Little given away on how district and borough councils will financially cope with coronavirus – but some councillors have serious concerns

Daventry District Council and its leadership team have insisted the authority is in a good place to be able to tackle the financial pressures, but Northampton Borough Council and South Northamptonshire Council have given little away so far.

This month, Northamptonshire County Council estimated it could have a financial black hole of between £14 million and £27 million due to the pandemic, but so far none of the district or borough councils in the west of the county have produced papers on how it is likely to affect their own finances – in what is the last year of their existence before they are abolished next April to make one unitary council.

The Local Democracy Reporting Service approached each of the councils to ask them the cost effect of the pandemic on their authority as estimated by their chief finance officers; whether they had considered implementing a section 114 notice that would ban all but legal required spending – as the county council had to do twice in 2018; and when it was likely to produce a public report on the matter.

In its original response, Northampton Borough Council said the financial impact was due to be discussed at a virtual cabinet meeting tomorrow (May 20), however it has instead been delayed by a week and will be discussed at a special cabinet meeting on Wednesday May 27.

But Councillor Danielle Stone, the leader of the Labour opposition at Northampton Borough Council, said there was ‘a real possibility’ that some of the district councils in the area may have to issue a section 114 notice – which effectively means the council has declared itself all but bankrupt. In 2018, the county council became the first authority in the country in two decades to issue such a notice.

Councillor Stone said: “Coronavirus is going to have a big impact on the borough council because of increased expenditure. I’m told it could be around £4 million. There’s a loss of revenue so there’s definitely going to be a deficit.

“The Government in the first place told councils it would cover the additional costs and now it is retreating from that, which is unfair as it will leave black holes. So I do think it’s an issue.

“There’s also an issue that for all the district and borough councils the reserves have been whittled away because of austerity. I’m going to be asking for a finance scrutiny group to be set up, because we only have one during the budget setting process. Given the circumstances I think we need to have one now.”

Meanwhile, South Northamptonshire Council gave only a brief response to our questions. A spokesman said: “We are in the process of estimating and refining the potential financial impact and when this has been completed we will share it with our cabinet in a public meeting. At that point it will become public information.”

Daventry District Council was the only authority to specifically rule out issuing a section 114 notice, and said it was preparing a report on COVID-19 financial issues and expected to present this to a committee soon. The authority said this could be at a Strategy Group meeting scheduled for May 28, in which case the public reports would be issued this week.

A district council spokesman said: “There will be pressures for the council on our costs and income streams arising from COVID-19. We are currently assessing the financial impact of COVID-19 on the council. We are working with the Government who has provided funding to assist with these pressures.”

Councillor Richard Auger, the Conservative leader of the council, said that the authority was in a good position to deal with the financial pressures due to years of being ‘prudent’.

He said: “We have got reserves and we are sustainable as an organisation, so we are OK. But obviously the longer it goes on and the more demands that are placed on councils, the more money we will spend out of our reserves. But we are alive and kicking and we have always been prudent. Sometimes people have been critical of that prudence by saving money for rainy days, and I think this is a good justification for the leadership teams and senior staff having done that.”

The councils in the West Northants region do seem to be moving quicker however than their colleagues in the North, who will make up the other unitary authority. Corby Borough Council has said it will not make a paper public until July, while Kettering Borough Council and the Borough Council of Wellingborough gave June deadlines. East Northamptonshire Council said it was ‘too early to say’ what the financial impact would be.