Northants Goes Bust

Northamptonshire County Council issued a section 114 notice yesterday.  That is effectively saying the Council is bust, and will lead to an immediate freeze on spending and some sudden and probably not very strategic cuts.  In the words of the Guardian, it is:

"an admission that a council does not have resources to meet current expenditure, that its financial reserves are depleted and that it has little confidence that it can bring spending under control in the near future."

It is the first local authority to issue such a notice in twenty years, and as such is a big deal.

It is not however, likely to be the last.  This is the start of the process predicted by Barnet's well known "Graph of Doom".  This shows a line of minimal spending by a local authority going steadily upward as demographic change and growing need places more demand on public services, meeting an upper line going downward, which shows the Authority's income made up of business rates, Council Tax, dwindling central grants, fees and charges and any other income it has.  The two lines have now crossed, so that services can no longer be paid for without central government intervention. 

Central government minister have ever since the Lib Dem/Tory coalition formed in 2010 and started savagely cutting funding for local government been told that this would be the result.  They have simply ignored this entirely predictable result of their own policies.

My main surprise is that a Tory Council has collapsed first, as a number of them have been given sweetheart deals by the Tory government.  However Northants will merely be the first of a number of authorities that central government is forced to take over.  I doubt whether it will have the capacity to do so effectively so we may well be about to see things fall apart across the country.