The s151: a prefect in a post-pandemic world

Tony Travers discusses how the prefectorial role of the section 151 officer has become more significant as austerity has hit council budgets. He suggests that the s151 will become ever-more important as the levelling-up agenda develops and we emerge from the pandemic.

The more precarious local government’s financial position, the more visible is the role of the section 151 officer. Indeed, any threat of a section 114 notice at an individual council guarantees immediate national media attention. Such threats are often, though wrongly, referred to as a local authority “going bankrupt”, which immediately increases headline sizes.

The transparency of the s114 process is such that it instantly shines a light on the financial management of councils in ways that rarely occur in the NHS, quangos or central government departments.

Local authorities are multimillion-pound enterprises that are of crucial importance to everyone in the UK. Unemptied bins, deeper potholes, broken pavements, graffiti, unlit streets and fly-tipping would become almost immediately obvious if a council could no longer function.

Section 151 officers are required to act in a quasi-prefectorial way when they determine whether or not a council’s revenue budget is fully funded in-year. It could be compared to the situation in France, where the prefect operates between central and local government and is tasked with ensuring that local branches of the state function properly (the term “prefect”, of course, comes originally from Ancient Rome). Crucially, however, French prefects are agents of national rather than local government.

Section 151 officers are required to act in a quasi-prefectorial way when they determine whether or not a council’s revenue budget is fully funded in-year.

Political judgements

Looked at this way, s151 officers are required to monitor their local authority’s decision-making (of which they are themselves, complicatedly, a part) and, potentially, make a judgement as to whether the books will balance. Given their own role in budgeting, the need to judge if spending will exceed income is intensely political. Where s114 notices are issued, it is often in such a way as to say, in effect, “councillors will not face up to reality”.

It is not always like this. In the last couple of years, as the pandemic has cut public transport use, Transport for London’s (TfL) fare income collapsed. TfL is statutorily a local authority and thus its finance director is a section 151 officer. As negotiations between the government and the Mayor of London became bogged down in politics, the threat of the need to issue a section 114 notice became real. TfL’s financial plight did not occur because of mismanagement, rather as the result of national lockdowns.

As the Department of Transport (for political reasons) drove a hard bargain with TfL over a bail-out, section 114 proved a powerful threat to the government. If the bailout had not been forthcoming, or had been too small, massive tube and bus service reductions would have occurred in a very public way.

22 March 2022
The Marriott Hotel, Leeds
LATIF North
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Real-life impacts

But, most frequently, s151 officers are acting where local politicians have got in a mess. Failure to make difficult decisions, poor management and personality clashes can all result in budgetary shortfalls. In Northamptonshire, Croydon and, most recently, Slough the issuing of a section 114 notice immediately attracted national media attention. Northamptonshire was broken up as a result, while the leader and senior officers resigned at Croydon.

There are significant real-life impacts from the actions of s151 officers that go beyond simply banning new expenditure and contracts.

The role of s151 officer, like that of the chief executive/head of paid service and the monitoring officer, gives the holder a role that transcends the electoral legitimacy of councillors. In most normal circumstances, the “reserve” intervention powers will not be used and will not perceptibly affect day-to-day operations. However, the possibility that a s114 notice could be issued will inevitably of itself create a “deterrent” effect on councillors’ behaviour.

The role of the s151 will inevitably be affected by the levelling-up agenda. If the government wants to regenerate town centres in the North and Midlands, then the only agents that can deliver this are local councils.

Prefectorial authority

Photo: Shutterstock

Local government’s experience of austerity since 2010 has both empowered local finance directors and put them into a more awkward position. Being akin to a “prefect”, an agent of national legislation, gives holders of the office an authority that many of them may not fully appreciate. Given it is unlikely that councils’ financial position will improve much in the coming years, the s151 role is going to remain important.

The role of the s151 will also inevitably be affected by the levelling-up agenda. If the government wants to regenerate town centres in the North and Midlands, then the only agents that can deliver this are local councils. And this will provide s151s with a much wider set of responsibilities.

This reality begs the question of whether professional organisations and the training they offer may need to recognise the challenge posed by being a (sort of) internal regulator. Indeed, as the post-Audit Commission local government audit arrangements continue to struggle, the need for councils’ own financial processes to be robust intensifies.

Ensuring that elected members manage limited resources to maximum impact within complex rules is a never-ending challenge. The role of s151 officers will become ever-more important as the country attempts to level up and recovers from the pandemic.

Professor Tony Travers is associate dean of the School of Public Policy at the London School of Economics.

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