An immediate ban on spending has been announced by Northamptonshire County Council which says it faces a severe financial challenge.

The Section 114 notice – which imposes immediate spending controls on the organisation – was announced by the local authority on Friday (2 February).

It is believed to be the first Section 114 notice issued by a council in 20 years.

The notice means no new expenditure is permitted, with the exception of statutory services for safeguarding vulnerable people.

    Balance budget

The council said the notice was served in light of the “severe financial challenge” facing the authority and the significant risk it would not deliver a balanced budget by the year end.

Councillors have 21 days to discuss the implications of the section 114 notice and this is due to be addressed at the Full Council meeting on 22 February.

The notice does not affect staff pay and Northamptonshire County Council said it would continue to meet its statutory functions.

The Chartered Institute of Public Finance and Accountancy says local authorities have found it increasingly difficult to balance their budgets.

    Spending reviews

It says this is in part to the impact of the spending reviews and funding cutst.

CIPFA’s local authority CFO confidence monitor for 2016/17 showed more than 56% of finance leaders were less confident that they would reach a balanced budget.

Concern about the rising cost of social care in upper tier councils and uncertainty over future funding streams were challenging robust financial planning, said CIPFA.

Many types of council were finding that the amounts generated through business rates, the New Homes Bonus and fees and charges could fluctuate dramatically.

This made them difficult to estimate and put council budgets at greater risk.

    Headquarters

Last month, Northamptonshire County Council unveiled proposals to save costs by selling and leasing back its headquarters.

Under the arrangement, the office complex would be sold as freehold with the council leasing it back for a period of 25 years or more.

The authority would also be able to sub-let space within the building to third parties to partially offset rental costs.

Councillor Robin Brown, the local authority's cabinet member for finance said: “Our financial challenge is severe and ongoing and therefore we need to explore all avenues of funding that is available to us to fund our statutory services.

“This arrangement would see substantial capital receipts which would make a significant funding injection for our core services.”