Northamptonshire County Council is set to invest millions of pounds in ‘transformation projects’ using funds that it has previously been reprimanded for ‘misappropriating’.
The county council is set to apply for the flexible use of capital receipts to spend on the transformation projects. Capital funds are usually ringfenced to be used for infrastructure schemes or investing in assets, but can occasionally be used for revenue purposes that deliver council services if permitted by the government.
Recent history has seen the county council criticised by its auditors for ‘misappropriating’ some of its capital funds in ways that were not permitted, including misspending Public Health Grants and Section 106 monies from building sales.
But a council report says that this new £6.79million investment meets the correct criteria to be allowed to be spent for revenue purposes.
Projects include reducing the number of agency staff in social work teams by making them permanent council employees. An investment of £293,000 would secure a saving of £1.62million in 2019/20. And spending £1million on voluntary redundancy packages could save the council £1.46million.
Other projects include renegotiating the Shaw PFI contract, reorganisation to unitaries, and the libraries transformation programme.
The report indicates that the investment of this £6.785m in 2019/20 will result in planned savings of £12.58million in the same financial year.
But the use of capital funds on the transformation projects has naturally set alarm bells ringing for some councillors given the authority’s chequered past on misusing them.
Chair of the scrutiny committee, Councillor Mick Scrimshaw, said: “Any suggestions of flexible receipts raises concerns to all NCC councillors given our recent track record. I hope very much that lessons have been learned.”
But he added: “The transformation of these services will be vital, and no doubt the future councils would not be able to perform without these. We are about to spend millions of pounds, so we need to monitor this very closely.”
And Liberal Democrat leader Chris Stanbra said: “There may be a risk that auditors might not sign off the expenditure that we have demonstrated to be flexible use of capital receipts. Has there been a discussion with auditors and have we sought their approval? History tells us it would perhaps be wise to do so.”
Cabinet member for finance Malcolm Longley admitted that the authority was very much reminded by the recent history of misspending capital receipts for revenue purposes. But he pointed out that the papers outlined that these transformation projects ‘fitted the criteria’ that was allowed by the Secretary of State.
The report states: “The scale of the financial challenge faced by the council leaves no alternative other than to transform service delivery.
“During 2018/19, a total of £2.835million was applied in funding transformational expenditure. Most of these projects continue into 2019/20 and, in a number of cases, the savings to be generated through this funding will be realised in 2019/20 and future years.
“A number of measures have been applied in order to ensure that the qualifying criteria are met. These include a robust approval process that is applied whenever the use of capital receipts is considered, to ensure that this funding source is only applied to qualifying expenditure.”