Auditors highlight ‘significant weaknesses’ in North Northants Council’s finances
Budget oversight and governance under spotlight in council report
External auditors have identified concerning "significant weaknesses" impacting North Northamptonshire Council's (NNC) financial sustainability, as outlined in a report discussed by the authority’s audit and governance committee this week.
The audit, conducted by Grant Thornton, reveals ongoing challenges with NNC's value for money arrangements. It points to two major weaknesses uncovered in 2024/25 concerning developing savings plans and burgeoning Dedicated Schools Grant (DSG) deficits.
Alongside a recommendation for NNC to develop robust income generation and savings schemes, the audit also highlights a £13.8 million overspend for the 2025/26 financial year—NNC's largest yet—necessitating the use of reserves to balance its budget. This practice has been deemed unsustainable in the long term.
Projected deficits highlight additional critical challenges: a cumulative funding gap of £13.6m is anticipated for 2027/28, escalating to £27.5m by 2029/30, alongside an expected DSG deficit of over £69m by the close of the financial year 2026/27.
Despite the temporary statutory override allowing NNC to keep dedicated school spending debt off its balance sheet, auditors emphasize that spending must be brought under control.
The Department for Education (DfE) has announced it will cover 90% of all DSG deficits across local authorities. Yet, even with this support, NNC is still expected to fund between £7m and £8m in leftover costs, according to Claire Edwards, NNC’s chief finance officer.
She notes the issues with statutory service delivery and demand control will be scrutinized through budgetary processes, including potential income generation in North Northants’ transformation portfolio.
Additional weaknesses noted in governance relate to statutory finance reporting and ensuring timely completion of financial statements and audit trails this year. Valuation concerns of land and buildings, council dwellings, investment properties, and pension fund share were raised, along with £74.1m of s106 agreements lacking supporting evidence.
While valuation concerns are not viewed as risking the council's general fund balance, improvements have been made to rectify presentation format issues affecting s106 fund testing.
With the final auditor’s annual report expected by November 2026, NNC faces potential statutory, key, or improvement recommendations following the completion of external auditors' work.
Councillor David Brackenbury (Conservative, Thrapston) expressed apprehensions over the financial state: “We’re in a mess, it’s not our fault. My question is what are we going to do about it?”