The government has given Northamptonshire County Council permission to spend up to £70m of cash receipts to balance its budget.
The move was suggested to the secretary of state for the Ministry of Housing Communities and Local Government by the Commissioners for Northamptonshire County Council in September, with their letter being made public this week.
Accounting rules usually prevent councils using capital receipts in this way.
The Commissioners’ letter pointed to an unfunded deficit for 2017/18 estimated by the external auditor at £35m which must be carried forward and addressed within this financial year. They describe this as ‘unprecedented in local government’ and representing an ‘extraordinary challenge.’
The option of reducing this deficit over a number of years was not open due to the proposed reorganisation of local government in Northamptonshire.
“An alternative would be to use available capital receipts to meet the council’s over-expenditure in 2018/19 and indeed the previous year. We will consider making a capitalisation request to the government”.
Ministers approved the move after the council warned that without a cash injection it would be unable to run its core services.
Northamptonshire must make good a total £70m deficit by the end of March to avoid the risk of insolvency for third time.
