ST HELENS Council has issued a warning over the potential of a Section 114 notice in the "medium term" amid major financial challenges.

But it says in the short term residents "should not be concerned".

A Section 114 notice is often described as a council effectively declaring bankruptcy.

The financial monitoring report, for period two, of 2023-24 came before full council at its meeting on Wednesday.

'Forecast overspend'

It said there is a forecast service overspend of £9.412 million against the updated net portfolio budget of £178.036 million.

Furthermore, it stated that "treasury management underspends" will offset the projected overspend by £2.750 million, resulting in a forecast net budget overspend of £6.662 million.

During the full council meeting on Wednesday, Cllr Martin Bond, cabinet member for corporate services, said it was a "difficult report" and a "significant strain".

He added that, without the change of Government, he suspects local authorities "will be in dire straits all across the country", not just those presently "on the edge".

The report said that if the projected overspend is not mitigated "considerably and permanently", there will be further pressure on levels of balances and the "potential that the council will be forced to issue a Section 114 notice in the medium term".

However, the Labour-run council has faced criticism from members of the opposition after a vote to increase councillors' basic allowances by 10.5 per cent went through on the same evening that the council's financial plight was discussed.

The Star has also highlighted the level of local authority has spent on consultants over recent years.

'In the short term residents should not be concerned'

A council spokesman said: “Given the financial pressures faced by all local authorities and the circumstances for St Helens as set out in the report it is right for the potential of a S114 notice in the medium term to be raised.

“In the short term residents should not be concerned but there is a long standing funding issue in local government alongside demand pressures which, until central Government takes action, do require significant savings to be found in order to achieve a balance budget position.”

The report also stated, in response to the "severe situation", the executive management board has actioned an "immediate recruitment freeze and have directed that all non-essential expenditure be ceased and ongoing reviews of agency worker usage be conducted".

The spokesman said: “The freeze applies to the current year to address the in year pressure, but there are exceptions for essential posts which are agreed by senior management.”

The financial monitoring report was submitted to cabinet in November.

READ MORE: St Helens Council spends £6.2m on consultants for 'specialist knowledge'

At the meeting on Wednesday, councillors noted the resolutions of cabinet, which included noting the forecast outturn revenue overspend position for 2023/24, noting the management actions outlined to mitigate the 2023/24 revenue position, and noting the latest position with regard to the implementation of 2023/24 budget savings and those brought forward from prior years.