Infamously bankrupt Northamptonshire council gets a mention up north - and not in a good way
Northamptonshire County Council got a mention in a council chamber in North Yorkshire this week - as an ominous warning for what happens when local authorities go bust.
The financial collapse of the county council and its aftermath was used as a cautionary tale by an auditor for Redcar and Cleveland Council in a committee meeting on Tuesday (July 30).
The Teeside local authority could run out of money within one or two years unless spending is slashed or central Government plugs the gap, according to Gavin Barker from independent audit group, Mazars.
Mr Barker said that while Redcar and Cleveland Council was closer to the 'cliff-edge' than other authorities, the number finding themselves in a similar situation was 'expected to increase'.
“It can be just where you are in relation to that cliff edge. It can be a historic thing, where you started in terms of the reserve levels you have,” he said.
“Some organisations still have quite a lot of reserves to draw upon which means they can manage their position over a longer period.
“Others are just much closer to that cliff edge.”
With a nod to Northamptonshire County Council, he added: “At least one has already gone over that cliff edge – and we’ve all seen what happens when that happens.”
Northamptonshire County Council went bankrupt last year and banned itself from all new expenditure, except in social services, twice - for the first time in the country in more than 20 years.
The problems are thought to be so deep-rooted that all Northamptonshire's county, district and borough councils are all being scrapped as a result, with two unitary authorities replacing them, by order of the Government.
Redcar and Cleveland Council is a unitary authority, having the powers of a county and district council combined, with a population of around 135,000.
In Redcar and Cleveland Leisure and Community Heart on Tuesday - a leisure centre where the council meets - councillor Glyn Nightingale asked if the council’s financial position was unique.
The auditor Mr Barker replied: “Not every organisation is in the same position as this council. That would be my comment.
“Auditors will always want to give an early warning when a financial position is getting more and more difficult – for me you’ve triggered that point now.
“Which is why we’re issuing the qualification on the value for money conclusion – it’s early warning.
“We’re not into a ‘going concern’ issue yet but the council does need to take that action to avoid that being the case in the future.
“Put simply, not every council is there. Not every public sector body that we work with is there.
“I have to say, my experience is that this council is an outlier in this respect.
“There are others who are in this position but the council is among a group of outliers.”