Tory-led Northamptonshire county council imposes emergency spending controls for second time in six months

'The government has allowed a Tory council to declare itself bankrupt twice in six months'

Northamptonshire County Council (Google)

A Conservative-led council has taken the unprecedented action of imposing emergency spending controls for the second time in six months after projecting a budget shortfall of up to £70m.

Despite being the first council in nearly two decades to issue a section 114 notice – immediately banning new expenditure – in February, Northamptonshire county council issued its second notice on Tuesday.

As a result of the extraordinary action earlier this year, two government-appointed commissioners were sent to oversee the finances of the council and produce a balanced budget.

But in a letter to councillors, the director of finance at Northamptonshire county council Mark McLaughlin said the situation was of an “extremely serious nature” and projected a significant budget shortfall in the current financial year of £60m-70m.

After meeting the government commissioners, the council chief decided to issue a second section 114 notice which means no new expenditure is permitted.

The only exception is for the safeguarding of vulnerable people and statutory services.

“The financial challenge facing Northamptonshire county council remains critical and the spending controls we have in place are vital to ensure we are focusing our limited funding on only the most essential services,” said the council's leader Matthew Golby.

He added: “At a meeting next month, we as a council will discuss a set of priorities built around delivering statutory services for the most vulnerable in our communities, and this means there will be difficult decisions that have to be made.

“We remain committed to doing everything we can to identify the savings required to reach a more stable financial position while ensuring those in our communities at risk of harm are protected.”

Andrew Gwynne, the shadow communities and local government secretary, seized on the announcement, claiming: “The government has allowed a Tory council to declare itself bankrupt twice in six months.”

He continued: “Northamptonshire is a perfect storm of local mismanagement and the crushing pressures of austerity. Commissioners will have no option but to slash and burn local services but it’s the people of Northamptonshire that will be forced to pay the price for this neglect.

“The Conservatives’ extreme ideology is pushing local government to the brink. The next Labour government will fund councils fairly and deal with our country’s social care crisis.”

A MHCLG spokesperson added: “It is essential residents are able to have faith in their council, particularly in the responsible use of taxpayers’ money.

“The financial challenges facing the council are clearly serious and reinforce how important it was that we took swift action to appoint commissioners.

“These commissioners will continue to work closely with the council as it takes the necessary steps to rebalance its finances.”

An extraordinary full council meeting will now convene next week to discuss the financial crisis affecting the local authority.