Northamptonshire County Council: The story behind the cash crisis

By Phil Shepka
BBC News

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Northamptonshire County Council met on Thursday to discuss cuts to services

Northamptonshire County Council has voted to make radical cuts to jobs and services as it attempts to fill a £70m shortfall. Children's services, road maintenance and waste management are among the areas now facing cuts. So how did the council find itself in this crisis?

'Weak budgetary control'

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Protestors outside County Hall during Thursday's meeting, where all but one of the MPs from the controlling Conservative party backed the action plan earlier while the opposition groups voted against

A highly critical government report into the Conservative-run council in March accused leaders of "weak budgetary control". The authority's leader Heather Smith subsequently resigned.

The Best Value report condemned the structure within the council's finance department, saying there appeared to be no officer with "clear responsibility for setting professional standards for finance staff".

Former finance director Matt Bowmer had warned in 2015 the council had a "culture and behaviour where overspending is acceptable".

He wrote to chief executive Dr Paul Blantern, council leader Jim Harker and cabinet member for finance Bill Parker after the authority overspent by £43m in the first seven months of that year.

He called for the authority to halt all non-essential spending - known as a section 114 notice - but his request was ignored.

A later government inspection found the letter was not treated as the "wake-up call" it should have been. The 2018 Best Value report said if the warning had been heeded, the council would have avoided having to make the latest cuts.

The authority's budgeting relied on one-off items, windfalls and capital receipts to balance the numbers at the end of the financial year.

For instance, a £21.1m overspend for 2017-18 was put down to, in the most part, the failure to sell land at a development area known as Buckton Fields.

The latest overspend prompted the government to send in commissioners to take direct control of the authority in April.

The council has issued two section 114 orders so far this year. There had previously only been two issued by UK councils since 1988.

Mike O'Donnell, from the Chartered Institute of Public Finance and Accountancy (Cipfa), said the council reached its current situation "in large part a result of failure of leadership to act upon clear warning signs".

He added: "Faced with these increasing pressures, the council lacked the financial oversight and political strength to take robust action."

'Next Generation Model'

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Northamptonshire County Council has brought some key services back in-house after a failed outsourcing initiative

The government report highlighted the council's radical outsourcing plans as a cause of its financial problems.

The plan, dubbed the "Next Generation Model" intended to outsource all services and create new bodies covering child protection, care of vulnerable adults, health provision and "improving the county".

These bodies would be owned by the authority but charge a fixed fee for services. The authority hoped this would avoid escalating costs and produce savings of £96.7m.

Councillors approved the plans in 2015, however expected savings did not materialise and in 2018 both public health and adult social care services were brought back in house.

Max Caller, author of the Best Value report, said all the model had done was "obscure and prevent effective member oversight and budgetary control".

The report said: "It did not and could not address the regular budget overspends which were covered by one off non-recurring funding sources."

Reduced funding

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Council leader Heather Smith resigned following the report's publication

While Ms Smith was in charge of the council she complained it received "significantly less" in government funds than other authorities.

In September she said the council "couldn't carry on as we are" and launched an appeal for "fairer" funding from central government.

The council said its population of 733,000 was among the fastest growing in England and demand for services was growing at an unprecedented rate.

But the government report said the authority was "in no worse position than any other council" and was not the "most disadvantaged" shire county.

Mr O'Donnell, from Cipfa, pointed out the council's leadership failings "took place within a context of sustained local government funding cuts".

He added: "It is a task for the government to work with councils to ensure finances are sustainable and it is down to local authorities to keep a check on their medium-term financial planning to have in place robust governance and financial oversight and also to heed the advice of outside experts."

Historically, the authority has charged its residents a lower-than-average council tax rate.

The Best Value report said a council tax rise would have helped the authority's finances. However, it had implemented the government's council tax cap between 2011 and 2014.

Other councils face similar issues, with East Sussex planning service cuts to a legal minimum "core offer".

Research released by the County Council Network (CCN) in June suggested England's 36 shire authorities face funding pressures totalling £3.2bn over the next two years.

CCN chairman and Kent County Council leader Paul Carter said: "Shire counties face a triple whammy of funding reductions, rising demand for services and are the lowest-funded type of authority.

"Counties are shouldering a disproportionate burden and the elastic is close to breaking."

What next?

Image source, PA, UK Parliament and BBC
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The county's MPs have criticised the council

In February all seven of the county's MPs had said they had lost faith in the authority's leadership.

The Best Value report was clear on what it thought should happen - scrap the council and start over.

It said it should be replaced with two new unitary authorities by 2020, one covering Daventry, Northampton and South Northamptonshire and the other covering Corby, East Northamptonshire, Kettering and Wellingborough.

The council has so far resisted those calls but Ms Smith's replacement, Matt Golby, said the authority accepted the inspection had found "what he believes to be significant failings at the council".

As councillors debated the cuts on Thursday, a member of the public said the council would have "blood on its hands" if a person died this winter because of cuts.

Mr Golby told the meeting that balancing the county's books would require "some very difficult decisions" including "rigorous controls on spending, recruitment and contracts".

The council will now figure out the impact on jobs and individual services after approving the "radical" cuts.

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