PARLIAMENTARY DEBATE
Public Service Delivery: Northamptonshire - 6 February 2018 (Commons/Commons Chamber)

(Urgent Question): To ask the Secretary of State for Housing, Communities and Local Government what are the implications for public service delivery in Northamptonshire of the issuance by Northamptonshire County Council of a section 114 notice.

I thank my hon. Friend for his question on a topic that he and his Northamptonshire parliamentary colleagues have consistently raised on behalf of their constituents.

As Members will be aware, on Friday 2 February, Northamptonshire County Council’s finance director issued a section 114 notice to stop new spending and put in place a process for the council to meet within a specified time to consider the financial situation. It is important to note that a section 114 notice does not automatically mean that existing services will stop. Northamptonshire’s finance director has confirmed that statutory services to safeguard vulnerable people will continue to be delivered and that council staff will continue to be paid.

Local authorities have a legal duty to balance their budget, and section 114 notices are part of the accountability framework that guards against irresponsible financial management. It is for the council to decide what steps it needs to take to balance its budget. I understand that the full council will meet on 22 February to consider the situation.

Local government is, of course, independent of central Government, but, that said, the Government have been aware of concerns about Northamptonshire County Council’s finances and governance for some time, which was why the Secretary of State appointed an inspector to undertake an independent best-value inspection on 9 January. That independent inspection is due to report on 16 March, and as the Secretary of State made clear in the written ministerial statement of 9 January, it would be inappropriate for the Government to comment while the inspection is under way, specifically to avoid prejudicing its outcome. The Government will address the wider issue of funding for local government in tomorrow’s debate on the local government finance settlement.

Issuing a section 114 notice is a serious step. I understand that this development will be causing some concern in my hon. Friend’s constituency and across the county. However, it is also a sign that the council is taking its responsibility seriously. The Secretary of State and I will take a keen interest in the steps that the council takes to resolve these matters and ensure that it continues to deliver for the communities that it serves.

Thank you, Mr Speaker, for granting this urgent question. May I declare an interest as a member of Kettering Borough Council, and may I welcome other Northamptonshire MPs who are also in the Chamber to ask questions?

It gives me no pleasure to say that, with the issue of this section 114 notice, Northamptonshire County Council becomes the worst-run local authority in the country. There are undoubtedly huge pressures on the social care budget, which are exacerbated by Northamptonshire’s fast-growing elderly population. The Government’s fairer funding review is welcome, but will, I am afraid, come too late for Northamptonshire County Council. This whole situation has been exacerbated by poor leadership by the cabinet at the county council, in which all seven Northamptonshire MPs now have no confidence. We echo the concerns of September’s peer review by the Local Government Association, which concluded that financial information is not presented clearly and transparently and that there is not a sensible budget going forward.

What happens if the county council cannot set a legal budget at its meeting later this month? What will happen to services—statutory or otherwise—to do with adult social services, children’s services, schools and highways? The Government have sent in a best-value inspector, which is good, and he is due to report by 16 March. Can—or will—the Secretary of State request of him an urgent interim assessment with some preliminary findings, because I believe that the Government need to be informed?

What is the total debt of the county council? I understand that it owes more than £700 million. Does the section 114 notice have the implication that lending institutions might foreclose on their lending to the authority? Can the Minister assure me that Northamptonshire’s bad situation with delayed discharges from our two local hospitals will not be made worse by this section 114 notice? We have a 10% delayed discharge rate. On any one day, 100 people are waiting in the two hospitals. They have completed their treatment, but because Northamptonshire County Council is not getting them into care homes quickly enough, they are not leaving the hospitals. May I urge the inspector to look at the opaque accountancy in the local government shared services model at the county council, which is where a lot of the problems may lie?

Will the Government prevent the county council from selling its new, very recently opened Angel Square offices? While that could bring in £50 million, it could leave a 25-year rental liability for any successor authorities. Will the Minister make sure that the transfer of the fire service out of the county council to the police commissioner is not held up by the financial crisis at the county council? I do not want the fire service to go down with the local authority.

