Javid urged to appoint government commissioners to run crisis-hit county council
Independent report says Northamptonshire has irreparably dysfunctional organisational structure and should be split up
The Ministry of Housing, Communities and Local Government has been urged to appoint commissioners to run almost all services at Northamptonshire County Council and prepare to reorganise the failing authority out of existence in two years’ time.
A report by a team of inspectors, appointed by secretary of state Sajid Javid and led by local government veteran Max Caller, said Northamptonshire faced problems that were “now so deep and ingrained that it is not possible to promote a recovery plan that could bring the council back to stability and safety in a reasonable timescale”.
One crumb of comfort for Javid and the government is that Caller’s report appears to discount the cuts imposed on councils – described last week by the National Audit Office as an effective real-terms cut of 49.1% in government funding since 2010-11 – for Northamptonshire’s predicament.
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Last month Northamptonshire made a statutory Section 114 declaration under the provisions of the Local Government Finance Act 1998, warning that it was in danger of failing to balance its budget by the end of the financial year and imposing strict spending controls.
Caller’s damning report – which was under way at the time of the declaration – said that even after the Section 114 alarm had been sounded, Northamptonshire appeared to find it “difficult to ensure that all new spending was controlled and authorised” by the council’s statutory finance chief.
“Living within budget constraints is not part of the culture of NCC,” the report said.
It traced Northamptonshire’s problems back over “a number of years” and noted that a 2013 statutory direction following an Ofsted inspection report appeared to be the point when the authority “lost tight budgetary control and appeared to abandon strong and effective budget setting scrutiny”.
The report said that instead of taking steps to regain control, the council was persuaded to adopt a “next generation” model structure as the solution, but that model never had a hard-edged business plan.
“Local government as a whole can make a reasonable case that the quantum of funding available to support the services that they deliver has been squeezed hard during the austerity years, but that is very different from concluding that the distribution of the available resource has been particularly unfair to NCC,” the report said.
“The next generation approach does not have any documented underpinning which sets out how it was expected to deliver the efficiencies and savings necessary to justify the investment and has served to obscure and prevent effective member oversight and budgetary control.
“For a number of years, NCC has failed to manage its budget and has not taken effective steps to introduce and maintain budgetary control. Instead it has pursued an organisational structure and operating concept which made it difficult to ensure a line of sight over costs and operational activity. It did not accompany this structure with an articulated set of financial and managerial controls. This made it impossible for the council, as a whole, to have any clarity or understanding as to what was going on.
“NCC has relied on one-off items, allocation of balances, windfalls and laterally the use of capital receipts to balance the numbers at the year’s end. This is not budget management.”
Caller – who is a former chief executive of the London boroughs of Hackney and Barnet, and a former chairman of the Local Government Boundary Commission for England – said Javid should seriously consider appointing commissioners to run all of Northamptonshire’s services apart from planning.
In the longer term, he said the county would require a five-year reform programme and additional funding to put itself on the right financial track, and that the money would be better spent by creating two new unitary councils to replace the county and its seven district authorities.
“To change the culture and organisational ethos and to restore balance, would, in the judgement of the inspection team, take of the order of five years and require a substantial one-off cash injection,” he said.
“Effectively, it would be a reward for failure. Even under a directions regime, it is not considered likely that councillors and officers would have the strength of purpose to carry through such a long running programme of recovery potentially crossing two electoral cycles. In the meantime, it would be the people of the county who would suffer.”
Javid said he would consider the report’s findings in detail and make a statement to the House of Commons setting out his proposals for next steps, including whether or not to exercise his powers of intervention.
“I am grateful to the inspector and his team for the thoroughness of their work and the clarity of their conclusions,” he said.
Northamptonshire County Council leader Heather Smith resigned following the report's publication. A statement on the authority's website said it accepted the team's findings and supported the proposals to “move to unitary governance within the county”, however it stopped short of backing the model proposed by Caller.
While Javid has the power to send in commissioners to take over services at Northamptonshire, he does not have the authority to impose a round of local- overnment reorganisation on the county. He could, nevertheless, endorse local proposals for such a shake-up.
Caller’s report suggested that Northamptonshire’s seven lower-tier authorities had commissioned a report on the potential for reorganisation from consultant Deloitte, and that it was due to report imminently. He proposed the creation of the new unitary authorities should take effect from spring 2020.
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