Northamptonshire council faces up to cost of effective bankruptcy

Authority likely to sell new £53m HQ and slash services despite being a model of Tory ideology

The clean steel and glass lines of One Angel Square were supposed to enshrine the modernising dynamism of its owners, Northamptonshire county council. Instead, the £53m headoffice is more likely to end up as a symbol of one of the biggest municipal failings of recent times.

Earlier this month, Northamptonshire went effectively bankrupt, becoming the first local authority in two decades to issue a section 114 notice. This signalled that its finances were so precarious it would be unlikely to balance the books this year and was at risk of being unable to set a legal budget for 2018-19.

As a result, One Angel Square is likely to be put up for sale, three months after it was formally opened by the communities secretary, Sajid Javid. A fire sale of assets is the only way to keep the council afloat, say officials, though even this temporary fix may not be enough to save it.

Danielle Stone, a Labour councillor, said: “I have been saying for years that they have been heading for disaster. What’s happened is going to be awful for the county. I’m shocked it has come to this, but I’m not surprised.”

Danielle Stone
Danielle Stone. Photograph: John Robertson/The Guardian

The council’s predicament has triggered bitter recrimination among local Tories. Northamptonshire’s seven MPs, all Conservatives, accused the council of mismanagement. Heather Smith, the council leader, said the government had starved it of funds. Eighteen backbench Conservative councillors called on Smith to resign.

The irony is not lost on some observers that the first local authority to go bust under austerity is not the profligate Labour municipality of media caricature, but a Tory-run council in the heart of middle England.

Penny Smith, the council’s Unison branch secretary, said: “Can you just imagine if this was a Labour authority? They’d be saying ‘Typical Labour, can’t run anything’.”Furthermore, it has crashed after rigid adherence to the Tory ideological rulebook for local government. Northamptonshire embarked on a “next generation” reform plan in 2014. Services would be outsourced or turned into profit-making companies. The council would drastically shrink in size and be run like a business. “The old model of local government no longer works,” it declared.

The grand plan failed at a cost, say critics, of more than £50m on consultants and rebranding. Expected efficiency savings did not materialise, some privatised services have since been hauled back in-house and the scheme’s political architects, including the then council leader Jim Harker and the then chief executive Paul Blantern, have departed. After years of freezing council tax bills on principle, the authority has raised them by 6% from April.

Although Smith refused to speak to the Guardian, a council statement blamed “unprecedented demand for local services, rapid population growth and reducing levels of funding from central government” for its problems.

“The authority has been warning the government for several years that the challenge was becoming insurmountable,” it said.

Northamptonshire faces huge structural pressures. The number of residents aged over 65 will increase by an estimated 28% by 2024 and record numbers of children are being taken into care. The council says it is left comparatively disadvantaged by the skewed formula for sharing out central funding among local authorities.

Government cuts have obliged Northamptonshire to make £376m of savings since 2010 and it estimates that another £111m must be cut from annual spending by 2021. How it will do this while maintaining the services it must legally provide is unclear. Council papers note that “it has been increasingly difficult to identify areas of the council that can be delivered more efficiently”.

At the Blackthorn Good Neighbours nursery, a thriving community charity on an estate in the socially deprived eastern edge of Northampton, Kathryn White, the manager, said the council was paying the price after years of cutting children’s services, compounded by growing poverty and housing and job insecurity.

Support services that might once have helped a struggling family stay afloat and together have almost gone, she said. More children are being taken into care and child protection spending is spiralling. “There comes a point where the cuts don’t stack up any more and we have gone beyond that point,” White said.

The backbench Tory county councillor Jonathan Ekins refuses to accept that underfunding was entirely responsible. Similar councils are in the same boat and they have not gone bust, he points out. He blames what he calls the council’s secretive and dysfunctional leadership.

Northamptonshire county council logo
Northamptonshire county council last week ditched a plan to close all but eight of its libraries. Photograph: John Robertson/The Guardian

Even so, he believes the cuts have gone too far. “The fact is we are living longer and our children are getting more care. This costs money,” Ekins said.

He would like to see big council tax rises to pay for it, but accepts that most of his constituents could not afford this. “Unless we get a big injection of funds [from the government], we are in trouble,” he said.

Mark McLaughlin, the council finance chief, issued a terse memo setting out the “grave” options facing the authority. Selling off and leasing back One Angel Square might give the council breathing space, but without a buyer, it faces “rapid and difficult reductions” in services. Even a skeleton service may not be enough to balance the books in the long term.

He insisted the council should pursue planned cuts with “realism” and “iron discipline”, but last week, it decided not to push ahead with unpopular proposals to close 28 of its 36 libraries.

A government inspection into alleged financial and governance failures will report back in March. Staff morale is at rock bottom, said Smith. There is speculation that the county could be abolished and merged along with its five constituent district councils into two new unitary authorities.

There are fears that a handful of councils could follow Northamptonshire into bankruptcy. Conservative-run Surrey county council has a deficit of more than £100m. A survey by the Local Government Information Unit thinktank found eight out of 10 councils were concerned about their finances.

McLaughlin has warned Northamptonshire’s councillors that they should not assume the government will ride to the rescue. Ministers have promised a review of council funding, but this “is more likely to be concerned with the distribution of an ever-shrinking quantum of support than a major injection of spending power”.


Patrick Butler Social policy editor

The GuardianTramp

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