It is clear that Northamptonshire County Council is in a huge mess. We look to the Government inspector to report quickly, and, in the view of all seven Northamptonshire MPs, the sooner that Lords Commissioners are sent in to sort out this mess, the better.

I thank my hon. Friend for his questions. I know that this is something that he is thinking about deeply on behalf of his constituents. Let me take in turn the points that he raised. With regard to the fire service, he will hopefully be aware that the Home Office is considering that application and will make its decision in due course. On his points about the financial situation, he is right to say that there are a range of issues that were highlighted in both the independent audit reports and the LGA peer review, which, as he rightly pointed out, cited both culture and governance issues at the council.

On the process from here, Ministers do not have direct contact with the inspector—he is rightly independent—so it is not possible to direct him to report earlier. I would point out that the 16 March deadline means that this inspection will conclude in much less time than was allowed for the Tower Hamlets and Rotherham inspections, which, hopefully, should give my hon. Friend some comfort regarding a rapid resolution.

Finally, if the council meeting is not successful, the finance director has the option of issuing a further section 114 notice. However, it is important to note that he, as the statutory official, has the flexibility today and in the future to authorise any payments that he sees fit and for which there is a sensible case, including, as he has guaranteed, to safeguard vulnerable people. At the point at which the council is ready to make formal representations to my Department for anything that it might require, we stand ready to engage with it.

Mr Speaker, thank you for granting this urgent question. I welcome the Minister to the Dispatch Box; it is just a pity that it is not the Secretary of State.

There have been deeply troubling reports for a number of months that Northamptonshire County Council has been failing in its duty to the people of Northamptonshire and to the public sector workers who provide valuable services to local people. As has been mentioned, the Local Government Association conducted a financial peer review back in September. That report had three key findings. First, it found that time was

“running out for Northamptonshire County Council”.

Secondly, it stated that the council was

“heading towards major financial problems”,

and, thirdly, it said:

“There was a sense that the scale of the financial challenge for the Council was just too great for it to overcome itself and that the government would have to bail it out.”

Since then, we have had more reports that the council was failing in its duty to the people of Northamptonshire, and residents will now pay the price for its negligence.

The failure of this Tory-run council is the result of a perfect storm of chronic underfunding and catastrophic Tory mismanagement, yet when a Government have taken £5.8 billion out of local government finance, when everyone is saying that social care is on its knees and when children’s services need another £2 billion, not only does the Secretary of State not turn up to reply to an urgent question, but he sticks his head in the sand and fails to give local government the money it needs to provide safe, decent, quality services. This situation shows, yet again, that we cannot push the cost of local government on to council tax payers, because that just does not raise enough money locally. The Secretary of State knows that, the Minister knows that, the Treasury knows that and the local government sector knows that, so when will Ministers stand up to the Chancellor and demand the money that local government needs?

The Local Government Chronicle suggests that at least 10 other local authorities are preparing to issue section 114 notices. The sector will look very closely at how the Minister treats Northamptonshire, so what contingency arrangements does he have in place should other authorities fall over the cliff edge? What guarantees can he give from the Dispatch Box that services in Northamptonshire and across the country will be protected by his Department? Will he join Sally Keeble, Gareth Eales and Beth Miller—Labour’s candidates in Northamptonshire—in calling for the appointment of commissioners to fix this mess?

It was announced last night on Twitter that the Secretary of State was in the process of politically fixing the financial mess he has made for his Tory Back-Bench friends. Two years ago, the transitional grant scheme gave out an additional £3 million of funding, but 80% of that went to Conservative-controlled councils, 70% of which were county councils. By contrast, metropolitan districts got only an extra 2%, despite being the hardest hit. In the light of that, we will be watching the Minister and his Department very carefully, because all councils are financially stretched and all councils deserve fairness.

I thank the hon. Gentleman for welcoming me—albeit lukewarmly—to the Dispatch Box. He talks about the Secretary of State, but it is this Secretary of State who has taken action with regard to Northamptonshire. It was this Secretary of State who, in response to the negative opinions of the external auditors and the LGA peer review, decided to commission an independent inspection at the end of last year. That is exactly what responsible government looks like, and the Secretary of State should be commended for taking swift action.

