Friday, February 02, 2018

Northamptonshire County Council brings in emergency spending controls

Alarming news from the Conservative-run Northamptonshire County Council this evening:
A cash-strapped local authority has imposed emergency spending controls as it faces "severe financial challenges". 
The section 114 notice bans all new expenditure at Northamptonshire County Council, with the exception of statutory services for protecting vulnerable people. 
Last month the government said an inspector would look into allegations of financial failings at the authority. 
The notice is to be discussed at the full council meeting on 22 February.
It's been clear for some time that Northamptonshire has serious problems.

At the start of the year Sajid Javid, the secretary of state for housing, communities and local government, announced a government inspector is to look into the authority's finances.

And last week the council announced plans to sell and lease back its new headquarters.

An old post by Alison Scott on Public Finance explains what a section 114 notice involves - a 'CFO' is a chief financial officer:
The ultimate recourse of the CFO remains the section 114 powers of the Local Government Finance Act 1988. These are not to be taken lightly and should be used very carefully and only after great consideration. 
Section 114 requires the CFO, in consultation with the council’s monitoring officer, to report to all the authority’s members if (in broad terms) there is, or is likely to be, an unbalanced budget. 
This would include situations where reserves have become seriously depleted and it is forecast that the authority will not have the resources to meet its expenditure in a particular financial year. 
The issue of a section 114 notice has serious operational implications. Indeed, the authority’s full council must meet within 21 days to consider the notice. During that period, the authority is prohibited from entering into new agreements involving spending.
Councils are the only public bodies required by law to set a balanced budget every year.

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