Councils’ cash curb

Feb 8 2008 by Liz Hands, The Journal

NORTH East councils being scrapped in a town hall shake-up face losing any real financial power before they are even axed, it was claimed last night.

The Government is set to impose financial controls on district councils in Northumberland and County Durham to stop them “blowing” budgets before new unitary authorities are established in 2009.

They will need central approval for contracts for services over £100,000 and capital projects, such as buildings, costing £1m and above. Any “large” decisions by existing county councils will need similar approval, while all authorities’ reserves will eventually be added to a new unitary authority pot.

The Communities Secretary is likely to delegate power to committees of district and county leaders leading the unitary move, before the role passes to new countywide authorities being elected in May. In Northumberland, the “implementation executive” is made up of the county council’s executive and opposition leaders, district council leaders and one other Labour councillor.

Details emerged after Durham North MP Kevan Jones called for controls after expressing concern over the risk of “ludicrous” contracts being signed by district councils as MPs discussed legal orders that will formally begin the countdown to unitary status.

Mr Jones strongly backed a unitary Durham authority but claimed Derwentside district council was spending £10m on “a mausoleum” for the previous council or leader – which his office later said referred to plans for a new leisure centre at Berry Edge, near Consett. “I would not want the new county council to come into being with a long list of commitments or to find that in the meantime land had been divested to various organisations,” said the Labour MP, with Communities Minister John Healey promising controls would be used to protect taxpayers

Blyth Valley Council leader Dave Stephens said controls were needed to ensure authorities were prudent, but added: “I am not happy with the broad brush approach, where they are saying in effect they are going to hamstring all the councils.”

Alex Watson, leader of Derwentside council, warned £11m in reserves held by his “good house-keeping” authority, with £10m set aside for the Berry Edge leisure facility, would be spent elsewhere because of the “draconian” financial controls. He defended Berry Edge, saying two old sites were past their “sell by date”.

Berwick MP Alan Beith said the implementation executive needed to recognise districts were “morally” entitled to spend cash raised in their communities to benefit those areas.

Tynedale Council said it would have capital reserves of £10m, with most earmarked for schemes – and would ensure a balanced budget and a below-inflation council tax rise. Alnwick District Council, which has £2m in reserves, said it was working with the county and expected it to be “relatively” straightforward to get approval for key commitments.

Durham County Council leader Albert Nugent, who chairs the county-district group overseeing reorganisation, said councils were running on a “business as usual” basis with checks to ensure any decisions creating an “unreasonable liability” for the unitary council were properly considered.

Durham County Council holds general reserves of £11.8m and earmarked funds of £68.9m compared with Northumberland County Council’s £28m and £17.8m for the same purposes respectively.

Northumberland council leader Peter Hillman said spending decisions would be taken by the new authority that would save £17m a year, improve services and cut council tax.

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More polls as boundary changes bite

FRESH elections to new “super-councils” in the North East could be held in just two years after a planned poll this May.

Elections are set to take place for new unitary authorities in County Durham and Northumberland in May, but a boundary review will be held after the poll which could see voters returning to ballots as soon as 2010.

The news emerged on Wednesday as MPs debated the legal orders allowing the creation of the single authorities, scrapping existing district and county councils.

Councillors elected this May will run the existing county council and prepare for the unitary authority in 2009.

Berwick MP Alan Beith said the order to create the Northumberland unitary authority set out a five-year term, adding: “At this stage, I am not persuaded that there is any reason to depart from what the order says, but it is causing some confusion.

“There is, of course, a case for redrawing the Northumberland boundaries in due course.”

Communities Minister John Healey said the boundary committee, part of the Electoral Commission, would conduct a review in Durham and Northumberland to revise electoral divisions as necessary after the elections.

And legally it was for the Electoral Commission to decide when new arrangements should be implemented.

But Mr Healey made it clear he wanted “stable” arrangements to get councils off to the best start, which pointed to avoiding interim elections between 2008 and 2013.