Northamptonshire County Council bans spending over budget fears

A cash-strapped Tory-run council has imposed emergency spending controls after warning it faces a "severe financial challenge".

Northamptonshire County Council is the first local authority in nearly 20 years to issue a section 114 notice, which bans all new expenditure apart from statutory services for safeguarding vulnerable people.

The council said it had taken the decision because there is a "significant risk" it will not be able to deliver a balanced budget by the end of the year, which is required by law.

In a statement, the authority said staff pay will not be affected and the implications of the notice will be addressed at a full council meeting on 22 February.

"The notice has been served in light of the severe financial challenge facing the authority and the significant risk that it will not be in a position to deliver a balanced budget by the end of the year," it said.

Northamptonshire County Council leader Heather Smith said it had been warning ministers for years that its position was "unsustainable".

Concerns had also been raised directly with Communities Secretary Sajid Javid shortly before Christmas, she said.

"We have been warning Government since about 2013-14 that with our financial position we couldn't cope with the level of cuts that we were facing," Ms Smith told the Radio 4 Today programme.

"Before Christmas I did write to the Secretary of State to say that we were about to fall over the edge of the cliff. We can't just increase council tax. We have a cap on us."

Shadow communities secretary Andrew Gwynne said there had been “deeply worrying” reports for months that Northampton County Council was failing in its duty of care.

"The failure of this Tory-run council shows that their approach to managing our public services doesn't work," he said.

Rob Whiteman, chief executive of the Chartered Institute of Public Finance and Accountancy, warned that other councils were also in danger of issuing section 114 notices.

He told the Local Government Chronicle: "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."

The last council to issue a section 114 notice covering all its activities was Hackney Council in 2000, according to the Local Government Chronicle.

A spokesman for the Ministry of Housing, Communities and Local Government said: "We recently appointed an independent inspector to look at Northamptonshire County Council’s finances.

"This is a decision for the authority, and it would not be appropriate for us to comment while the inspection is ongoing."