Northamptonshire CC has agreed the sale of its One Angel Square headquarters under a 35-year leaseback deal.
The council said on Tuesday it had finalised a £64m deal with Canada Life Investments despite chief finance officer Mark McLaughlin last week recommending against proceeding due to discussions over local government reorganisation and confusion over the use of capital receipts to fund budget pressures.
Opposition Labour leader Mick Scrimshaw has claimed a future unitary council would have to pay around £1m a year in rent.
Matthew Golby (Con), leader of Northamptonshire CC, said: “We believe that this transaction is effective in leveraging the council’s assets and covenant allowing us to maximise the benefit of very competitive pricing at this point in the market.
“Put bluntly, without this sale far more service cuts would be required and the process of reorganising local governance in the county would be carried out against a backdrop of unsustainable cuts to the very services the new councils would be created to run.”
Mr McLaughlin said in a quarterly revenue finance report presented to council last week that sale negotiations had been postponed after he had taken the decision to pause the sale process.
Citing the fact the communities secretary is considering replacing the district and county councils with unitary councils, Mr McLaughlin questioned “whether this remains the appropriate time” to enter into a long-term leaseback.
Auditors KPMG warned the council on 20 February that its initial budget proposal for 2018-19 was “unlawful” as it had placed too high an assumption on the income receivable from the sale of public land.
Cllr Scrimshaw (Lab) told LGC the deal had been postponed to prevent unnecessary financial burden for any future unitary council.
Cllr Scrimshaw said: “This deal is clearly an example of short-termism and absolute financial mismanagement. It reeks of desperation and shows that after years [of the leadership] sticking its head in the ground saying everything is fine, clearly it was not.”
He claimed a future unitary council would have to pay around £1m a year in rent under this deal. LGC has contacted the county council for comment on this issue.
Cllr Scrimshaw said: “The council almost didn’t balance the budget for 2017-18 and that has never happened before, anywhere. Selling the HQ won’t get rid of that risk. But this is not a sale as you and I understand it because the council will buy it back in 35 years - it’s basically a secured loan.
“They’re hoping to sublet some of the space out to someone in the private sector so they get rent from someone else. To do this though they might have to move some staff back to the old [dilapidated] offices that they were originally trying to move away from. What they’ve not factored in though is that the private sector sees the council as a white elephant and a laughing stock. No business is going to want to be associated with it.”
County’s £5m overspend due to 89 additional children in care
Northamptonshire CC reported a £5m overspend for children’s care in the past financial year due to an “increasing number and complexity” of cases.
The council reported it had accepted an additional 89 children ”over the Christmas period” in its quarterly revenue finance report, presented to its cabinet last Tuesday.
Director of finance Mark McLaughlin said in the report: “The council said in its CFE is experiencing inherent demand pressures totalling £5.0m, as a result of the increasing number and complexity of children in care cases that have occurred after the setting of the 2017-18 budget.”
According to the finance report, the number of children in care “increased sharply” throughout the summer, reaching a peak of 1087 in December. This compared to an average total of 998 children who were in care at any one time throughout 2016-2017.
The Local Government Association estimates the total cost of providing care to 89 children runs to £4.5m a year, as each child costs around £50,000 a year subject to individual needs and placement type.
LGA chairman Lord Porter (Con) said in January that the government should do more to prevent children ending up into care in order to prevent future financial cost, adding that children’s services in England face a funding shortfall of at least £2bn by 2020.
Meanwhile, a newly created advocacy group for the volunteer sector, Voluntary Voices, wrote to Mr Javid ahead of the deadline date of 12 April to request a greater role for volunteers in the debate about reorganisation in Northamptonshire.
”Our intention in this letter is to ask for the sector to be full partners in discussions about the future shape of services and structures that emerge during the period when commissioners are in place,” Voluntary Voices said in its letter.
A spokesperson for the group said in a separate statement: “The voluntary sector in Northamptonshire is under severe pressure. The situation at the county council means that this is a crucial time for the services we provide across the county. We’re chomping at the bit to be part of the solution and want to make sure we have a seat at the table when the commissioners come in.”