Northamptonshire County Council has announced that it is set to balance its 2018/19 revenue budget, seven months after its former director of finance issued a section 114 notice predicting a £64.4m overspend.
A financial update produced for councillors this week said that the council’s forecast revenue deficit at the end of the third quarter now stands at £1.4m.
In what would be a remarkable turnaround, the council said that it anticipates making further budget savings to completely eliminate the deficit by April.
A report to the council’s cabinet said: “We anticipate balancing the budget by the end of the financial year.
“This has been achieved through the hard work and patient endeavour of staff at all levels across the council working under the clear direction of a new cabinet and executive leadership team.”
Speaking to Room151, the council’s executive director of finance, Ian Duncan, said that the reduction in the predicted overspend – which is down from £9.8m last month – was partly due to a direction from government allowing the council to use capital funds for revenue.
Duncan, who joined the authority in November, said: “We used the capitalisation direction for an insurance reserve, that was previously being funded from the revenue budget, so that cash is now freed up.”
In addition, he said that closer monitoring of the council’s public finance initiative contracts had helped it recoup penalty payments from operators.
“I know the name Northamptonshire has taken on negative associations, but if you compare our revenue position to what other counties are reporting, our predicted outturn does stand good comparison.”
However, Duncan warned that the council’s reserves were still perilous in comparison with other local authorities of a similar size.
He said: “We have set ourselves a reserve level of £16m and if you look at other similar councils, they are generally getting up towards £100m.”
The council will also next week consider budget proposals for 2019/20 which will require a further £41m of savings.
Duncan said that savings will be monitored by a director of transformation, brought into the council in October, as well as an internal board.
In a letter to the cabinet, government commissioners currently overseeing finances at the council said that the financial resilience of the council “remains fragile”.
It said: “Even with the actions taken to date the financial resilience of the council remains fragile.
“The council will continue to operate with a minimum general balance and only very limited earmarked reserves and provisions.”
However, it said that the proposed 2019/20 budget was “credible and achievable, subject to confirmation of the capital receipts, and therefore it has our endorsement”.
