Bedford council 'can't set legal budget without government bailout approval'
Bedford Borough Council’s Executive heard that the authority cannot set a legally balanced budget for next year unless the government approves emergency financial support (EFS).
A refusal of EFS could trigger formal bankruptcy-style procedures.
The statutory Section 25 report presented to the council’s Executive last night (Monday, January 26), said: “It is clear the council is not able to set a balanced budget for 2026/2027 without the need for EFS.”
“The section 151 officer believes this course of action is a last resort,” it added.
EFS does not provide extra funding, instead, it gives councils government permission to borrow or sell assets to pay for day-to-day running costs.
Julie McCabe, the council’s executive director and section 151 officer, said: “The basis of the budget is based on an application for exceptional financial support or EFS of £25 million for 26/27, over and above an amount of £22 million for 25/26.”
Crucially, the Section 25 report said: “If the application for EFS is not approved at the end of February, a balanced budget will not be able to be set, and the section 151 officer would be under a duty to issue a notice under section 114 of the 1988 Local Government and Housing Act”.
A section 114 notice effectively freezes all non-essential spending and usually prompts external government intervention.
The report revealed the scale of the current financial crisis, with the council’s overspend this year reaching £14.3 million, up from £11.4 million two months earlier.
Reserves are also below the council’s own recommended safety threshold.
The General Fund balance stands at £11.1 million, beneath the minimum risk-assessed range (currently between £12.8 to £15.6 million), and overall reserves are classed in the bottom quartile compared to similar councils.
At the same time, borrowing is set to rise sharply. Long-term debt is planned to increase from £104 million now to as much as £227 million by 2028.
The council’s Improvement Plan (approved earlier this month) is intended to restore financial stability.
Ms McCabe said: “This plan is an outline plan at this stage, it needs to go further. It needs to look beyond 26/27 and have greater ambition if we are to get to a point where the council is financially sustainable in later years.”
Councillors must take the Section 25 report into account before setting the budget next month.