A bankrupt county council siphoned off £9 million meant for school improvements in a desperate bid to prop up its depleted reserves, it has been revealed.
Northamptonshire county council hit the headlines in February after its bank balance plummeted so low that it was forced to bring in what’s called a Section 114 notice, banning all new spending.
But the revelation that it had diverted funding meant for schools towards other costs has prompted warnings that other authorities could do the same.
The council’s grip on its finances has since been the subject of several investigations, and the Huffington Post reported this week that it moved the £9 million into its general revenue account last year.
An external audit report by KPMG into the council’s finances in 2016-17 revealed in August last year that it had delved into its reserves in an attempt to keep afloat, including funds raised through “Section 106” payments from housing developers, which are meant to fund community projects and local services.
The size of the cuts councils are having to make is simply too big to be plugged by reserves
The report said “mitigations” made by the council included “£9 million of S106 developer contributions set aside to fund future educational improvements within the county”.
S106 agreements are legal obligations with developers which aim to balance out pressures created by new developments with improvements to the local area, and include a variety of infrastructure including schools.