Northamptonshire CC’s projected in-year overspend has doubled in the space of a matter of weeks, while the authority claims “only” becoming a unitary can significantly reduce costs.
Due to the council’s “bleak financial position” and with only seven weeks to go until the end of the financial year, director of finance Mark McLaughlin said “budget mitigation options of this magnitude are limited”.
He added the “only viable option short of the elimination of all avoidable or new spending as a consequence of a Section 114 report, is the proposed sale and leaseback of One Angel Square” – the county council’s £53m headquarters, into which it moved last year.
LGC reported three weeks ago how Northamptonshire was facing a £10.3m overspend in 2017-18 largely due to pressures on adult social care services.
In a budget report, due to go before cabinet next Tuesday, Mr McLaughlin warned “there is an increasing risk that the 2017-18 revenue budget will not be fully delivered” as the council’s forecast overspend has increased up to £21.1m.
The council’s forecast outturn position “has significantly worsened due in part to recent risks on the timing of £8m of asset sales”, said Mr McLaughlin while ongoing pressures in adult social care, including finding £3.6m to cover costs relating to sleep-in allowances and fees, has also added to the burden on the budget.
“The council also faces losing up to £5m of the Improved Better Care Fund income if it fails to” reduce the number of people in receipt of social care being delayed from leaving hospital, Mr McLaughlin said.
Northamptonshire, which is proposing to increase council tax by 5.98% in 2018-19, is anticipating it will need to save £111m over the next four years, a total of £487m since 2010. However, funding gaps of £61.2m in 2019-20, £67.6m in 2020-21 and £78.1m in 2021-22, have been identified. Mr McLaughlin said the council is mainly looking to use capital receipts to plug these funding gaps but added: “The delivery of these capital receipts in a timely manner poses a significant risk to the council.”
“Assuming” Northamptonshire’s headquarters is sold, the council’s reserves balance can remain at £12m “which is in line with the agreed level laid down within the reserves policy of two to five percent of the council’s net budget requirement”, said Mr McLaughlin.
However, Northamptonshire “has very limited scope to address its forecast medium-term funding shortfall structured in its current form”, he said. Mr McLaughlin added: “Although the council constantly seeks value for money in all of its business decision making and transformation agenda, only significant local government re-organisation, moving to a unitary status, would provide the opportunity to reduce its costs significantly over the coming years.”