Ministers relax borrowing rules to help Northants

The Government has relaxed its own borrowing rules to help cash-strapped Northamptonshire County Council balance its books.

In a highly unusual move, the Government has allowed the county council to keep the proceeds from the sale of its One Angel Square headquarters to help plug its financial black hole.

The authority sold One Angel Square to Canada Life Investments in a 35-year lease-back deal in April.

Local authorities are not normally allowed to use what are known as capital receipts in this manner, but a report published yesterday by the commissioners appointed by the Government to rebuild Northamptonshire confirmed they had granted the council’s request to use £70 million of capital receipts to help balance its books.

‘This significant step – called capitalisation dispensation – will help the council to reduce its deficit and put it on a more sustainable financial footing,’ said the Government in a statement.

Northamptonshire County Council has been in financial dire straits since it issued a Section 114 notice in February, which effectively banned all new spending.

The commissioner’s report said ‘dysfunction’ at Northamptonshire council has resulted in some services lacking resilience and “active, engaged and capable leadership” is paramount in carrying the local authority through its difficulties.

Housing secretary James Brokenshire described the situation at Northamptonshire as ‘very serious’.

‘I am grateful to the commissioners for uncovering the council’s true financial position and the robust steps they have taken to improve its financial management and governance,’ added Mr Brokenshire.

The leader of Northamptonshire County Council, Cllr Matt Golby, added: ‘I am delighted the commissioners have been successful in their request for a capital dispensation.

‘This will enable us to use our own resources to tackle the £35m deficit from 2017/18 and replenish our reserves to put us on a sustainable financial position.

‘We’re pleased that the government has recognised the robust steps taken by the authority to stabilise the council’s position, and the approval of the capitalisation grant is a significant step in the council’s recovery journey,’ added Cllr Golby.

A public consultation was also launched yesterday (29 November) on plans to replace the current county council and districts in Northamptonshire with two new unitary authorities.

‘I’m determined to ensure the people of Northamptonshire receive the very best public services from local authorities which are well-connected, make best use of public funds and give people more choice over how their communities are run,’ added Mr Brokenshire.

‘I look forward to hearing views on the proposals from the people of Northamptonshire.’