“Northamptonshire’s financial woes are just the tip of the iceberg”

“… All councils in Britain are required to match annual day-to-day spending with income: unlike the Treasury, local authorities cannot fund current spending from borrowing. They can, of course, borrow to spend on capital items such as land and buildings. Northamptonshire’s difficulties derive largely from a failure by councillors to address the need to match spending to income. But the wider context of relentless reductions to council spending cannot be ignored.

The Treasury has been attempting to reduce the UK government’s deficit since the coalition took office in 2010. But populist pressure to protect state pensions and the NHS, along with decisions to increase international development spending, have meant that the burden of lowering the deficit has fallen on unloved sectors and services, notably provision within the oversight of the Home Office and the Ministry of Housing, Communities and Local Government. Grants to councils in England fell by almost 50% between 2010-11 and 2017-18, and spending in real terms has tumbled by almost 30% on average.

Councils themselves, within falling budgets, have chosen to protect social care for children and adults. No chief executive or leader wants to face the dire consequences of even a single childcare failure, so money has (just about) continued to reach children’s social services. For older people’s care, the picture has been grim. Entitlements have been reduced and services cut back. Fast-rising numbers of over-75s mean that demand is growing while resources shrink.

Even the government came to realise that with rising demand and falling real resources, adult social care was unsustainable. It is a measure of overall government priorities that between 2010-11 and 2017-18 the amount spent on state pensions in the UK rose by £26bn, while spending on adult social care in England was virtually unchanged in cash terms. Only after it became clear that care homes were closing and that services were likely to fail did ministers allow councils to put up council tax and provide new grant funding via the Better Care Fund.

Other local services such as libraries, planning, highways, housing and waste management have been cut by far more than adult care. Almost by default, the way deficit reduction has been delivered has led to a retreat in the very public services that were the origins of the modern developed British state. While Victorians saw the need for clean streets, lighting, police, parks, libraries, rubbish collection and transport, the impact of post-2010 deficit reduction has been to cut such services hardest.

The abolition of the audit commission has ensured that there has been no official agency to publish embarrassing reports about the impact of cuts on councils’ financial health or, even more awkwardly for Whitehall, on the asymmetric nature of the government’s approach to achieving a zero deficit. The National Audit Office, which, crucially, reports to parliament, has undertaken noble work on the broader systemic challenge to local authorities’ financial sustainability. In a report published in March, the NAO noted that “10.6% of single-tier and county authorities would have the equivalent of less than three years’ reserves … left if they continued to use their reserves at the rate they did in 2016-17”.

In short, many of the larger councils that deliver social care are running short of resources. There have been recent press reports that in the coming spending review, covering the period 2020-21 to 2023-24, local government will again be expected to bear the brunt of deficit reduction. It is worth remembering that a zero deficit was originally planned to be achieved by 2015-16. Northamptonshire may have reached the precipice first, but if reductions in local authority budgets continue, they are unlikely to be the last. The county’s plight is evidence of a wider challenge facing the country: are we willing to put up taxes to protect provision or do we want the state to stop delivering services? A crunch point is approaching.”


3 thoughts on ““Northamptonshire’s financial woes are just the tip of the iceberg”

  1. Copied from TaxPayers’ Alliance:

    Northamptonshire County Council
    Earlier this week many news outlets reported that Northamptonshire County Council may have to cut essential services as they need to find £70 million worth of savings.

    It is worth highlighting some of the wasteful spending that has led to this dreadful situation.
    • £53 million on a new HQ, which they then sold and leased back
    • a course on how to wear a scarf ‘more effectively for their personal style’
    • £350,000 payouts to staff on ‘injuries from poorly fitting outfits’
    • £95,000 golden handshake for chief exec, just for leaving his job
    • 23 councils executives on more than £100,000
    £53 million, the cost of NCC’s new headquarters

    Residents of Northamptonshire are unfairly paying the price of financial mismanagement. The TPA has always maintained that councils must focus their spending on frontline services and not frivolous non-essential expenditure. We hope other councils will take heed and that similar disasters can be averted in future.


  2. If you search back, you will find that I made exactly this accusation about EDDC a few years ago – that they were using capital receipts to fund day-to-day services and that this would eventually create funding issues.

    In the case of EDDC it was using capital receipts from New Homes Bonuses to fund services instead of raising council tax – for over 8 years EDDC kept council tax the same, a decrease in real-terms, using one-off or year-limited receipts of New Homes Bonus to avoid raising council tax to fund the increased costs of council services (due to inflation and greater demand from those in need).

    It remains to be seen just how long EDDC can survive before it needs to bump up Council Tax massively in order to survive.


Comments are closed.