Northants mulls ‘capitalisation direction’ to tackle funding deficit
0Northamptonshire County Council is mulling over an application to central government to use its capital budget to alleviate its financial woes.
Earlier this year, commissioners sent into the council by the Ministry of Housing, Communities and Local Government, identified a projected overspend of £30m in the current financial year.
The council has taken measures to reduce this to £20m, but says one of its options is to apply for a “capitalisation direction” to fund at least part of the remainder.
A statement to Room151 from the council said: “The commissioners are considering sending an application to the MHCLG for a capitalisation direction to help close the funding gap.
If this is successful it would mean that we could use some of our capital money towards bridging the deficit.”
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Until 2012/13, the government set aside a specific amount of money each year for councils to apply for capitalisation directions.
The following year it introduced a regime whereby councils could apply to use capital on revenue schemes deemed to be transformational.
However, councils can still apply for a direction at any time.
Northamptonshire’s stabilisation plan also includes a number of other measures to save money, including a reduction in agency staff and a review of service provision for adults with learning disabilities.
It has concluded that it would not be financially viable to buy itself out of a controversial Private Finance Initiative contract to run four health centres for elderly vulnerable people, due to “excessive breakage costs”.
Council leader Matt Golby said: “These are unprecedented times for us and as such we need a robust plan to address the financial challenges we now face.
“The stabilisation plan, alongside our latest financial reports show how we are now moving firmly towards stabilising our budget position.
“However, we are of course acutely aware that the challenge to deliver this plan is significant and as such we will now focus all our energy on doing so.”
