'Fine line' in disaggregation talks to avoid putting Northamptonshire councils in 'financial jeopardy'

A meeting of North Northamptonshire Council (NNC) heard on Monday (June 17) that there is a "fine line" in splitting up the millions of pounds of debt between the West (WNC) and the North so that neither council is put in "financial jeopardy".

Claire Edwards, the interim finance director for NNC, told the room that the position on disaggregation is "not good for either party" and could fundamentally put council finances at significant risk if the agreed split is "wrong".

The dispute between the newly made councils relates to the balance sheets of the now-defunct Northamptonshire County Council (NCC) and where the assets and debts now lie. Though a significant part of the disaggregation has been agreed on, there are still balances adding up to around £40m where the split hasn't been decided.

A decision on the inheritance of these debts is needed to complete and sign off yearly audits for the unitary councils and to properly understand their underlying financial situations.

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Ms Edwards said: "There’s a very fine line in navigating that so we don’t actually put either council in any financial jeopardy.

"It’s not a nice balance sheet to actually carve up so whatever we come out as a result will not necessarily be in a good place, just because of the balance sheet we’ve inherited because it's very highly geared.

"It’s making sure from the future financial landscape that neither of the authorities are disadvantaged by the disaggregation of that balance sheet, which is really tricky, to try and make sure that we get both authorities in the same place and are both agreeing that that outcome, although a negative one, is palatable.

"Once we agree this, this is it then forever and if we get this wrong fundamentally the financial risk to each party could be quite significant. We have to ensure that what comes out of this is an outcome that we can manage, and that’s as good as it’s going to get."

The new unitary councils are now in their fourth year since NCC was abolished. Both WNC and NNC have said that they are committed to resolving the balances between themselves, but talks have been called "too slow" by external auditors.

Mark Stocks, the authority's external auditor from Grant Thornton, recognised that NNC is in a 'reasonable' position in terms of its finances, but that it is facing challenges in particular from the Children's Trust. It advised the authority to continue making additional savings to avoid using reserves to cover revenue spending.

A series of recommendations were made to the council concerning their internal audit including agreeing on disaggregation fully, monitoring the Children's Trust and completing the last two years of financial statements that are still outstanding.

Concerns were also raised regarding the council's progress on housing, with Mr Stocks saying that more needs to be done to bring the inherited housing stock together, undertake condition surveys and resolve issues around homes that are classed as 'non-decent'.