Limits to section 114 powers

Last week Joe Ejiofor wrote to all Labour Party members concerning the cuts_… the result of having to close a £20m budget gap, means that we will either have to charge more, or do less, or do both of the above. We are not going to set a deficit budget, nor are we going to dig so deep into our reserves that our section 151 Officer (the Borough Treasurer) issues us with a Section 114 notice (re: misuse of reserves and expectation of financial default). 

He has explained his line of argument in meetings, saying that the section 114 notice would to unelected officers taking over the running of the council from the elected councillors.


But the 151 officer (the interim CFO) is a council employee. And his powers are far more limited than Joe Ejiofor suggests. The limitations of the powers of the 151 officer are described in the blog post http://www.room151.co.uk/blogs/agent151-anyone-for-a-section-114/ Here the 151 officer and CFO states:

For the uninitiated, the section 114 powers of the chief finance officer (CFO) under the Local Government Finance Act 1988 require the CFO, in consultation with the council’s monitoring officer, to report to all the authority’s members if there is, or is likely to be, an unbalanced budget.In practice, this is most likely to be required in a situation in which reserves have become depleted and it is forecast that the council will not have the resources to meet its expenditure in a particular financial year.A full council meeting must then take place within 21 days to consider the notice. In the meantime, no new agreements involving spending can be entered into.
Let’s agree right now that things have to be pretty bad before you’re going to issue that notice.  To begin with, your reserves must be pretty much exhausted, to the point at which you have sacrificed all of your medium and long-term financial commitments in order to finance current expenditure.You must also have no confidence that future expenditure is going to be reined in to affordable levels; which either means that you believe the forecasts in your budget paper are a work of fiction, or that your budget paper presents the ugly truth that there are no plans.Next, you will almost certainly be currently spending more than you have budgeted for anyway, and have no confidence that you will be able to bring spending under control; and finally, you must be convinced that there is absolutely no way of brokering a solution without issuing the notice.
… That sounds like a happy ending, but history tells us that an section 114-wielding CFO rarely escapes unscathed. Some are plucked from their office before they can even sign the notice, and some depart shortly afterwards; the fate of each obscured from public view by a compromise agreement (soon to be capped, by the way). I can think of only one CFO that came out of it with a promotion to chief executive. Who would be a local authority finance director, eh?  Welcome to the new bad old days.

So the CFO does not have powers to issue the 114 notice arbitrarily. These can only be issued in the most extreme circumstances, where the CFO needs to be pretty certain that the financial plans are a work of fiction and will never add up. And even in the cases where a CFO issues a section 114 notice, they usually get fired, and all that it requires of the council is to meet again within 21 days to re-consider the budget. A left Labour council these 21 days can be used for mass meetings of the council workforce and service users where the CFO can explain which of their jobs and their services he wants to destroy, and the service users and workforce and express their preferences.

In our democracy we get to elect the council (or the Government for that matter). But the real business of government continues to be carried out by unelected officials – the CFO in the council or the permanent secretaries in government. The elected councillors or MPs are the public face. But behind the scenes things stay the same.

This is particularly problematic in Haringey where some of the key council officials where brought in from Barnet by Claire Kober to carry out her programme of cuts and privatisation.
When we elect a Council (or a Government) with a different agenda, this council needs to fight to overcome the resistance to its programme from the developers, from central government, from the profiteering privatising contractors, and from the unelected officials. This means reigning in on the CE, the CFO and the other unelected officials and making it clear to them that they work for the council, and not vice versa. Their job is to implement the manifesto under the direction of the elected councillors.

Instead, Joe is effectively inviting the unelected officials to sabotage the implementation of the programme of the new council was elected on. This has to change. The new council was elected not only to scrap the HDV, but to implement Corbyn’s anti austerity programme. We need to reverse the Officer led norms of the past. We need to have a council which is led by the elected councillors with the democratic oversight of the Labour Party membership.