Northamptonshire County Council finances 'remain fragile' despite break-even optimism from commissioners

Tony McArdle and Brian Roberts were drafted in by Westminster to oversee the failing county council after it effectively declared itself bankrupt last year by ordering a section 114 notice, which prohibits news spending.

But with the in-year overspend reducing from £64.1million to £1.4million, the commissioners are confident the council will balance its book by the end of the financial year in late March.

In a letter sent to all councillors prior to the 2019/20 budget being set this week, the signed letter reads: “For the current year the monthly revenue monitoring report is showing the current overspend to be £1.4m and we expect the council to break even by the end of the year.

“This is a substantial reduction on the projected overspend at the time of issuing the s114 Notice in July 2018.”

The in-year savings have however had a huge helping hand from the Government, who granted the county council permission to use £70million of capital monies for their revenue funding. Such spending is not normally allowed in local government.

The capital dispensation has allowed the council to wipe out the £39.7million deficit that was being brought forward from 2017/18.

The commissioners go on to say: “In addition, further scrutiny of the measures taken by the council to close the 2017/18 accounts has identified the injudicious use of earmarked general fund reserves of £4.4m. We are pleased that the council proposes to reinstate these reserves by further use of the capitalisation dispensation.”

Chief executive Theresa Grant said the impact on frontline services would have been ‘pretty catastrophic’ had the capital dispensation now been allowed by the government.

Even still, the commissioners are predicting further financial prudency for 2019/20. The budget, being determined on Thursday, has an increase in council tax of 4.99 per cent, which is beyond the 2.99 threshold normally allowed without a referendum. It will raise an additional £5.8million for the council.

The letter adds: “We are concerned about the potential workload on the council in leading and supporting the work on establishing the new unitaries. We would expect the focus of the cabinet and the officer leadership team to continue to be on improving services, especially Children’s Services and delivering savings totalling £41.4m in 2019/20.

“Even with the actions taken to date the financial resilience of the council remains fragile. It will continue to operate with a minimum general balance and only very limited earmarked reserves and provisions.

“Although the financial situation remains serious, we believe the budget to be considered by the cabinet at its meeting on February 14 is credible and achievable, subject to confirmation of the capital receipts, and therefore it has our endorsement. This should result in the council producing a balanced outturn in 2019/20.”