The hon. Gentleman asked me to prejudge the outcome of the inspection, but it would be absolutely inappropriate and unfair to the council for me to do so. When the Government receive the results of the independent inspection, we will of course carefully consider its findings, but it would be wrong to draw conclusions about those findings today, as he suggests we do.

The hon. Gentleman mentioned finances. We will, of course, be discussing finances tomorrow. This Government have backed local authorities with an historic four-year funding deal that provides more than £200 billion and a real-terms increase in spending for next year and the year after. Everything is always about money for the Labour party, but the hon. Gentleman would do well to listen to the words of the chief executive officer of the Chartered Institute of Public Finance and Accountancy, who said:

“Whilst Northamptonshire has had a difficult context within which to balance its budget…other councils in a similar situation have successfully managed their budgets”.

As my hon. Friend the Member for Kettering (Mr Hollobone) pointed out, the issue is one of governance and culture. Those are the points that were highlighted and that the inspector will be considering.

I congratulate my hon. Friend the Member for Kettering (Mr Hollobone) on securing this very important urgent question. As he said, all seven Northamptonshire MPs have lost confidence in the leadership of the county council. There is no question that this is about money; it is about the governance of the county council. Its cabinet has to go, and it has to go now. The vast bulk of county councillors of all political parties on Northamptonshire County Council are impeccable, but there has been a clique running that cabinet, and that is the cause of the problem. If there had been a committee system, this could not have happened. I am not saying that a cabinet system does not work elsewhere, but we need to ensure that Northamptonshire County Council has a committee system in future. Does the Minister agree?

My hon. Friend makes some intelligent points, and I know that he has represented his constituents well on this issue. I am sure he will understand that I cannot comment on the particular governance arrangements that should be in place at Northamptonshire, but he is right to highlight that governance is important to the conduct of the authority. I am sure that the independent inspector will consider that during his deliberations.

Yesterday, the Communities and Local Government Committee was looking at business rates and local government finance, and we heard from witnesses from the LGA, CIPFA and the County Councils Network. When we asked whether any other councils were in a similar position to Northamptonshire, the answer we got was not this year, but that many councils are on a cliff edge. With the coming pressures on not just adult social care but children’s services, some councils could fall over that edge next year without additional resources. These comments were made by Conservatives as well as Labour representatives. Is the Minister aware of other councils that will be in this position next year? If so, what action is he going to take to prevent them from getting into that position?

My Department is in constant dialogue with individual councils and the LGA. It funds the LGA with £21 million to conduct peer reviews, so that we can build up a detailed picture of what is happening across local authorities. When there are issues in which we need to be involved, we will of course be involved. We will keep the situation under review.

I declare an interest as a vice-president of the Local Government Association and an author of other LGA peer reviews. As a former leader of Derbyshire County Council, I believe that local mismanagement has led to this situation, but I also believe that there are Northamptonshire and sector-wide fairer funding issues to be addressed. Prominent among the funding problems is the huge and growing cost of adult care. Will the Minister consider establishing a royal commission on health and social care, as well as making changes to the funding formula?

I thank my hon. Friend for highlighting the importance of social care. It was in response to the pressure on social care budgets that this Government announced in last year’s spring Budget £2 billion of new funding for social care. We will be discussing that more broadly tomorrow. My hon. Friend is also right to highlight the importance of fair funding. The fair funding consultation opened in December, and I urge all councils to make submissions to the consultation, so that we can start to put in place a new funding formula for local government and ensure that it captures all the cost drivers that councils think are relevant.

I was in Northampton yesterday for an event celebrating 100 years since some women first got the vote. The Conservative county council’s appalling mismanagement of services and finances has left local residents deeply concerned. They want and deserve answers. So what specific guarantees can the Minister give that local services will be protected, particularly for children in need, the elderly, and vulnerable adults?

The hon. Lady is right to highlight constituents’ concerns. Of course they are concerned about what they are seeing. That is why I am glad to be able to reassure them that the statutory financial officer at Northamptonshire County Council has said that he will maintain all funding for statutory safeguarding of vulnerable children and adults, and that he has the flexibility to take any steps and approve any payment that he sees fit to deliver exactly that objective.

