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Northants makes ‘unprecedented’ use of reserves to balance books

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  • by Colin Marrs
  • in 151 News · Funding
  • — 10 May, 2018

Northants HQ. Photo (cropped) Hazel Nicholson, Flickr, CC

Northamptonshire County Council has balanced its 2017-18 budget with an “unprecedented” use of reserves to cover a £12.7m overspend.

In February the council’s executive director of finance issued a section 114 notice, halting all but essential spending in the authority.

This week, the council released its provisional outturn statement showing the books had only been balanced by using all £12m of its general fund balance, plus a further £700,000 of earmarked reserves. The latter was in addition to £5.2m from earmarked reserves allocated earlier in the year.

Michael Clarke, county council cabinet member for finance, said: “Serious action had to be taken very late in the financial year to ensure that the council could deliver a balanced budget.”

Northamptonshire said that because it is required to hold a prudent level of general reserves, the council will start 2018-19 needing to replenish £13.7m used in 2017-18.

The council completed the £64m sale of its headquarters in April, which meant that the 2017-18 budget was only able to include £9.6m from capital receipts income to fund transformation.

Originally, it had hoped to complete the sale last year, which would have allowed it to use £20.9m of capital receipts for revenue spending.

A report on the provisional outturn presented to a meeting of the council’s cabinet this week said the county had £8.1m in earmarked reserves left at the end of 2017-18.

However, £4.4m of this sum is ringfenced and unavailable to support the revenue position.

The report said: “The use of reserves at these levels is unprecedented and the council is in discussion with MHCLG (Ministry of Housing Communities and Local Government) on the financial implications.”
The 2017-18 end of year finances will now be audited by the council’s external auditor, KPMG.

In February, the auditors warned the council that its original budget could be illegal and that it was “premised on an incorrect estimate of likely revenue expenditure in 2018-19”.

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