Northamptonshire County Council’s s151 officer has issued the council with its second section 114 notice of the year, after service heads failed to identify any areas for making further savings.
In February, the council became the first authority in 20 years to be issued with a s114 notice due to the financial crisis engulfing it.
However, that notice only covered the 2017/18 financial year, and the council’s director of finance, Mark McLaughlin, who has already tendered his resignation, says that he has issued a new notice owing to a forecast overspend of up to £70m in 2018/19.
In his report, McLaughlin said: “Services were asked…to come up with meaningful further in-year savings proposals.
“No realistic proposals, other than the mitigation of existing pressures, were provided and so I must assume that this process is unlikely to yield additional savings.”
He added that the council “has no financial resilience” and that the budget target of using £30.9m of capital receipts as revenue funding under government transformational expenditure rules was “unlikely to be achieved in full”.
Work on the preparation of the accounts for 2017/18, and audit work carried out by the council’s external auditor, KPMG, has identified a significant risk that the council will have an unfunded deficit as at 31st March 2018.
“…it is therefore likely that the council faces a need to find in the region of £60m to £70m of in-year savings in 2018/19; taking into account the 2017/18 unfunded deficit,” McLaughlin said.
Following the issuing of the first s114 notice, the council’s approach to financial management has improved, according to the outgoing FD.
However, he added that: “There are no ways out of this financial situation other than a willingness on the part of the county council to take the decisions that will be required to achieve a lawful outturn in 2018/19 and to set a lawful budget in 2019/20.
“This process must be performed with pace and the decisions taken must be implemented.”
Achieving a balance budget, he said, will involve “detailed attention to all costs that can be safely and legitimately minimised”.
He said this would have to go beyond cuts to staff pay and staff numbers, to all services including those affecting vulnerable children, young people and adults.
“All accounting adjustments and one-off interventions have now been exhausted,” he said.
Given that no immediate remedy is available “it is likely that the s114 notice will remain in place for the foreseeable future”, McLaughlin warned.
The council is now required by law to have a full meeting to discuss the notice.
Council leader Matthew Golby said: “The financial challenge facing Northamptonshire County Council remains critical and the spending controls we have in place are vital to ensure we are focusing our limited funding on only the most essential services.”
Responding to the development, a statement from CIPFA said: “It is a warning that whilst many councils have the requisite capabilities, not all councils have the necessary leadership skills, effective robust governance and culture to effectively manage budgets under pressure.
“Service users and staff at the county have been let down by the collective failure of leadership that for several years led to denial of the scale of the problem and ultimately financial collapse.”
