“A lot of” councils are in danger of following Northamptonshire CC in issuing a section 114 notice to curtail non-statutory spend unless they take difficult decisions now.
This warning has come from Chartered Institute of Public Finance & Accountancy chief executive Rob Whiteman in his first interview since the county became the first council since 2001 to issue such a notice, preventing new expenditure on everything with the exception of statutory services for vulnerable people.
Mr Whiteman said although Northamptonshire was a “traditionally low-spending county and they have less reserves and not favourable treatment through grant distribution”, the county “aren’t in a unique position”.
He was critical of the council’s decision to draw down on its reserves, stating: “This is a warning to every council that a strategy to draw down on reserves to balance the budget is 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.”
Mr Whiteman continued: “I see a lot of councils [now] in Northamptonshire’s position [from] a couple of years ago. My advice to all those councils, in as helpful way as possible, is that you could see this coming to Northamptonshire.
“This demonstrates that councils need to get ahead and get on and take the action needed now rather than draw down reserves, saying you’ll take action in the future.”
Mr Whiteman described Northamptonshire’s policy of moving services into council-owned companies as “innovative” but that it “hadn’t delivered much benefit in terms of medium financial savings”.
The last authority to issue a s114 notice is believed to be Milton Keynes Council, with regard to its housing services, in 2001. The last council to issue a s114 notice covering its entire activities was Hackney LBC in 2000.
This from the OBR - social care authorities in blue - left hand chart shows rapid depletion in usable reserves - this will accelerate as demands continue to increase and funding continues to reduce. #fairfunding review is going to be crucial. #localgov pic.twitter.com/wH00uq8Yuu— Dan Bates (@danatpixel) February 2, 2018