Auditors have warned cash-strapped Northamptonshire County Council that its proposed budget could be breaking the law.
The auditors KPMG have issued an advisory notice to the council warning it would be in breach of the Local Audit & Accountability Act 2014 if it signed off on its budget.
The struggling authority issued a section 114 order earlier this month, calling a halt to spending due to the ‘severe financial challenge’ it was facing.
According to estimates produced for the Treasury, the council faced a £157m cash shortfall between 2006 and 2020 before damping.
KPMG argues the council’s 2018/19 budget does not balance and is therefore in breach of the 2014 Act.
The advisory notice states it would be ‘unlawful’ for Northamptonshire to sign off on the budget - a budget it says is ‘likely to cause a loss or deficiency.’
The auditors argue the council is relying too much on takings from selling off land and buildings - funds which cannot be guaranteed.
Responding to KPMG’s warnings, a spokesperson for Northamptonshire County Council said: ‘The Section 114 notice issued earlier this month shows that as a council we recognise the very real risk we face in balancing the expenditure demanded of us in terms of our statutory duties and the resources available to us to pay for them.
‘We have also been clear that we do not believe our funding position is sustainable.
‘We have been clear that there are risks in our budget proposals for 2018/19 given this funding position and the on-going demand pressures we face.’
‘Given the severity of our financial position we are having to maximise the use of capital receipts as encouraged by the Government to enable us to transform and protect statutory services,’ the spokesperson said.
‘We have worked hard to ensure that the budget proposals being put forward for next year are accurate and realistic.’
The council was due to vote on the budget tomorrow, but this will now be postponed until February 28th.
