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Since 2018, numerous councils have had to issue Section 114 notices, which indicate a state of financial distress relying on their Chief Financial Officer's assessment. These notices signal that councils can no longer commit to new spending, compelling them to either curtail spending, request government assistance via capitalization directions for asset liquidation, or reduce essential services they are mandated to provide. Remarkably, a staggering 11 such notices have been issued in total, with seven occurring since 2021 alone.
Understanding the root causes of the financial turmoil facing councils necessitates a closer examination of their funding structure. Councils receive financial support through three primary avenues: council tax, business rates, and government grants.