£953 million disaggregation figure contended by Northamptonshire councils

A Northamptonshire council has revealed that a total of £953m is under dispute by the county’s two unitary authorities – based on disagreements with disaggregation.

North Northants Council (NNC) discussed the divisions at an audit and governance committee meeting on Monday (November 27).

It said that a lot of the work on disaggregating the balance sheets had been undertaken by officers, but that it was pursuing ‘more formal routes to determine the split between West and North Northants’ for the ‘significant’ item they disagreed on, through arbitration.

Janice Gotts, NNC’s executive director of finance and performance, said: “We need to get it done right and we need to make sure that our views are heard.

"It relates to effectively the net worth of the authority and what we’ve got in debt versus what we hold in assets.”

Councillors were told by an auditor at the meeting that they needed to finalise the disaggregation of their balance sheets before their audits, following North Northants Council’s formation in 2021, could be completed.

Both West Northants and North Northants Council have failed to publish any audited accounts in the past two years.

Chairman of the audit and governance committee, Cllr Andrew Weatherill, said that he shared the council’s ‘disappointment’ with the lack of progress, but that there wasn’t anything they could do to speed up the process apart from ‘keep the pressure on’.

Mark Stocks, a national partner at Grant Thornton, said that Northamptonshire was in a ‘unique position’ being effectively divided in two.

He said that timescales for pursuing a disaggregation agreement would be over a year which was ‘not tenable’ to delay audits further.

Mr Stocks said: “We have an enormous backlog of audits now [nationally].

"We have to get to a position where we understand our underlying finances and at the moment, we don’t.”

Local authorities are required by law to produce accounts every year to publicly report on their spending and financial situation, however only five councils published their audited accounts on time this year.

The Levelling Up, Housing and Communities (LUHC) Committee warned in a report published on November 24 that the government must act ‘urgently’ to tackle the ‘crisis in local audit’.

They also highlighted the need for creating a new audit regulator as the ‘system leader’.

Fanny Malinen, from Research for Action - a project undertaking research in politics to support social and economic justice - said: “The committee’s report is an important moment of reckoning in the local audit crisis.

"The increasing number of local authorities in financial trouble is a warning sign that local audit needs to be taken seriously.

“It is barely possible to understand local authorities’ financial position and performance from the accounts.

"Now more than ever we need a wholesale change in how we view audit.”