Government allows Northamptonshire’s unitary councils to spend millions set aside on day-to-day spending instead to ease budget pressures

Both of Northamptonshire’s Conservative-run unitary authorities are among two of a record 19 English councils that have been handed multi-million-pound government agreements.

West Northants Council (WNC) has been granted £6.6m and North Northants Council (NNC) £3.9m in money granted by Government following the formation of the two new authorities

The Department for Levelling Up, Housing and Communities announced the funds yesterday (February 29) alongside ‘in-principle capitalisation support’.

Capitalisation directions are arrangements allowing councils to convert capital sums obtained by loans or by selling assets – land and buildings – to convert into revenue to balance the budget books.

Jonathan Carr-West, chief executive of the Local Government Information Unit, said: “It’s good to see the Government finally recognising the scale and severity of the financial crisis in local government that so many of us have been warning of for years. This comes only a day after our research revealed that half the councils in England are seriously concerned about their financial viability in the next five years if nothing changes. We should not mistake this for generosity on the part of the Government. They are simply allowing councils to borrow and to sell their own assets.

"We should not mistake today’s announcement for a sustainable long-term solution to local government funding. Increased debt and selling off the family silver will only get us so far.”

WNC and NNC are two of 11 councils on the list which included agreement to support for ‘prior years’, with a further eight given ‘exceptional financial support’.

It comes just six years after their predecessor authority, Northamptonshire County Council went bust.

In 2018, Northamptonshire County Council made an £11m profit on their brand-new One Angel Square headquarters after selling it to an asset management firm.

They had been forced into the sale to fund ‘transformation services’ that was to help the council save money and prop up its finances.

A financial meltdown in 2018 saw the previous county two-tier system – Northamptonshire's county, district and borough councils – all being scrapped, with two unitary authorities replacing them, by order of the Government.

The list of councils includes Birmingham, Nottingham, Thurrock, Croydon, Slough, and Woking, all of which are in special measures after issuing formal section 114 declarations of bankruptcy in recent years.

In January, an emergency £600m cash injection for all councils had been announced to stave off financial problems.

NNC leader Cllr Jason Smithers said: “The exceptional financial uspport of £3.9m announced on Thursday is supporting the continued delivery of local Government reform and transformation of services within North Northamptonshire, originally provided to Northamptonshire County Council, as part of a wider capitalisation direction granted in 2021.

“The extension of this funding is welcome and will support North Northamptonshire Council in the ongoing delivery of an effective and efficient council.

“This was not a request for new support, but continuation of existing funding that was already approved.”

Now permission has been granted by the government, the money given post-county council can now be used for other services. WNC will use their £6.6 to plough into children’s and SEND services.

WNC leader Cllr Jonathan Nunn said: “All councils nationwide including ourselves are navigating significant financial challenges due to rising demand and cost of services.

“We specifically applied to carry over unspent capital funds from last year and change the purpose for which they are earmarked. Our intention is to undertake a number of actions which will help transform and improve our children’s and SEND services and therefore reduce the cost and pressure on the council’s finances.

“This strategic approach aligns with our commitment to financial sustainability, as outlined in our budget plans. The request will allow us to fund projects which will reduce the number of people requiring social care and therefore reducing the amount we spend in this area.”

The Department for Levelling Up, Housing and Communities has been contacted for a comment.