Some Welsh councils close to issuing section 114 notices, Auditor General warns

Speaking to the Senedd's Finance Committee this month, Auditor General Adrian Crompton also said the Welsh model of public service delivery is "unsustainable on its current trajectory".

Crompton said: "There are undoubtedly a few authorities that are very close to having to issue a section 114."

He highlighted the findings of a report published in December last year, which found that, while there are no councils on the verge of issuing a section 114 notice, some councils are in "fragile and sensitive" financial positions.

"They are all facing some very significant demand-led pressures in areas like children's services, additional learning needs, temporary accommodation, which are very hard to predict," he told the committee.

Crompton continued: "But when you're right at the edge of financial sustainability, if you get hit with a couple of significant cases that you have to deliver against, that could be sufficient to tip authorities over the edge."

The Auditor General's eight-year term ends in September 2026. He told the Senedd that he plans to publish "legacy reflections" on his time before the end of the year.

He said: "Reflecting on my experience over the last seven and a half years, and, at a headline level, I would say that our model of public service delivery is unsustainable on its current trajectory.

"Bluntly, demand across all areas is outstripping our ability to increase funding, and so increasing public sector productivity and getting better value for money from the resource that we do have is absolutely central to squaring that circle."

However, he is "not without hope and optimism", despite concerns about public sector sustainability.

"I think we can turn things around, but we will have to tackle many of the things that we've talked about today: improved productivity, and a much sharper lens on value for money," Crompton said.

He also mentioned the impact of poor governance on public sector finances, stating: "By and large, our public sector is well governed, well managed, and money is spent sensibly.

"But, during my time in this role, I've had to publish reports on examples where that has not been the case, and [...] really, it's not been specific to any area."

He added: "Those come at a financial cost, in terms of settlement payments when there's dispute and so forth. Those are significant, but, for me, the damage is not really financial, so much as damaging the trust and the confidence that the public have in the whole system."

Adam Carey