COUNCIL SAYS £12.9MILLION EMERGENCY FUNDING ‘MAY NOT BE NEEDED’

A key source of funding for financially distressed local authorities referred to in the Isle of Wight Council’s 2026/27 budget plans may not have to be used, senior council officers have said.

Both chief financial officer Chris Ward and monitoring officer Christopher Potter made the point regarding £12.9 million of Exceptional Financial Support (EFS) in response to questions from councillors at the policy, finance and resources committee (PFRC) meeting last week (Thursday).

EFS gives councils government permission to use capital budgets, borrowing or asset sales to fund day-to-day spending, according to the Institute for Government.

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Mr Potter told the committee:

“The fact that the government has had an (EFS) application and in-principle granted it does not mean to say that you have to use it or there’s a cost to you. It would be drawn down if needed in part or in full later on in the year.”

Mr Ward said:

“What you have with the application and the in-principle decision is a flexibility. It’s an option available to the council to use if it needs to. The flexibility there was offered because it was the only way to effectively set a lawful budget at the time.

“It doesn’t mean that it needs to be drawn on. The EFS is a mechanism to avoid a Section 114 notice. At this stage, nobody can really predict with certainty whether EFS will be required or not.

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“It’s not something that the council has signed up for at this stage with any terms and conditions attached.”

The issuing of a Section 114 notice – the closest a council can get to bankruptcy – is usually followed very quickly by government intervention and all non-essential spending may stop, according to the Local Government Information Unit.

Ministers can appoint independent commissioners to take control of the council.

Alliance council leader Phil Jordan said:

“The Section 151 (chief financial) officer has just said that there are no conditions. That is not my understanding and what I’ve been told as chair of this committee or as a member of full council.

“I was told that transformation funds had to remain because part of the EFS funding was that you transformed the council. And therefore, you need funds to transform.”