Northamptonshire County Council faces a fresh financial crisis after a £34.9m budget gap for 2020/21 opened up.
A review of the council’s medium term financial plan (MTFP) published this week showed that the estimated savings requirement has leapt from £11.2m in the six months since the plan was originally published.
The council says that identifying new and deliverable savings for inclusion in next year’s budget presents a significant challenge, given the perilous state of the authority’s finances.
Matt Golby, leader of the council, said: “The purpose of this financial plan is to look ahead and help the council plan towards making detailed budget proposals for 2020-2021, which are announced in December.
2nd Housing & Regeneration Finance Summit
October 31, 2019, County Hall, London
“The council will work towards addressing this budget gap immediately and as such will continue to provide existing services in the most cost effective way through service redesign and increased use of technology; supporting local partners to deliver local services and prioritising needs-based statutory services.”
£10.3m of the additional budget gap is due to a review of demography and demand forecasts, while another £4.1m comes from revised inflation forecasts, according to council documents.
A further £3.8m will need to be found due to undeliverable savings proposals contained within the 2019/20 budget.
A further £3.5m of savings budgeted for within the original version of the MTFP are now also considered unachievable, according to a report to councillors.
The report said: “The council has considerable financial risk because the demand for its statutory services in adult and children’s social care, is volatile in nature and increasing year-on-year.
“There are also internal capacity constraints in service delivery which are currently being addressed.”
Last year, the council achieved an underspend on its 2018/19 budget of £4.5m in a year it had been forced to issue a second section 114 notice to stop unnecessary spending.
However, a separate report to the council revealed that the current forecast outturn for 2019-20 is a predicted overspend of £5.6m.
Golby said: “While this is a £200,000 improvement on the position last month there is clearly still a lot of work to do to move us in the right direction.
“This is a priority for the cabinet and the leadership team and all efforts are being directed to strengthen the council’s financial position.
“The whole purpose of the revenue monitoring reports is to keep track of our budget situation to ensure the right mitigating measures are put in place so that our budget balances at the end of the financial year.”
However, the report by executive director of finance Ian Duncan warned that the “most significant risk is the fragile state of the council’s finances which makes the ability to identify new on-going deliverable savings a significant challenge”.
Directors are currently identifying ways to reduce costs, maximise income and transform services before the draft 2020-21 budget is published in November 2019.
Duncan also hinted that the council has not ruled out issuing a third section 114 notice to achieve savings.
His report said that discretionary spend could be “minimised or ceased” but said “this is regarded as a last resort”.
Last week, Room 151 reported that the council has appointed its fourth finance director in two years.
