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A Tory council has become the first in 20 years to ban all new expenditure after completely running out of money.

Northamptonshire County Council says there is a "significant risk" it will not be able to produce a balanced budget this year, as required by law.

No new expenditure will be permitted from now on, except for services the council is legally required to provide.

One plan to balance the books is selling the council's new £53million headquarters in Angel Square, Northampton, and then leasing the building back, the BBC reported.

Other proposals being considered include up to a dozen office closures across the county.

The council's finance boss has written a section 114 notice - a legal document that means there is, or is likely to be, an unbalanced budget.

It is believed to be the first time in 20 years such an order has been issued.

Labour, the official opposition on the council, called for resignations, saying that the organisation was in “unchartered territory” and is now in “both financial and political chaos”.

(Image: LeaderNCC/Twitter) (Image: Google)

At the end of December the council was reporting an overspend of £8.7m on a gross revenue budget of £738m.

It announced in December that it was looking to increase council tax by almost 5% as it sought to make savings of £34.3m.

Secretary of State for Local Government, Sajid Javid, announced last month a government inspector would be assessing the council’s financial state.

The council's opposition finance spokesman, Councillor Mick Scrimshaw, said in a statement on Facebook: “An emergency meeting of the full council will follow, but this could now end up with the government having to step in and take over the running of the council.

“We are now in uncharted territory and the council is now in both financial and political chaos! Resignations must surely follow.”

The council said in a statement: "​Northamptonshire County Council’s director of finance has today issued a section 114 notice imposing immediate spending controls on the organisation.

(Image: AFP)

"It means no new expenditure is permitted, with the exception of statutory services for safeguarding vulnerable people.

"The notice has been served in light of the severe financial challenge facing the authority and the significant risk that it will not be in a position to deliver a balanced budget by the end of the year.

"Councillors have 21 days to discuss the implications of the section 114 notice and this is due to be addressed at the full council meeting on February 22.

"The notice does not affect staff pay and the council will continue to meet its statutory functions."

Rob Whiteman, chief executive of Chartered Institute of Public Finance and Accountancy, called the move “highly unusual” and said it was the first section 114 notice for over 20 years.

He told the BBC: “Whilst Northamptonshire has had a difficult context within which to balance its budget in relation to government cuts, other councils in a similar situation have successfully managed their budgets,” he said.

Tory council leader Heather Smith insisted the authority had always been “open and transparent”.