Attempt to stop county council spending due to 'financial crisis' was ignored THREE years ago
Attempts to warn Northamptonshire County Council that it was in a '˜significant financial crisis' were ignored by leaders THREE years ago, the full contents of a letter can now reveal.
Had the internal warning been heeded, it’s likely Northamptonshire would have had an ‘easier road to stability’ according to government inspectors.
Instead, it now has to find up to Â£70 million of savings this financial year to make up for the past mistakes, with children’s services likely to be the big loser from the impending cuts.
Then director of finance Matt Bowmer wrote to chief executive Dr Paul Blantern, council leader Jim Harker and cabinet member for finance Bill Parker on October 29, 2015 notifying them of his intention to issue a Section 114 notice banning any new spending.
The letter was revealed in a Freedom of Information request by local democracy reporter at this newspaper, Sarah Ward.
The warning, which was ‘not taken seriously’ according to government inspector Max Caller, was swept aside, with a S114 not being ordered until 28 months later under new leadership.
In his letter, Mr Bowmer - who is now director of finance at LGSS - reveals that the authority had overspent by Â£43 million just seven months into the financial year. He criticises the use of one-off funding to plug the gaps, describing it as ‘greatly alarming’.
He adds: “Not only do the measures taken to date not address the total pressure faced but they are unsustainable and place the council at great risk in the future.”
The authority has now issued two S114 notices in the last six months. There had only ever been two issued by any local government in the UK since 1988 prior to this.
The county council went on to raid its Â£12 million of reserves to set a budget for the 2017/18 year, although it recently emerged that it is now unlikely that particular budget will balance, putting the council in unchartered territory.
In the 2015 letter, Mr Bowmer says: “We are experiencing a significant financial crisis but there is avoidance of the term and a lack of action appropriate for the situation we find ourselves in.
“At the heart of this is the corrosion of our financial management arrangements over the past eighteen months; there has been a change of culture and behaviour where overspending is acceptable and there are no sanctions for failure.”
Mr Bowmer, who moved on from his position in the middle of 2016, goes on to say that the authority was ‘starting to behave defensively’ and failing to acknowledge that ‘not one difficult decision has been made or implemented’.
He then tells Dr Blantern, who received a Â£95k pay-off when he resigned as chief executive in October 2017, that the crisis ‘demands a change in approach’. He adds: “It is time for a very direct approach and this has to be from you and more importantly the leader and his cabinet.”
Council leader Mr Harker, who stepped down in May 2016, has since gone on to say he took ‘no responsibility’ for the subsequent financial meltdown the authority suffered. Despite being sent the stark warning letter from Mr Bowmer, he blamed the lack of central government funding that was available.
But Mr Bowmer wrote in the 2015 letter: “It is right that we should look to LGA and DCLG for support at these times, but we can’t expect them to remedy the position for us, and must continue to focus on balancing the budget for ourselves. There’s a real danger that both officers and members expect others to do the job for us.”
Current leader of the council Cllr Matt Golby said: “This letter clearly outlines the challenges the council was facing at that time. Those very same issues have since gone on to become contributing factors to the current financial crisis we are dealing with.
“With new senior management and political leadership in place it is now our determination to directly confront these issues and return the council to living within its means.”
The words of warning to those in power three years ago were dismissed though. In his best value inspection report on the council published this year, Max Caller said: “Had the Section 151 officer felt strong enough in October 2015 to issue the Section 114 report he presaged, and the council had treated it as the wake-up call it needed to change its behaviour, the road to stability and normality though difficult might have been possible.
“Since that time, more reserves have been expended and more capital receipts squandered.”
One current county councillor, who did not wish to be named, said: “If they had acted on the notice back in 2015 then I don’t think the situation would have been as bad as it is now.
“From what I’ve heard the section 151 officer was bullied into not going through with it.
“The amount spent in the budgets since then has been phenomenal, and to carry on spending like it was the richest council in the country was completely reckless.”
Speaking about the decision not to issue the S114 back in October 2015, government appointed commissioner Tony McArdle said: “It is abundantly clear that the warning signs for Northamptonshire were there and were recognised. However, what is also clear is that there was no effective response to these warnings and that is clearly a key reason that the council finds itself in its current position.
“It is of critical importance that the council does not repeat these mistakes but rather now does everything in its power to address its significant financial challenges and does as every other council has managed to do – live within its means.”