The funding crisis facing local authorities has deepened after a Tory-run council warned services for vulnerable children and adults can no longer be protected as it prepared drastic measures to survive ongoing financial difficulties described as “without parallel in modern times”.

Northamptonshire county council – already technically insolvent – has called an extraordinary meeting for Wednesday to seek support for cutbacks which will reduce statutory services to the bare legal minimum and see non-core services shrunk or closed.

Hundreds of jobs are likely to be at risk as the council scrambles to find up to £70m of savings over the next few months to balance its books. The council has already drained its reserves, and has warned that further savings will be difficult.

Northamptonshire’s Tory leader, councillor Matthew Golby, has warned that in future services will be restricted to a “core offer”. He describes this as “the best service offer we are likely to be able to afford. It aims to fulfil our [legal] duties and offers support to those most in need only.”

In a discussion paper published ahead of the meeting, Golby says that although the council will strive to deliver its core services the council will need to encourage big society-style “behaviour change” in local communities “to create resilience in places where the council can no longer step in”.

Prof Tony Travers of the London School of Economics, an expert in local government, said the scale and nature of Northamptonshire’s crisis was unprecedented: “This is as near as possible to being without parallel in modern times.”



He said the danger for Northamptonshire was that in order to make the scale of cuts necessary to meet its legal obligations to balance its budget it would simultaneously breach its legal obligations to provide statutory levels of core services, such as those for children at risk and for elderly and disabled adults.

The council is already facing a legal challenge over its plans to close or sell-off 21 of the county’s 36 libraries on the basis that in doing so it is in breach of its statutory obligations. More legal challenges can be expected as it moves more services to “bare minimum” levels.

The plight of Northamptonshire will heighten pressure on the government to ease the impact of austerity on local authorities, who have had £16bn of central funding cut since 2010. Other councils are believed to be at risk of becoming similarly insolvent as they struggle with increasing demand for services and shrinking budgets.



The National Audit Office has warned that up to 15 English councils could go bust in the next few years as costs race ahead of resources, especially in children’s services, which have experienced a surge in at-risk youngsters being taken into care, and in services for vulnerable older adults.

The Tory head of the Local Government Association, Lord Porter, recently warned that cuts meant “councils will no longer be able to support our residents as they expect, including our most vulnerable”. Local services such as libraries, Sure Start centres, parks and bus services have been lost as town halls retrench.

Tory-run Somerset county council warned in May that it is at risk of following Northamptonshire into bankruptcy after large overspends on child protection services put its financial stability at risk.

Last week Northamptonshire council issued an unprecedented second section 114 notice setting out the scale of the continuing crisis. Its finance director, Mark McLoughlin, issued the first notice in February – an effective statement of insolvency – after warning it could not balance its books. It has a net budget of £441m.



In a terse and scathing four-page letter to councillors, McLoughlin warned that years of mismanagement had left the council financially compromised and in serious danger of failing to meet its obligations both to balance its budget this year and to set a legal budget for 2019-20, when a further £54m of savings are due.

He said councillors could not avoid tough decisions to balance the books, noting that these “will have to go beyond cuts to staff pay and staff numbers to include all services, including those to, and in respect of, vulnerable children, young people and adults”.

McLoughlin criticised a series of “inappropriate” decisions made by the council leadership over the past four years to balance the books, including the abuse of reserves and capital receipts, accounting ruses and “knowingly adopting unachievable savings”.

He said the council leaders had assumed they could put off difficult cuts decision because they believed the government would change the national funding formula for councils to benefit counties like Northamptonshire. He warned that it was clear that “no immediate remedy” was available to the council.

This week it emerged that the council’s former chief executive had been told of impending financial crisis by its then director of finance back in 2015. The warnings about the “corrosion of our financial management arrangements” were effectively ignored.

Labour county councillor Danielle Stone described Northamptonshire’s plight as “unbelievable” and the result of “years of mismanagement on a massive scale”. She said she expected swingeing staff cuts and a fire-sale of council buildings to try and meet the shortfall.



Northamptonshire in recent years aspired to be a poster-child for a distinctively Conservative approach to local government, priding itself on having one of the lowest levels of council tax, then freezing council tax and adopting a radical plan to outsource services, which sunk without trace.

However, the government was forced to send in commissioners to Northamptonshire in May to oversee the management of the council. This followed a devastating inspector’s report in March, which identified widespread management failures and lax financial controls at the council.

Although the inspector, Max Caller, blamed the council’s position on mismanagement rather than underfunding, the continuing crisis in Northamptonshire – all of whose seven MPs are Tory – will set alarm bells ringing in Whitehall, and drive up pressure on ministers to intervene.