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More councils could follow Northamptonshire and impose emergency controls: CIPFA

It is likely that in the next two to three years other councils will reach the point that Northamptonshire County Council has reached if the government does not provide a more sustainable for local government finances, CIPFA has warned.

The Director of Finance at Northamptonshire issued a section 114 notice imposing emergency spending controls on the authority on Friday (2 February).

This means that no new expenditure is permitted, with the exception of statutory services for safeguarding vulnerable people.

CIPFA said the news that Northamptonshire was the subject of a section 114 notice was not surprising for three reasons.

“First, the local government sector is under enormous strain following significant resource reductions since 2010. CIPFA has advised both the Ministry of Housing, Communities and Local Government (MHCLG) and the LGA that we are likely to see other councils reach this point in the two to three years if the government does not provide a more sustainable framework for local government finances,” it said.

“Secondly, in the specific case of Northamptonshire, it is a council that has traditionally received tight resources and has generally been a low-cost authority. An adverse OFSTED report placed the corporate position under strain. At the same time the number of elderly people has risen, creating budget pressures. 
 
“Thirdly, the county’s transformation programme, though innovative, has not yielded sufficient savings and the council depleted its reserves in an unwise manner without alternative compensatory savings of the order needed. However, we have seen other councils suffering the same general and specific strains manage their budgets more effectively. With Northamptonshire, it appears to have now deteriorated too far for the council to be able to manage its finances and government intervention is likely to be needed to set a path for the future.”

Councillors will have 21 days to discuss the implications of the section 114 notice and this is due to be addressed at a full council meeting on 22 February.

“The notice does not affect staff pay and the council will continue to meet its statutory functions,” the county council said.

In January the Secretary of State for Housing, Communities and Local Government, Sajid Javid, appointed an inspector, Max Caller, to examine concerns around financial management and corporate governance at the Tory-run council.

The same month Northamptonshire unveiled plans to sell and lease back its One Angel Square headquarters to help fund social care and other service transformation.

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