Government intends to take over Northamptonshire’s finances

27 Mar 18

Government commissioners are likely to take control of Northamptonshire County Council’s finances, the communities secretary has announced today.

Sajid Javid said he was ‘minded’ to take over the council’s financial management and reporting processes. The council now has 10 days to respond before he makes his final decision.

The communities secretary also told the Commons he could go further, giving the commissioners “reserved powers to act as they see fit across the entirety of the authority’s functions if they consider that they must step in”.

The move is in response to a critical government-commissioned report, which suggested the local authority was broken up.

Javid told the Commons Northamptonshire had failed “on all counts”.

“Northamptonshire’s failures are not down to a lack of funding or because it is being treated unfairly or is uniquely disadvantaged compared to other councils,” he added.

The county council issued a section 114 notice last month - thought to be the first of its kind in nearly 20 years – after it had spent its reserves, meaning it could not produce a balanced budget for the year. This halted expenditure on all services, except those protecting vulnerable people.

Javid has the power to take over the council’s functions under section 15 of the Local Government Act 1999.  

Inspector Max Caller was sent in to investigate the authority in January 2018.

The former chief executive of Barnet council said in his report: “The problems faced by Northamptonshire are now so deep and engrained that it is not possible to promote a recovery plan that can bring the council back to stability and safety in a reasonable time scale.”

The council’s structure made “oversight difficult and accountability blurred”, he also stated in the report.  

Caller suggested the local authority was merged with other councils in the area and split into two.

Northamptonshire has accepted these findings and said it was committed to “working alongside partners to achieve this in the timescale outlined”. 

Caller suggested the two new unitaries be set up following the elections in May 2020. 

The troubled council along with district and borough local authorities in the area have three months to come up with proposals for restructuring local government in the county.  

Javid reassured Northamptonshire that essential services will continue to be delivered under the commissioners’ control.

In response to the section 114 notice, the council agreed to sell its headquarters to free up cash.

Andrew Gwynne, shadow secretary for local government, speaking after Javid’s announcement in the Commons, attributed the council’s struggles partly to financial mismanagement but also “eight years of austerity nationally”.

Rob Whiteman, CIPFA chief executive, said: “It is right for the government to act to ensure there is financial leadership of Northamptonshire County Council and also to call for local proposals on the future of the authority.

“Whatever the decision on the shape the reforms take, it is crucial that we learn the principle lessons from the county council’s failure.”

The County Councils Network umbrella-group acknowledged the communities secretary had “no option” but to send in commissioners. 

But they also claimed “all the available evidence” showed “a single county unitary would deliver deliver 68% greater efficiency savings than a two-unitary option”. 

The Local Government Association previously reported that councils faced a funding gap of over £5bn by the end of the decade.

Image credit: Hazel Nicholson, Flickr Images

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