The commissioners report, released yesterday, found the local authority had an estimated £35m unfunded deficit, which “must be carried forward” into the next financial year.
In the response from the communties secretary, also released today, he said the government had accepted the council's ‘stabilisation plan’, and would allow it to use £70m in capital receipts to set a balanced budget. PF will publish a further story on this tomorrow.
The findings of commissioners, who have been in place since May, said: “The requirement to find further savings to the extent necessary in order to neutralise this historic deficit represents an extraordinary challenge.
“Considered against the concomitant need to maintain the integrity of critical public service delivery, it is a challenge that is beyond being met in a single year”.
It added: “The external auditor has estimated a £35m unfunded deficit in the financial year 2017-18 (it is currently estimated because the auditor’s work is not yet completed).
“This is unprecedented in local government and we anticipate the external auditor will want to report fully on this and the subsequent inadequacy of the 2018-19 budget setting process when the audit is complete. ”
The commissioners report was sent to Brokenshire in September.
Commissioners Tony McArdle and Brian Roberts said: “The current state of the council’s finances calls into question the standard of financial management practice in the council. There has been a preparedness to compromise generally accepted accounting principles if this will present the council’s finances in a better light.”
In future, the council will need to find an “alternative mechanism” for tackling the deficit but doing so over a number of years is not possible due to reorganisation plans. The commissioners mooted the idea of using capital receipts to cut the deficit, and said they will make a request to government to do so.
Responding to the report, council leader Matt Golby said: “This together with our new leadership team means we are putting in place the foundations required for profound and sustainable transformation of public services.
“We have been clear we accept in full the failings that were identified and are now tackling them head-on.”
Brokenshire said: “Clearly, the situation in Northamptonshire is very serious. I am grateful to the commissioners for uncovering the council’s true financial position and the robust steps they have taken to improve its financial management and governance.”
The commissioners’ report coincided with the launch of a consultation, which will run until 25 January, on proposals to break up Northamptonshire council and create a two unitary structure in the county.
In a written statement published today, Brokenshire said: “Once the consultation is concluded, I will then as statute provides, decide whether or not to implement, with or without modification, the proposals that the councils have submitted to me”.
In August, seven out of the eight councils in the county voted to accept unitary reorganisation – only Corby Borough Council declined. The consultation document said Corby is “specifically invited to respond to this consultation”.
As part of the consultation announcement, Brokenshire committed to delaying council elections from May 2019 to May 2020 to coincide with reorganisation plans.
UPDATE at 11.23am on 30/11/18:
We have updated this story to reflect the government’s decision to allow Northamptonshire County Council to use £70m in capital budgets to set a balanced budget this year.
