Northamptonshire CC’s director of finance has issued a section 114 order, calling a halt to spending at the cash-strapped authority.
In a statement, the council said: ‘The notice has been served in light of the severe financial challenge facing the authority and the significant risk that it will not be in a position to deliver a balanced budget by the end of the year.’
The order bans all new expenditure, aside from spending on statutory services for safeguarding vulnerable people and staff pay.
Conservative-run Northamptonshire warned the Government as early as 2013/14 that it was facing difficulty.
According to estimates produced for the Treasury, the council faced a £157m cash shortfall between 2006 and 2020 before damping.
A report, entitled Mind the Gap, concluded: ‘The evidence is clear. Northamptonshire has been hit hard by recent funding mechanisms and has actually been penalised for achieving the growth that is so crucial to the recovery of the UK.
'The key question is whether Northamptonshire CC can sustain these cuts in the long-run.’
Chief executive of the Chartered Institute of Public Finance and Accountancy, Rob Whiteman, described the move as ‘rare’.
Tweeting in the aftermath of the announcement, Mr Whiteman said there had not been any substantial s114 notices for nearly 20 years, when Milton Keynes and Hackney issued them.
Mr Whiteman tweeted: ‘CIPFA has advised MHCLG [the Ministry of Housing, Communities and Local Government] more are likely in the coming years as 40% council savings since 2010 take hold and reserves deplete.
‘CIPFA has advised for some time that this position would ensue without stronger financial management.
'Nonetheless we are sorry to see the first use of s114 in 20 years because the later it has been left unresolved the harder it is to now recover @mycountycouncil [Northamptonshire] finances.’
Last month, local government secretary Sajid Javid ordered an inspection of the council’s finances amid growing concerns over its financial predicament.
Former Hackney LBC chief executive Max Caller was called in to undertake the review.
Councillors are due to address the full implications of the s114 notice at a full council meeting on 22 February.