Hackneys financial crisis deepens as treasurer issues section 114 notice

19 Oct 00
The London Borough of Hackney is in the throes of another financial crisis after the borough treasurer issued a formal warning that the authority is facing a massive budget deficit.

20 October 2000

All spending has been frozen after George Jenkins issued a section 114 report on October 17 that predicted a hole of up to £15.5m in the general fund by the end of this financial year.

The report, sent to the district auditor and all council members, also warns of a £2.2m overspend on the housing revenue account.

Problem departments identified include waste management and revenue and benefits, which are both £3m in the red, and transport services, which is running £600,000 over budget.

This is the latest instalment in a long-running catalogue of financial problems at Hackney. It is the first authority to have issued two section 114s, the first being in 1989. In September 1999, the borough had to impose a seven-month spending moratorium to limit last year's deficit.

Managing director Max Caller, appointed this summer, blamed the current crisis on officers' refusal to take previous warnings seriously. 'The real story is only now unfolding and we were left with no choice but to issue this report to force officers to curb expenditure who, up to now, have failed to realise and take seriously the situation we are in,' he said.

A five-strong emergency panel has been set up to deal with the present chaos. The members, who include Caller, acting director of finance Anna Klonowski and director of social services Mary Richardson, will examine budget savings plans drawn up by each department.

They will also have to approve all spending until the full council meets to discuss Jenkins' report on November 7.

Mark Williams, leader of the opposition Liberal Democrat group, condemned the Labour/Conservative coalition for failing to act since taking power in April and said he did not believe they could turn things around.

'I am not convinced that officers will carry out the borough treasurer's instructions. Historically they have shown a huge disregard towards financial diktats,' he added.

Hackney's problems mirror those of Hillingdon, which issued a 114 notice in July.


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