As ever, I could not have put it better than my hon. Friend the Member for Kettering (Mr Hollobone), not least because all seven Northamptonshire MPs were told by cabinet members before Christmas that Northamptonshire County Council would be able to balance its books. May I press my hon. Friend again on the point about the inspector being invited to make an interim recommendation? That would be very welcome because it would help to give some much-needed reassurance to my constituents.

I appreciate where my hon. Friend is coming from, but I have to remind him that the inspector is independent of the Government and does not communicate directly with Ministers during this process. He has been asked to report back by 16 March, which is a considerably shorter timeframe than previous inspections, and he has the option to report back as soon as he feels that he has been able to complete his work properly and objectively.

That is not something I am actively considering, having only been in the job for a couple of weeks. On the hon. Lady’s broader point about council tax, the Government have increased the council tax referendum limit by 1% for the forthcoming years to allow councils to raise additional funds should they see fit.

Northamptonshire has very close links with Oxfordshire at a whole number of different local government levels. Can the Minister reassure me that this crisis in Northamptonshire will not affect the deals that Northamptonshire has with Oxfordshire and the people of Oxfordshire?

My hon. Friend, as a former councillor himself, will be very familiar with these issues. Obviously, the details of individual contracts will be a matter for the individual officer concerned, but nothing in the inspection process itself should change any of those contracts as of today.

The Minister boasts of a settlement given to local government. Northamptonshire’s accounts show that in the next five years it will owe £240 million to private finance initiative schemes, of which £77 million is interest alone, paid to shareholders. Does he therefore agree that it is time for a windfall tax on the excessive profits of these companies, so that we can put the money where it is needed—in our public services, not in the pockets of these legal loan sharks?

The hon. Lady talks about funding for Northamptonshire. Let me tell the House the numbers. Northamptonshire will be receiving a £30 million increase in core spending power for the forthcoming year. That represents an over-3% increase in its total budget, comparing favourably with the national average of 1.5%. On top of that, Northamptonshire will have access to its business rates retention, which on its current trajectory will include another £4 million of additional resources available.

Since 2010, there have been multiple requests from Liverpool’s leader and MPs inviting Ministers to come and look at our local authority finances. We have even sent train tickets to a previous Secretary of State that have gone to waste. Will the Minister now accept the request and come to see for himself the severe financial strain that Liverpool is experiencing, along with many other councils across the country?

In particular, Northamptonshire.

I would be delighted to visit Liverpool on the hon. Lady’s invitation. I was just being briefed by my officials on the good work that her council is doing on the troubled families programme, particularly with vulnerable children. I would be delighted to accept her invitation and meet people in Liverpool in due course.

Northamptonshire County Council has completely failed its citizens and its staff. Northamptonshire MPs have consistently voted for huge cuts to local government funding, and Ministers have refused to listen when Labour Members described the impacts of rising demand for services and even deeper cuts to our councils. When will the Minister listen and respond to the budget crisis facing all councils, including my own City of Nottingham Council?

The hon. Lady asks “When?” The answer is tomorrow, when we will be debating the local government finance settlement, where councils will see a real-terms increase in their core spending power this year. As I have said, Northamptonshire itself will be receiving at least a 3% increase in its core spending power next year.

The Minister did not answer the question from the Chair of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts). How many local authorities is he talking to that have concerns about their funding next year?

It would be wholly inappropriate for me to give a running commentary on councils that we might have a conversation with. As I told the Chair of the Select Committee, my Department consistently monitors all councils and is in dialogue with all of them—as well as the LGA’s peer review process, which we fund—to ensure that we have a good, consistent picture across local government of what is happening on the ground.

On 19 December, I extracted a commitment from the Secretary of State, who is not in his place, that the transition grant was finished. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, that grant overwhelmingly went to better-off communities and those with Conservative administrations. Can the Minister assure me that in the light of the calls overnight, following the section 114 notice, for the transition grant to be reinstated, it will not be reinstated?

I can tell the hon. Gentleman that the written statement will be laid later today. We will be debating these issues tomorrow, and he will have the answers to all his questions then.