. Budget 2017-20. Appendix 4 – annex C


  1. Policy Committee
  2. Reading Borough Council webcasts
  3. Clouds are gathering over the Civic Offices
  4. Auditors finally deliver report on council finances

2 thoughts on “Alarm bells are ringing for Council finances

  1. Pingback: Whitley library relocating to Reading Youth and Community Centre | The Whitley Pump

  2. Pingback: Auditors now have their two pennyworth on Council finances | The Whitley Pump

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