Experienced councillor rings alarm over 'parlous' NNC finances after authority uses up its contingency cash four months before year end

Cllr Jim Hakewill says he does not think the way NNC is running its finances is sustainable

A senior North Northants Council member has raised concerns after the authority spent all its contingency budget four months before the end of the financial year.

Councillor Jim Hakewill (Ind, Rothwell and Mawsley) said the council now found itself in a ‘parlous’ position, similar to that of the broke Northamptonshire County Council that it was set up to replace.

He was speaking at the authority’s Finance and Resources Scrutiny Committee – a cross-party group charged with probing the council’s financial management.

The committee met at the Corby Cube earlier this week

They were discussing a budget forecast report that predicts the authority will have overspent by £5.72m at the end of March. The council has already spent all of the £4.75m contingency fund it set aside at the beginning of the year for unforeseen costs.

The authority originally set its 2022/23 budget at a total of £295.907m. That had to be upped in month three to £300.075m, an increase of £4.6m taken mostly from council reserves.

The report states that unexpected inflationary rises, driven by the uptick in energy costs, has contributed to the overspend.

Cllr Hakewill said: “The contingency budget is completely spent and we’re looking at period eight, we’ve got four months to go.

"We are zero on that contingency now. How do we replenish that, and what will we do in the next four months given we don’t have that contingency reserves? Where will, if we have continuing deficits, that money come from?”

Officers said the money would come from general reserves.

Cllr Hakewill said: "Like many councils across the county we’re in a parlous position not dissimilar to the legacy councils that we were with.

"That is disappointing because the change was intended to bring us back to sustainability and I don’t believe what we’re reading at the moment is going to be sustainable.”

Noting the huge £11m Children’s Trust overspend, that will cost NNC £5.2m as it is shared with West Northamptonshire Council, Cllr Hakewill said: “Whichever way you look at it the same basic systemic problem of increasing social care - in this case children’s – is attacking our bottom line.

One officer replied: “Like a number of authorities we’ve been affected this year both by significant inflationary impact generally, and through energy costs which weren’t foreseen at the start when we set the budget.

"It’s an expectation from government that a number of authorities will be using their reserves."

Cllr Hakewill added: “The use of reserves was the slippery path that Northamptonshire County Council went down until they were exhausted.

"It says that we aren’t on a long term sustainable path.

“Home to school transport – again a very significant pressure.

"How are we going to try, and have we got anything in process, to mitigate home to school transport running out of control?”

The authority is undertaking a review of home to school transport, which was split between West and North Northants authorities in November and has an overspend of £3.3m. The council has already taken £918,000 from its contingency fund to bring that down to £2.35m.

Officers said that a number of contracts had become single-user transport during Covid and bosses were now looking to return some of them to multi-user services.

Following the meeting, leader of North Northamptonshire Council Cllr Jason Smithers (Cons, Oundle) said: “It is misleading to compare our finances to those of the situation which faced the county council in 2018.

“The financial landscape now is unrecognizable to the circumstances five years ago and overall our finances are in a robust state through a prudent approach to managing our money.

“What we, and all councils are facing, is a lot of hard work to reduce our spend pressures in a challenging economic climate.

“In line with good practice the council includes a corporate contingency budget to help meet unforeseen pressures and needs.

“This year we have witnessed unprecedented cost increases, with levels of inflation and changes in demand which could not have been forecast when the budget was set. Therefore, the council is releasing its contingency budget to help offset such costs, and even though it has been fully applied in year it is still based on supporting the forecast position for the whole year.”