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Norfolk County Council’s cash reserves halve in four years

PUBLISHED: 08:13 09 March 2018 | UPDATED: 17:21 09 March 2018

County councils' finances have been particularly badly hit by the cost of providing care for the elderly. Pic: Alex Raths/Getty Images/Stockphoto

County councils' finances have been particularly badly hit by the cost of providing care for the elderly. Pic: Alex Raths/Getty Images/Stockphoto

AlexRaths

Norfolk County Council is showing some similar signs of cash problems that plagued a crisis-hit authority in the years leading up to its financial collapse.

Some of the warnings that concerned auditors at Northamptonshire County Council - before it effectively went bankrupt in February, including a sharp fall in its reserves - have been found at Norfolk, according to analysis by The Bureau of Investigative Journalism.

Researchers from The Bureau looked at how councils’ finances shaped up on five measures, with Norfolk failing three.

But the council disputed some of the figures and said it had a “robust and prudent strategy”.

It comes as the National Audit Office warned on Thursday one in 10 councils could run out of money in the next three years.

The three measures looked at by The Bureau, which it says Norfolk failed, included using up more than half of its reserves since 2013, overspending this year and having a history of overspending.

Records published by the government show the authority spent more than it budgeted for in the last three financial years. It has also overspent on adult social care and children’s services.

But the council denied it had a history of overspending and said its accounts showed it had slightly underspent.

Norfolk’s total financial reserves, however, have halved since 2013 and now stand at £62m.

The council expects total reserves to be slashed to £47m by 2022.

But it said its budget for 2018/19 was balanced, protected the vulnerable and also relied on fewer reserves than in previous years.

The council is making savings of £30m in 2018/19 but still has to find another £95m of cuts by 2022.

Simon Edwards, director of the County Councils Network, said: “The government may want to dismiss Northamptonshire as unique but, as The Bureau’s work is showing, the pressures on much of local government are intolerable.”

A council spokesman said: “We face major challenges, with Government grant reducing, demand for services rising and costs increasing. But by prudent budgeting, we have focused our spending on the priorities outlined in our “Caring for our County” plan.”

They include more spending on children’s services, adult social care and infrastructure.

Deputy leader of the council Alison Thomas told this paper in February the council was not in the same situation as Northamptonshire, but they did need to increase emergency reserves.

•The figures

The Bureau looked at five measures of financial health and found Norfolk, Lancashire and Somerset county councils failed some of them.

Researchers identified these county councils after applying stress tests - based on concerns auditors raised at Northamptonshire - to all English councils responsible for social care.

The three of the five The Bureau says Norfolk failed were:

•It will spend more than its budget this year - the overspend is just under £3m.

•Its reserves have fallen by more than 50pc since 2013/14. Norfolk’s total reserves were slashed from £127m to £62m.

•It has historically overspent for the last three years. Government data shows Norfolk spent more than its overall budget, adult social care budget, and children’s services budget.

The council said its accounts showed overall it had underspent, after balancing its books by using its reserves. The other two measures were:

•Emergency reserves less than 3pc of budget - Norfolk’s emergency reserves are around 5pc of its budget.

•Budget gap higher than total reserves. Norfolk has to cut £30m in 2018/19 against total reserves of £62m


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