Northamptonshire County Council is set to use its general and earmarked reserves in order to achieve a balanced budget this financial year.
This follows a decision by the authority to postpone the sale and lease back of its headquarters One Angel Square due to the likelihood of local government reform in Northamptonshire following the Best Value Inspection report and to seek further financial and legal advice about the use of capital receipts.
The county council would therefore face a forecast overspend of £16.7m for the end of the financial year without the use of its reserves to offset the overspend, which is primarily due to unprecedented demand pressures for adult social care services.
These reserves would need to be replenished in 2018/19 and so further savings will need to be identified within the new financial year.
The county council currently has £12m in its general reserves and £4.9m in its earmarked reserves, money which is set aside for capital projects.
Acting council leader Cllr Matthew Golby said: “The current financial climate facing Northamptonshire County Council is exceptionally difficult. Government funding reductions since 2010, the cap on increasing council tax and the increasing cost and demand for social care services mean our financial challenge has never been greater.
“Since 2010 we have worked hard to find savings of £376m and a further £105m will be needed between now and 2022. The Section 114 notice spending controls relating to all but safeguarding and statutory services remain in place, but the pressures in adult social care in particular mean delivering a balanced budget is becoming extremely challenging.
“We have taken the decision to postpone the sale of One Angel Square as the Best Value Inspection report and the Secretary of State’s ‘minded-to’ decision this week suggest the strong likelihood that there will be a reorganisation of local government in the county. Following ongoing discussions with our auditors, we are also keen to seek further clarity around the flexible use of capital receipts.
“Therefore, given the fact it is not an option for us to fail to deliver a balanced budget by the end of the financial year, we are looking to make the difficult decision to use our general and earmarked reserves to negate the forecast overspend.
“This would effectively exhaust our reserves and as such really is a last resort option. It is now the only option available to us. We have communicated directly to government about this as part of our ongoing discussions about our situation.”
Cabinet will discuss the latest quarterly revenue finance report next month.