Northamptonshire County Council's finances 'serious'

The government ordered a review into the county council's finances last month

A council that banned all new spending faces a serious financial situation for the rest of this year and next year, according to its chief finance officer.

Northamptonshire County Council has brought in a so-called section 114 notice preventing all new expenditure.

In the notice, Mark McLaughlin projected a £21.1m overspend for 2017/18, partly caused by the failure to sell housing development land.

He said the situation for the following year was "grave".

The housing land sale at Buckton Fields, near Northampton, was scheduled to have generated a capital receipt of £12m, intended to have been used to invest in services.

The county council only has reserves to meet half of the overspend, a report says.

It said the authority entered 2017/18 with "minimal reserves, and a budget that was achievable only with ambitious savings proposals and via inherently risky asset sales".

What is a section 114 notice?

• A notice issued by a council when it does not have enough money to meet its expenditure

• This includes the depletion of any financial reserves

• It means the authority does not have the confidence it can bring its spending under control

• Executed by the council's chief finance officer

• Northamptonshire County Council is the first authority in two decades to issue one

To combat the overspend, Mr McLaughlin recommends the cabinet agrees the sale and leaseback of its new headquarters, One Angel Square, on 13 February. It opened officially in October at a cost of £53m.

'Worst council'

But this holds inherent risks, Mr McLaughlin said, including finding a buyer in time to exchange contracts to generate revenue for 2017/18 receipts.

MP Philip Hollobone told the Commons financial pressures at Northamptonshire County Council had been "exacerbated by poor leadership"

On Tuesday, Kettering MP Philip Hollobone raised an urgent question in the House of Commons asking what implications the notice would have on services.

He said the issuing of the notice meant Northamptonshire "becomes the worst run in the country".

Local government minister Rishi Sunak said a report of an ongoing inspection into financial failing at the authority would be published on 16 March.

'Strict limits'

On Monday, the authority was legally bound to set a budget for 2018/19.

It included a council tax increase of 5.98%, including a 3% adult social care precept, and cuts totalling £2,748,000 for bus subsidies, trading standards, winter maintenance and library services. It will be discussed by the council cabinet on 13 February.

In a report on the 2018/19 budget attached to the section 114 notice, Mr McLaughlin said "members of the county council should be in no doubt that the council faces a financial situation that is grave and which thus places strict limits on the choices available to the county council".

All Northamptonshire's MPs are calling for government commissioners to take over the running of the county council, saying its financial woes have been "self-inflicted".

Council leader Heather Smith has yet to comment, but previously said she had warned the government about its situation.