Inspector calls for troubled county council to be replaced with two new unitaries

Northamptonshire County Council (NCC) should be split into two unitary authorities to provide “a new start”, an inspector sent into the financially-troubled local authority has concluded.

In a report published today (15 March) Max Caller said the council had failed to comply with its duty under the Local Government Act 1999 (as amended) to provide best value in the delivery of its services.

Suggesting that “in essence, the road to failure has a simple cause”, Caller said that following an Ofsted inspection report published in August 2013 which resulted in an ‘inadequate’ judgment and the subsequent Statutory Direction, NCC had “lost tight budgetary control and appeared to abandon strong and effective budget setting scrutiny”.

Instead of taking steps to regain control, the inspector decided, the council had been persuaded to adopt a ‘Next Generation’ model structure as the solution.

“There was not then and has never been any hard edged business plan or justification to support these proposals, yet councillors, who might well have dismissed these proposals for lack of content and justification in their professional lives, adopted them and authorised scarce resources in terms of people, time and money to develop them. This did not and could not address the regular budget overspends which were covered by one off non-recurring funding sources,” Caller said.

The inspector added that when the use of capital receipts to fund transformation was introduced by central government, “this was seized on as a way of supporting revenue spend by classing some expenditure as transformative”.

Caller revealed that, until this budget cycle, there had been no report to full council, “or anywhere else”, which set out the specific transformation that was to be achieved, on a project by project basis, as required, nor had there been any report to full council which set out the actual outcome compared to the prediction. “This means the Statutory Guidance has not been complied with putting in doubt the use of capital receipts for this purpose.”

The first comprehensive report that addresses the requirements of the Direction and Guidance will be reported to Cabinet on 13 March 2018, he said.

According to Caller, appropriate advice in setting and managing budgets and the necessary control mechanisms to ensure that the council complied with the law and good practice were only just now being introduced.

Even following the issue of a Section 114 notice - controlling the authority's expenditure - in February 2018 and the KPMG Advisory Notice on the Budget also in February 2018, the council still appeared “to struggle to take the necessary decisions at both member and officer level to control and restrain expenditure to remain within budget constraints”.

Caller said that each one of these concerns would require determined intervention from both members and officers. “Taken together they demonstrate the failure to comply with the best value duty.”

The report noted that NCC employed "many good, hardworking, dedicated staff" who were trying to deliver essential services to residents who need and value what is offered and available. The problems the council faces were not their fault, Caller said.

The inspector added: “In Local Government there is no substitute for doing boring really well. Only when you have a solid foundation can you innovate.”

He said his inspection team believed that a new start was required for the residents of Northamptonshire which could deliver confidence and quality in the full range of Local Government services.

The report proposes two new unitary councils – one covering the area of Daventry, Northampton and South Northamptonshire and the other encompassing Corby, East Northamptonshire, Kettering and Wellingborough. Caller said these new authorities should be established following elections to be held in May 2020 and be in operation commencing at their first annual meeting.

“In the meantime the Secretary of State should give serious consideration to whether Commissioners should take over the running of all services save planning currently provided by Northamptonshire County Council and on what basis,” he added.

NCC said it had accepted the findings of the Best Value Inspection report and would now be looking to respond to the Secretary of State within the coming days.

It also welcomed the recommendation within the report to move to unitary governance in the county and said it was now committed to working alongside partners to achieve this in the timescale outlined.

Cllr Heather Smith has meanwhile announced that she will be resigning as council leader. A process to find a new leader will now take place.

Cllr Matthew Golby said: “While I am pleased the report recognises the hard work and dedication of the staff and recognises recent progress in financial management it is clear that the inspector has found what he believes to be significant failings at the council.

“We accept the findings and we will now be acting accordingly and responding directly to the Secretary of State.”

Cllr Golby added: “While the report accepts the figures we use in arguing our case for fairer funding, it states we are in no worse position than other councils. We would argue that the sector as a whole does face significant financial challenges and we will continue to work with our local government partners to present our case. 

“While we will make these points in our response, we should in no way hide away from the general thrust of this report.

“We will now be reviewing the report is far further detail and respond directly to the Secretary of State.”