INSPECTOR'S VERDICT: Two new councils should be created in Northamptonshire by 2020... all others should be abolished

Max Caller, an independent inspector, was called in by local government secretary Sajid Javid after allegations of financial mismanagement. He was also tasked with seeing if the local authority was being run properly by bosses and the cabinet's Conservative councillors.

His report published this morning says all existing councils in the county should be abolished - save for parish councils - and two new ones created, delivering all local authority services. One would cover the south and of the county and the other the north

Mr Caller says: "The Inspection team believe that a new start is required for the residents of Northamptonshire which can deliver confidence and quality in the full range of local government services.

"This can best be achieved by the creation of two new Unitary Councils, one covering the area of Daventry, Northampton and South Northamptonshire and the other encompassing Corby, East Northamptonshire, Kettering and Wellingborough. These should be established following elections to be held in May 2020 and be in operation commencing at their first annual meeting."

In the meantime, Mr Caller says, Mr Javid should "give serious consideration" to whether commissioners should take over the running of all services apart from planning currently provided by Northamptonshire County Council.

His report, published this morning, says the origins of the crisis was the Ofsted inspection into Children's Services in 2013 that caused emergency money to be pumped in, which meant the local authority 'lost tight budgetary control'.

What came next was a poor response to the financial pressures, Mr Caller says, in effect chasing a heavily flawed model championed by departed CEO Paul Blantern.

He said: "Instead of taking steps to regain control, the council was persuaded to adopt a ‘Next Generation’ model structure as the solution.

"There was not then, and has never been, any hard-edged business plan or justification to support these proposals. Yet councillors, who might well have dismissed these proposals for lack of content and justification in their professional lives, adopted them and authorised scarce resources in terms of people, time and money to develop them.

"This did not and could not address the regular budget overspends which were covered by one off non-recurring funding sources."

When the use of capital receipts to fund transformation was introduced by central government, Mr Caller says this was seized on as a way of supporting revenue spend - by classing some expenditure as 'transformative'.

However until this week, there had been no report to full council - or anywhere else - that set out the specific transformation that was to be achieved, on a project-by-project basis. This goes against the terms of use of the money.

Despite his criticism of bosses, Mr Caller makes a point of separating the acts of managers and leaders from frontline staff.

He says: "NCC employs many good, hardworking, dedicated staff who are trying to deliver essential services to residents who need and value what is offered and available. The problems the council faces are not their fault."