Following Northamptonshire CC’s financial collapse on Friday, a damning financial peer review of the beleaguered council from September 2017 has come back to the fore.
The LGA review of Northamptonshire CC’s management highlighted “major shortfalls in achievement” and found the council were:
- Delivering “a poor record” on approved budgets
- Failing to present financial information clearly and transparently
- Issuing “unrealistic” savings targets which were not evidence based.
The review found the cabinet were burning through their reserves at an accelerated rate, with “no financial strategy to deliver a sustainable position” and an “over-reliance on the government bailing the council out in 2019-20”.
The chief executive of the Chartered Institute of Public Finance & Accountancy Rob Whiteman told LGC last week that drawing down on reserves was a “very risky strategy indeed”.
“Northamptonshire has drawn on its reserves without delivering the savings. Other councils in a similar position have managed their finances better. Northamptonshire has not made the sorts of decisions we’ve seen elsewhere,” said Mr Whiteman.
A lack of transparency
Noting a “novel” experience of reporting the budget, the peer review team reported a general lack of scrutiny had created “a sense of ‘opaqueness’” over business decisions.
“Financial information is not presented clearly and transparently,” the report said. “For example, the 2016-17 outturn report masks the difficult financial position of the council as it is not totally clear the extent to which the council has overspent.”
The review reported that cabinet decisions required greater transparency and scrutiny chairs needed access to more information.
Next generation council
The peer team found “a lack of overall understanding and confidence… at both officer and member level in the ‘Next Generation Council’ model” for a variety of reasons, including the fact its implementation “is not affordable” in the council’s current financial situation, while the local authority lacked the capacity to successfully deliver it.
The report added: “The cost and benefits have not been articulated and approved and we found no evidence of fully worked business cases for each of the key strands of transformation.
“It is a distraction away from core business and the urgent need to create a coherent and deliverable medium-term financial plan. The team heard comments from several sources that ‘time has run out’ for the model.”
Other concerns included:
- The “non-delivery” of a full internal audit plan in 2016/17
- A difficulty “to identify solutions” to the scale of the challenge it faced
- A tradition of ineffective medium-term financial plans, due to “unreliable and undeliverable” plan components
On the upside, the peer review noted confidence in the new management team and witnessed “a step change in the stewardship of the budget with a better grip on finances since the arrival of the interim group finance director”.
In response to the LGA’s “blunt” report, interim chief executive Damon Lawrenson questioned all of the assertions made but added: “It is unquestionable that financial pressures facing the authority are significant, and this can lead to tough decisions.
”The amount of money available for local government services in the county has been reduced substantially over the last seven years. Yet the challenge is not insurmountable.
“The management team and political leadership are confident that together, we can rise to the challenge and ensure we make best use of the resources available to us.”
All seven of the county’s MPs said the imposition of spending controls on the council was “self-inflicted” in a joint statement on Sunday.
“As Conservative MPs for Northamptonshire we have been concerned with how the cabinet at Northamptonshire County Council have conducted its financial management for a number of years,” the MPs said in the statement.