Labour’s Seven Point Financial Plan for Northamptonshire County Council

By Mick Scrimshaw on April 21, 2017

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There is no question that the County Council’s finances are in a terrible state and whoever takes charge after the election will have a huge task trying to sort out the mess that has been created over the last few years. The Council is on the verge of bankruptcy, and over the last few years the only way the books have balanced each year has been by dipping into the depleting amount of cash reserves, by moving money from one department to another, cutting services to fund overspends elsewhere, and by some clever accounting methods around how the council makes repayments on the many loans it has.

If Labour takes control, it will be a massive challenge to deal with the financial problems that have built up over years to get us the extent they currently are. There is no easy answer, and not one simple thing than will fix the issue, but a combination of the seven proposals below over approximately four years will change the direction of the Council’s finances and allow for a more flexible and imaginative approach in how the budget is managed.

The first task of the new Labour Administration will be to undertake a complete root and branch reform of the Council’s finances. This has already started to a degree, but currently doesn’t go anywhere near enough and needs to involve individual budget managers from the bottom up and not just be led from the senior management down.

This process in itself will be a huge undertaking but we have to learn from the past mistakes of the last few years and shouldn’t be frightened of looking at new imaginative ways of tightening up the council’s financial procedures. A recent report from the independent auditors KPMG concluded that the council ‘does not offer good value for money for its tax payers and residents’. An urgent change in direction is needed to address this.

The Council need to appoint a new Finance Director. The current position is held by an outside consultant on a short-term contract and the appointment of permanent director with the relevant expertise is essential to long-term financial planning.

Over the last few years the Council has literally just scraped by from one year to the next. Labour will ensure that financial planning is about more than just getting through the next twelve months.

For years Labour have been calling for the Council to bring in extra income through revenue making schemes.

The Council is in unique position that enables it to invest in schemes to bring in extra cash that will reduce the need to rely on Government grants and the hard pressed local taxpayer. This is what councils up and down the country are doing as they try to meet the Government’s aim of Councils' becoming financially self sufficient.

So far NCC has done nothing to acheive this and it is vital for the long term stability of the Council that we start planning these sorts of schemes to bring in extra cash for the long term.

For example Manchester City Council own London Stansted airport which after all their running costs and management fees brings them in a net profit of £11m a year. They then use that towards directly funding their services.

We are not suggesting anything on that scale immediately, but there of lots of investment opportunities that can bring in rental income and profits for years into the future and these investments can also be used to support local businesses and add to the economic development of our County.

Labour will also undertake a complete review of the many contracts the Council has with private companies and partners, and this will include the many PFI contracts that the Council are locked into.

Some renegotiation of these contracts to get better value for money will be easy, but some will not. With regards to the PFI contracts, it may mean there will have to be a short term cost that could lead to long term efficiencies. It is vital that the Council considers how these contracts benefit its long term financial position.

The current Conservative Administration seems to think all their problems can be solved by their Next Generation Working model. This is the intention to move all of its services to outside bodies in the belief that this will somehow save money and bring in extra income.

However having spent three years working on this plan it has still not been explained exactly how this will happen! The notion that NCC will bring in money from selling its services to other Councils, given their track record on things like children’s services, is almost laughable.

What we do know however is that these organisations will pay VAT where they do not now, will pay Corporation Tax where they do not now and will often have the same senior officers in charge, doing pretty much the same job as they do now but often at a higher salary.

Obviously these plans need to be carefully reviewed, and given the millions that are being spent simply on setting them up there is obviously a huge potential for savings.

Northamptonshire County Council owns a huge amount of assets and properties some of many of which are not being run efficiently and not being maximised for their revenue earning potential.

Everyone at the Council seems to agree that there is potential to utilise these assets better, both to save money and to bring in new money. The Conservatives have it on their list to do, but given the current financial climate, clearly work needs to be done to make financial gains in this area quicker.

Labour will immediately bring forward plans to do this and treat the matter with the urgency it needs, again focusing on how this will benefit medium to long term financial planning.

Every expert and professional seems to agree that Northamptonshire County Council is underfunded by central Government compared to other Councils. The current Conservative Administration has time and time again said that they have presented their case for more funding to their Conservative friends in Government, but have so far been unsuccessful in getting extra money.

Labour believe that they have not been forceful and robust enough in these discussions, and we will aim to press for reform of the criteria used to decide how much the County receives.

In conclusion, none of these proposals on their own will cure the dire financial problems the Council has, but combined they will make a difference. Coupled with a new imaginative and flexible approach to how the Council handles its finances we are confident that the corner can be turned and a better long-term plan can be created.

The truth is, until we take power and get to have a much closer look at the books we won’t know the extent of the problems and we fear they may in fact be worse than we have been led to believe, which is why we are putting such an emphasis on having a flexible approach to dealing with the finances.

The next few years will be very difficult but that is no excuse not to deal with the situation. We cannot any longer simply respond to one financial crisis after another. We need long term sensible planning and a new and fresh approach is long overdue.

We do not underestimate the challenge and recognise our plan is only the start of the work needed in dealing with the overwhelming financial problems the council has, but at least we have a plan which seems to be more than the other parties have.

The Conservatives are planning to simply carry on as they have done and rely entirely on the rather dubious police of Next Generation Working despite none of the supposed savings having been properly identified or explained.

The Green Party recognise that “the drastic cuts over the last two years represent a last-ditch attempt to balance the books“. However their only publically stated suggestion is to “examine the loan book to ensure that previous bad decisions don’t continue to impact on public services”. A good suggestion, but doesn’t go anywhere near enough to address the issues.

The Lib Dems at least recognise the scale of the problem and have rightly stated that “finances have been very poorly planned over the years”. However according to a recent press interview about the Council's finances said, “their aim would be to give more funding to the County’s trading standards division and to honour contracts with third party sector organisations, but to pay for it they too have not discounted raising Council Tax”.

Again, hardly addressing the fundamental need to bring in extra revenue, and address the inadequacies of the current plans!

UKIP’s spokesperson on the other hand has said “I can’t comment on how the County Council has managed its budget over the years”, and “We need to look very carefully at what the financial situation is before we make any pledges about what we can do”. It sounds to me as though they have no ideas.

Cllr. Mick Scrimshaw
NCC Labour Group’s Finance Spokesperson

Mick Scrimshaw is the Leader of the Labour Group at Kettering Borough Council, the Shadow Cabinet Member for Finance at Northamptonshire County Council. He has a public record of standing up for Kettering as a County Councillor for the Northall division in Kettering, Northants and since May 2015, a Borough Councillor for the William Knibb ward. He is a keen cyclist and also runs a family business with his wife.

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