Northamptonshire CC’s lead commissioner has revealed he still does not know the timescale by when the stricken authority can balance its books as it faces a budget shortfall of up to £70m this financial year alone.
Tony McArdle spoke to LGC this morning about the “extraordinarily challenging situation” the county found itself in but insisted he was “100% confident that this council can live within its means”.
He was interviewed after it was revealed Northamptonshire had issued a second section 114 notice in six months which will impose new emergency spending controls on it until a balanced budget is set. This follows a previous section 114 notice imposed in February, which was followed by a budget which the council now believes has not resulted in financial balance.
Months of auditing have now indicated a shortfall of between £60m and £70m on a revenue budget of £441m in 2018-19. There is an “equally stark” forecast for 2019-20 with the official section 114 notice estimating a further £54m savings will be required.
tony mc ardle
Mr McArdle said of the significance of today’s measure: “The authority acknowledges that it’s going to overspend by £60m-£70m [this year] unless it takes radical action. That’s way beyond what was expected.
“A section 114 [should be] about using a situation where a council is about to go over a cliff then pulling it back. Northamptonshire has gone over the edge of the cliff and it’s looking how it goes back up again.”
He said of the previous budget: “The budget was not realistic. There were no measures in place to make sure that that budget could be met.”
A team of accountants from the Chartered Institute of Public Finance & Accountancy has worked for months to “make sense of some of the figures”. However, Mr McArdle said the fact that the council had broken itself up into a series of operating units, shared services, community interest companies and trusts, meant it has “lost a degree of control” and, “it’s been very difficult to come up with a [shortfall] figure that everyone can understand”.
“This local authority needs to face the consequences of its own past actions. That’s an essential first step,” he said.
“It’s fair to say that the leader and cabinet here have grasped the scale of the problem. They understand it. They are determined to do something about it. They are very inexperienced. Half of the cabinet have only been councillors for less than a year.”
Mr McArdle described Northamptonshire’s situation as “enormously complicated… by virtue of the circumstances it put itself in” but he insisted the council had some “great staff” who could work with its two commissioners – the other being former Leicestershire CC deputy chief executive Brian Roberts – to balance its books.
“This is an extraordinarily challenging situation; the local authority will do what it needs to get itself out of this. It’s the intention of the commissioners to do that.”
Mr McArdle insisted the timescale by when the books would be balanced was “the only question”. Until the accountancy work had been completed, “for me to say, ‘that’s the timescale’ that would be irresponsible”, he said.
It is anticipated “realistic timescales” will emerge in the autumn.
“I’m 100% confident that this council can live within its means, just like every other authority. I cannot predict the timescale to make that work,” said Mr McArdle. “We’ll know within the year what’s possible this year and what’s possible after that.”
Asked about the statutory requirement for the council to balance its books next April, Mr McArdle said: “We need to plan to do that.”
“The statutory requirement to balance your books still exists but so will the moral imperative to keep people safe,” he said. “We’ll look at the requirement to balance the books and the requirement to provide statutory services. This is about a proper measured way of retrieving the situation the authority is in and council should and will do this.”
He said the plan had “to be more realistic than the plan – or lack of plans” that resulted in its current situation.
A full council meeting will be held next Wednesday to reassess the council’s “core offer” and examine the “hierarchy of need” for its services.
Mr McArdle said 70% of the council’s expenditure is through third party contracts, all of which would be subject to a “rigorous review”. A quarter of expenditure is on staffing, which would “clearly be under some pressure”, Mr McArdle added.