Services and employment opportunities in Swindon could have faced cuts had the government not granted the council authorisation to dispose of certain assets to generate funds, according to the authority's leader.
The substantial budgetary shortfall of £14.7m this year would have resulted in Swindon Borough Council effectively declaring itself bankrupt.
While officials and councillors were formulating the authority's £188m revenue budget for the current financial year last December, the chief financial officer submitted an application to central government for Exceptional Financial Support (EFS).
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This arrangement permits the council to circumvent standard regulations governing local authority finances to prevent severe financial distress.
For Swindon, there existed a deficit between projected income and anticipated expenditure of almost £15m, with the council seeking approval to dispose of certain property assets – including commercial holdings such as a trading estate – to bridge this shortfall.
Chief financial officer Kim Chequer made clear that without this authorisation, the council would be unable to achieve a balanced budget and would be compelled to issue a Section 114 notice.
Within the government application, one inquiry posed was: "Does the council have an alternative option to EFS?".
"Please specify what would happen in the event EFS was not agreed and the council's likely next steps."
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The answer was unambiguous: "If EFS is not approved it would be necessary to issue a S114 notice.
"However, given the level of expenditure on statutory services and the service improvement requirements facing the council, it is not clear how a S114 notice would make a material difference to achieving a balanced budget."
The issuance of a Section 114 notice is commonly termed "declaring bankruptcy".
In technical terms, a local authority cannot 'become bankrupt', and a Section 114 notice merely represents a declaration that it lacks sufficient funds from its revenue streams – including council tax collections, government funding and charges such as parking fees, or payments for services like funerals or leisure facility usage – to fulfil its budgetary spending obligations.
Borough council leader Councillor Jim Robbins said that, considering the council's financial challenges, which mirror those faced by numerous other local authorities, utilising Exceptional Financial Support represented the optimal choice.
He said: "The alternatives to taking out EFS this year were to either slash services or cut jobs.
"Neither of these would have resulted in an improvement in the lives of Swindon residents or helped us to deliver the Swindon Plan.
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"We have set up the Swindon 2028 Transformation plan which is designed to look at all of the activities that we currently undertake and determine how best they can be delivered whilst switching the focus of the council's work to be targeted on prevention, stopping problems for residents before they really develop."
Cllr Robbins confirmed that officers were working diligently to achieve savings. He said: "We will be working hard this year to use as little of EFS as possible and have already made a huge start in this by delivering a small surplus last year rather than the projected overspend.
"We may decide to use EFS again next year, rather than cut services that are currently being looked at by the transformation process.
"It makes no sense to cut a service this year, and then bring it back subsequently, with the knock-on impacts to service users and staff, if we don't have to.
"That also probably costs us more money in the longer-term."
He added: "Years of under-investment and cuts have taken their toll, but we are working to deliver the best possible outcomes for residents, as well as investing in Swindon's future.
"The situation for next year will become clearer in a few months when the Government release their fairer funding plans which are designed to deal with the years of under-investment, and support Councils to be sustainable for the long-term."