BCP Council is in ‘one of the most precarious’ financial positions of local authorities in the UK, the chief executive has said.

Graham Farrant, addressing a meeting of the Children’s Services Overview and Scrutiny committee, said the council has one of the biggest deficits with the lowest reserves in the country.

He said the financial position ‘probably would result in a section 114 notice’ being issued but that the council would need to assess all options.

This notice essentially means that the council is insolvent.

Considering the implications of the Safety Valve programme to tackle education deficits, which at this stage are estimated at £63m, Mr Farrant said if the scheme didn’t work, the council would be forced to look at if it can balance its budget.

At the moment, there is a government set aside on the deficits that is set to lapse on 31 March 2026.

“If Safety Valve does not work and we assume that the statutory set aside is removed, then we have a big chunk of money that is outstanding which potentially could fall on the council’s balance sheet,” Mr Farrant said.

“We would have to question how can we balance the balance sheet. That might include selling assets, it might include making cuts in other services, it might include asking the government for a capitalisation direction, which is permission to capitalise in order to repay.

“Some of those might require a section 114 notice before they could be triggered, others there might have a conversation.”

The chief executive said that he doesn’t ‘fall naturally on the answer [for the financial situation] is a section 114’.

“The answer is we have to balance the budget,” Mr Farrant said.

“There are various mechanisms for doing that. They would all be extremely painful, not just for services in this area but for services across the board that are provided by the council.

“I’m hoping we don’t get there.

“The government knows that we are one of the councils that has the biggest deficit with the lowest reserves to balance it.

“There are many other councils that have bigger deficits, but they have reserves. We don’t have that.

“Therefore, we would be possibly in the most precarious position, or one of the most precarious positions.”

Mr Farrant continued: “It probably would result in a section 114 notice being issued as we stand. But it just depends what other government grant is available, what other funding is available, what the funding position is, where we are on council tax, income and all of that.

“If it was today, we would come to the council and say these are your options.

“We would probably, if it was today, ask for a capitalisation direction to capitalise it and pay it off over so many years and if that was approved that would require a smaller level of cuts but over a longer period.”

The council recently unveiled its budget proposals for the 2024/25 financial year.

It is awaiting a response from the Department for Education on its 15-year proposal under the Safety Valve programme.