Last week, Daventry District Council called on the communities secretary to take over the running of Northamptonshire County Council. In an exclusive interview, Room151 speaks to Damon Lawrenson, interim director of finance and section 151 officer at Northamptonshire.
Room151: Is it right to say, as Daventry do, that an external audit of NCC’s finances by consultant KPMG found that £34.9m of £65m savings planned for 2016/17 were rated as either amber or red?
Damon Lawrenson: That report was produced around the end of July, which was the month I took up my post. During my first cabinet meeting, my predecessor said that there were a lot of proposals that might not be delivered and that I needed to get going. That is what I and my team have been doing.
Our cabinet member wanted, and I delivered, a full zero-based budgeting exercise for adult social care and social services — to make sure it comes in on budget. We have also been questioning procurement of contracts going forward. We are now down to a gap in the budget of £10m, which with four months to go is a pretty solid performance. We are intending to deliver to budget. Once we get this year out of the way, it gets us in a real controlled position moving forward.
Room151: Does that mean there is no gap in funding in the medium term?
DL: If you look at all medium term plans up and down the country there would be some gap in the later delivery. We have a gap forecast for in 2018/19 and 2019/20. My first priority is to deliver this year and make a strong and deliverable budget for next year. We will then move onto looking further forward.
Room151: Daventry said that the county only avoided running out of reserves this financial year by using capital receipts from service transformation, making use of a temporary permission from government to do so. Is this a fair criticism?
DL: Daventry makes the point that, in a normal year, you wouldn’t use capital receipts. But it isn’t a normal year: the government has made this flexibility available, so it is totally legal. I don’t understand why they have made that point.
When you have the pressures of adult social care funding building, why wouldn’t we use the power? Lots of chief finance officers are doing the same thing. We haven’t got the reserves that some councils have access to and using capital receipts has allowed some cushioning of the pressures this year.
Room151: Is the level of your reserves a problem?
DL: It is a challenging position but we are in control of it. I speak to the Department for Communities and Local Government and the Chartered Institute of Public Finance and Accountancy every month about the situation. We have maintained our general reserves, and the earmarked reserves are there for a purpose — for the here and now. All of this is in keeping with good financial stewardship.
Room151: Daventry also raised worries that your stand-alone companies would not result in the savings predicted. Is there any truth in that?
DL: At the end of the day, the next generation council is a really innovative new model for local government delivery and will rely on a number of federated vehicles. For us, it is a work in progress but one which is attracting a lot of positive attention nationally. One proposal for a trust to deliver children’s services has been put back a year, because the head of children’s services looked at the timetable and said it won’t be deliverable immediately. These different vehicles have the potential to attract different funding streams and we are talking to social investors who want to be part of that moving forward.
Room151: So there is no danger that you will become technically insolvent, as Daventry claims?
DL: This council has never not delivered its budget, even if it has been difficult in-year. We will make informed decisions to make sure the budget is legal. We have perhaps suffered from our transparency — which you might not get elsewhere.
Room151: Were you surprised by the request by Daventry that the secretary of state should intervene in the running of your authority?
DL: I suspect that what is happening is that Daventry wants to deflect the spotlight from our proposal to create a unitary authority for the county. It is a no-brainer and there is several million to be saved if the public sector in Northamptonshire reorganised. We have to protect the services such as mending potholes and social care. The more we can reduce the cost of democracy the better. Daventry doesn’t like the idea of a unitary and have done this to deflect attention from the idea.
Room151: Daventry argues that a unitary authority would lead to a lack of local accountability that is provided by district councils?
DL: At the end of the day it is about getting effective leadership across an organisation. And good communication means public accountability could be strengthened. If I was Joe Public, I wouldn’t care whose responsibility delivering the services was as long as they were delivered.
Room151: How is the council responding to Daventry?
DL: Our chief executive and cabinet member have been in contact with their opposite numbers at Daventry. It appears the leader of Daventry wasn’t fully in the loop on this report. He is meeting with chief officers to unpick why they have gone down that route.
Room151: Will they issue an apology?
DL: I don’t know. I have offered to meet with the chief executive and their finance officers to go through the entire budget. This is supposed to be a budget response, so they could have written and asked how they are affected. Why would you put something out without the courtesy of ensuring the facts are right?
Daventry District Council’s corporate governance committee was due to consider the officer report as Room151.co.uk went to press.
