Northamptonshire sparks warnings other councils could ‘fail’

5 Feb 18

Leading local government figures are warning multiple councils could be at risk of financial collapse after a county council dramatically imposed emergency spending controls.

Concerns have been raised after Northamptonshire County Council issued a rarely used ‘section 114’ notice on Friday banning expenditure on all services, except those that protect vulnerable people.

The notice - thought to be the first of its kind in nearly 20 years-  has signalled the council’s fear that it will not be able to produce a balanced budget by the end of the year, as required by law.

CIPFA chief executive Rob Whiteman tweeted about the announcement on Friday: 

A CIPFA spokesperson said: “CIPFA has advised both the Ministry of Housing, Communities and Local Government and the LGA that we are likely to see other councils reach this point in the two to three years if the government does not provide a more sustainable framework for local government finances.”

Paul Carter, chair of the County Councils Network and leader of Kent County Council, added: “Northamptonshire, like other counties, have worked hard to balance the books.

“But this demonstrates the severe financial pressures counties are facing.”

Carter explained county authorities were facing “deepest reductions in funding and demand-led pressures in adult social care”.

“This is placing immense strain on local budgets after years of financial restraint.”

Northamptonshire County Council now has 21 days to hold discussions about what this order means for them and will address the issue at a full council meeting on 22 February.

In a statement issued on Friday the local authority said: “The notice has been served in light of the severe financial challenge facing the authority and the significant risk that it will not be in a position to deliver a balanced budget by the end of the year”.

Reports have suggested warning signs about Northamptonshire’s financial state had been ignored.

Sajid Javid sent an inspector into the Conservative-controlled county council earlier this month, saying he could intervene in the local authority’s management depending on what the inspection found. 

Andrew Gwynne, shadow secretary of state for communities and local government, issued a statement saying: “There have been deeply worrying reports for a number of months that this council was failing in its duty to the people of Northamptonshire - and now these people will pay the price for this negligence.”

He also called on the final local government finance settlement, due to be released on Wednesday this week, to make more funding available for public services.

Northamptonshire has the lowest funding for any county authority, according to the CCN, and this has left it “£23.6m worse off each year”.

A peer review published in 2017 by the Local Government Association suggested “the council is banking on the ‘hope’ that it will be bailed out by the government in 2019/2020, because other councils may also find themselves in a similar position”.

A CIPFA spokesperson said they were “not surprised” by the section 114 for three reasons, including the fact the local government sector is under enormous strain due to resource reductions since 2010.

Also, Northamptonshire’s budget has been placed under mounting pressure after an unfavourable Ofsted report alongside an increased number of elderly people, the spokesperson explained. 

“Thirdly, the county’s transformation programme, though innovative, has not yielded sufficient savings and the council depleted its reserves in an unwise manner without alternative compensatory savings of the order needed,” she added. 

A Ministry for Housing, Communities and Local Government spokesperson said: “We recently appointed an independent inspector to look at Northamptonshire County Council’s finances.

“This is a decision for the authority, and it would not be appropriate for us to comment while the inspection is on-going.”

The council also said on Friday that the notice does not affect staff pay and the council will continue to meet its statutory functions.

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