Struggling Northamptonshire council balances books, but funds ‘need replenishing’

The struggling Northamptonshire County Council has managed to end the financial year without using all of its reserves.

The local authority has been dealing with major financial issues for some time. In February, the executive director took the unprecedented step of issuing a section 114 notice, which stopped all but the most essential spending for the cash-strapped council.

The organisation also tabled unitary plans to combat its bleak economic position, with councillors suggesting that an unlikely “significant local government reorganisation” could be the only option left.

It has not been plain sailing since then, with auditors issuing an advisory notice warning that Northamptonshire’s budget could be unlawful. The revised budget then included some “regrettable but inevitable” proposals designed to meet its statutory responsibilities, despite government concerns that it might be unable to do so.

Last month, the local authority announced that it planned to use its general and earmarked reserves in order to balance its books.

Since then, and with the section 114 notice in place, any new spending has only gone ahead with the approval of a panel chaired by the chief executive. According to the council, this has helped to slow down spending and the provisional outturn for the year shows an overspend of £12.7m.

This gap can be met by reserves in the short term, but the council has said that it will need replenishing in the very near future. The end-of-year finances will also be subject to audit by KPMG.

Cllr Michael Clarke, county council cabinet member for finance, explained: “Serious action had to be taken very late in the financial year to ensure that the council could deliver a balanced budget.

“The county council is committed to building on the good work which has already started with a robust approach to financial management and rigorous cost control.

“We will need to replenish our reserves and the challenges of the next few years are very clear, but the county council has shown that it does not shy away from the big decisions, such as the sale and leaseback of One Angel Square in the current financial year.”

In March the government published its Best Value Inspection report, which highlighted issues around budget planning and financial forecasting at the county council, recommending that external commissioners be appointed to assist with the council’s recovery.

Following this, Northamptonshire announced plans to establish an independent improvement board to oversee the work to improve financial management and governance. The board will be made up of county council members and officers, as well as representatives from the borough and district councils, stakeholders and external advisors, working alongside the commissioners.

The council said that it will remain in place until a new system of unitary governance is established in Northamptonshire – a move recommended in the Best Value report.

Cllr Matthew Golby, new leader of the council, said: “We are committed to making the necessary improvements to our financial management and governance as highlighted by the Best Value Inspection.”

He explained that forming the board is a key part of the council’s journey, enabling it to ensure that the agreed improvement actions are implemented and helping to restore public and stakeholder confidence.

“By including representatives from the borough and district councils, it will also help with the transition to unitary government and enable closer working between the current tiers of local government,” concluded Golby.

Top image: yevtony

Enjoying PSE? Subscribe here to receive our weekly news updates or click here to receive a copy of the magazine!