Northamptonshire County Council's £40.9m hope for selling off capital among reasons for labeling its budget 'unlawful'

Last night KPMG called on the county council to delay the all important Thursday summit - as it called its current proposals to cut around £30 million from next year's budget "unlawful".

The auditors sent a letter to all councillors outlining 39 different reasons for the budget not meeting the legal standard.

Among them, the auditors state the council's bid to sell off acpital, including its new One Angel Square headquarters, and use the receipts to generate £40.9 million of revenue funding are "unachievable".

The move comes just a fortnight after the council became the first in 20 years halt all non-essential spending.

Labour's opposition leader, Councillor Bob Scott (Lab, Lloyds) said he was frustrated at the fact the budget setting would be delayed by a week.

A series of protests are planned before the meeting at County Hall tomorrow, with rumours of a major political name set to speak ahead of the meeting.

But he added: "KPMG are only saying what we have said all along.

"The position we had formed was that we couldn't support the budget as it stood anyway because we didn't think it was achievable."

Councillor Scott now fears the council will have to include plans to raise council tax by more than 10 per cent in a referendum.

He said: "It's a stark choice, but if they don't vote in favour of raising tax, commissioners will be brought in to cut everything to the bone."

Among the reasons for halting the meeting tomorrow, KPMG says it does not agree with the council's £40.9 price tag put on its One Angel Square site.

The authority announced plans to sell the new headquarters last month at a loss and raise "capital receipts" to fund its day-to-day running.

The KPMG letter sates: "It is this figure of £40.9m, which KPMG believes is not on any view achievable and which entails that the proposed budget is premised on an incorrect estimate of likely revenue expenditure in 2018/19."

Northamptonshire County Council was issued with an "advisory notice" on Tuesday night by auditors KPMG, who said the proposed budget by the council for 2018/2019 "is or will be unlawful".

In its statement issued on Tuesday night, a KPMG spokesman said: "The authority has begun to take a course of action which, if followed to its conclusion, would be unlawful and likely to cause a loss or deficiency.

"KPMG is mindful in this regard of its responsibility to come to a conclusion on the authority’s arrangements for securing value for money in the use of its resources for the financial year ending 31st March 2018.

"The authority’s arrangements include making properly informed decisions and sustainable resource deployment and therefore the need to consider appropriately the deliverability and achievability of the budget that it sets for the financial year 2018/19.

"The authority may not lawfully continue with the course of action set out below until it has considered this Advisory Notice, the Statement of Reasons and the consequences of continuing with this course of action. If it intends so to continue it may not do so until it has written to KPMG to this effect and the specified period has expired."

The move means that the council meeting to discuss next year's budget can no longer pass a vote.

A spokesman for Northamptonshire County Council said: “The Section 114 notice issued earlier this month shows that as a council we recognise the very real risk we face in balancing the expenditure demanded of us in terms of our statutory duties and the resources available to us to pay for them. We have also been clear that we do not believe our funding position is sustainable.

“We have been clear that there are risks in our budget proposals for 2018/19 given this funding position and the on-going demand pressures we face. Given the severity of our financial position we are having to maximise the use of capital receipts as encouraged by the government to enable us to transform and protect statutory services. We have worked hard to ensure that the budget proposals being put forward for next year are accurate and realistic.

“We will now review and respond to KPMG’s advisory notice as required.

“Full council will meet as planned on February 22. This will be to discuss the Section 114 notice and debate KPMG’s advisory notice. Because of this notice this meeting can no longer vote on the budget.

“A further extraordinary council meeting will be held on February 28 to debate and vote on the final budget proposals.”