By Eric King-
Northamptonshire County Council is to be investigated over its general running and a £1m overdraft facility it lent to a company called LGSS Law.
The council is meant to be in a financial crisis, but has been accused of mismanaging its funds to the tune of £1m. The large figure has alarmed observers who are alarmed at the figure. The Eye Of Media,Com is considering an investigation into the worrying sums of money involved, but is concerned about the time and costs that may be involved in the investigation given other commitments.
LGSS was set up in 2010 as a shared service between Cambridgeshire and Northamptonshire county councils. LGSS Law Ltd was created five years later after the councils were granted an ABS licence. Central Bedfordshire joined 12 months on. Filings with Companies House reveal LGSS Law, which had an £8.7m turnover in 2018 drew down £950,000 of the Conservative-led council’s £1m overdraft in 2017-18.
Alternatively, the council may be referred to some other body to investigate Northamptonshire County Council’s financial practice that has lead to such a large sum of money spent in overdraft. A spokesperson from the County Council said
The credit was offered to “ensure the emerging company avoided any cash flow difficulty”, the council said. LGSS Law – which is owned by Cambridgeshire County Council, Northamptonshire County Council and Central Bedfordshire Council – was founded in 2015 with the aim of providing a “new model” for public sector legal services.It now has more than 100 public sector and not-for-profit clients, including Ipswich Borough Council and Corby Borough Council, and employs more than 150 people.
Filings with Companies House reveal LGSS Law, which had an £8.7m turnover in 2018 drew down £950,000 of the Conservative-led council’s £1m overdraft in 2017-18.Labour councillor Mick Scrimshaw, who is also the county council’s overview and scrutiny committee chairman, said: “There are definitely questions that need to be asked.
“There is no question that the council could do with that money back. It would go some way to dealing with the overspend.”A council spokesman said the overdraft was provided when the company was established. “This was before the council’s recent financial difficulties,” he said. “The purpose of the overdraft was to provide a working capital to ensure the emerging company avoided any cash flow difficulty.”This facility is still required by the company at this present time.”
Accounts filed by LGSS Law show that the company, wholly owned by public bodies, has benefited from a £1m overdraft facility with Northamptonshire County Council. The accounts, made up to 31 March 2018 and filed in January, state that £950,000 has been drawn down.
The BBC reported that last year housing, communities and local government secretary James Brokenshire appointed commissioners to intervene in the running of the council and assume responsibility for strategic financial management after an independent inspection report found ‘significant failures that could not be satisfactorily addressed within a reasonable timetable’.
A spokesperson for the council said the overdraft facility was provided to LGSS Law in 2015, when the company was established and before the council’s ‘recent financial difficulties’.
The spokesperson said: ‘The purpose of the overdraft was to provide a working capital to ensure the emerging company avoided any cash flow difficulty. This facility is still required by the company at this present time. To give this a full context LGSS Law is part of a model which was established to generate income for the partner councils.’