Northants plans to use up reserves to balance budget

30 Mar 18

Northamptonshire County Council is to use just about all of its reserves in a “last resort” attempt to balance the budget this financial year.

The council announced yesterday its £12m general reserves and £4.9m earmarked reserves – money set aside for capital projects – will go to plug the gap created by a forecasted overspend of £16.7m.

It plans to replenish the reserves in 2018-19, which will mean it will have to identify further savings in the new financial year.

Acting council leader Matthew Golby said: “The current financial climate facing Northamptonshire County Council is exceptionally difficult.

“Given the fact it is not an option for us to fail to deliver a balanced budget by the end of the financial year, we are looking to make the difficult decision to use our general and earmarked reserves to negate the forecast overspend.”

He added: “This would effectively exhaust our reserves and as such really is a last resort option. It is now the only option available to us.”

The troubled local authority will also postpone the sale and lease back of its £53m headquarters due to the likelihood of local government reform after the Best Value Inspection report.

It also announced it will seek further financial and legal advice about the use of capital receipts.

Golby added:  “We have taken the decision to postpone the sale of One Angel Square as the Best Value Inspection report and the secretary of state’s ‘minded-to’ decision this week suggest the strong likelihood that there will be a reorganisation of local government in the county.

“Following ongoing discussions with our auditors, we are also keen to seek further clarity around the flexible use of capital receipts.”

Northamptonshire’s auditors- KPMG- previously expressed concerns about the council’s use of capital receipts to raise money, suggesting it was not sustainable.

The council has accepted the findings of a reported carried out by Max Caller, which suggested it should be split up and two new unitary councils created

Communities secretary Sajid Javid also wrote to the council this week saying although the government will send in two commissioners to control its finances “in practice, most decisions will be continue to be made by the authority”.

He also gave details on what the commissioners remit would be:  one will focus on governance and scrutiny and the other to look at strategic financial planning and budgetary control.

Northamptonshire became the first council for 20 years to issue a section 114 notice in February, which meant it could not balance its budget and had spent its reserves.

Spending by the local authority was then stopped on all services, except those that protect vulnerable people.  

The amount of reserves the council has compared to the predicted overspend, would lead to just £0.2m being left over.

PF has reported that more and more councils are beginning to use up their reserves.  

Image credit: Hazel Nicholson, Flickr Images

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