Councils across England face £5billion black hole over next year
Why aren’t councils cutting costs in lockdown? Local authorities face £5bn black hole but critics say ‘bosses’ sky-high salaries and generous councillor allowances should be looked at before going cap in hand to government’
- Newly released data shows public services are facing a financial black hole
- Analysis compiled by the largest authorities shows they will £2.2bn in the red
- This is despite the government announcing £3.2bn in additional funding
- Here’s how to help people impacted by Covid-19
Councils are facing a £5billion cash shortfall caused by the ongoing coronavirus pandemic – but critics have said local authorities should look to make cuts to ‘sky-high’ council boss salaries before going to the government for more money.
Data seen by The Guardian shows that public services are in a financial black hole and that a number of councils in England are on the verge of bankruptcy.
Analysis compiled by the largest 44 authorities in the country shows that by the end of this financial year they will be £2.2billion in the red. If spending and losses at all councils continue to mount the predicted shortfall will be £5billion.
This is despite Local Government Secretary Robert Jenrick previously announcing £3.2billion in additional funding for local authorities.
Harry Fone, grassroots campaign manager at the TaxPayers’ Alliance, said that local authorities regularly ‘plead poverty’ but continue to ‘waste taxpayers’ money.
Greater Manchester Combined Authority, said on Friday that coronavirus will leave the city’s 10 borough councils £541 million out of pocket
He added: ‘The coronavirus crisis makes it more crucial than ever to fund frontline public health and social care services, but dipping further into taxpayers’ pockets is not a sustainable solution.’
‘Be it sky-high salaries for council bosses, generous councillor allowances, or poor procurement, local authorities should be rooting out every penny of unnecessary spending before going cap in hand to the government.’
Councils warned last week that much of the additional funding provided by the government has already gone and the money allocated is not adequately covering a huge increase in costs for things such as the procurement of PPE.
Councils are facing significantly increased costs due to the pandemic as they battle to support key services and protect vulnerable people. They have also seen a dip in revenue from council tax and parking fees.
Oxfordshire councils – who received almost £15m from the first round of funding – said they stood to lose £100m as a result of coronavirus costs
The study of 343 local authorities, by the Special Interest Group of Municipal Authorities (Sigoma), indicates that extra spending pressures from Covid-19 will top £720million, but that this will be overshadowed by huge losses in revenue.
Newcastle-under-Lyme Borough Council has said it has already used its £65k additional funding, and only has £1.5million reserves.
While Windsor and Maidenhead council is teetering close to bankruptcy amid a £14million shortfall.
Oxfordshire councils – who received almost £15m from the first round of funding – said they stood to lose £100m as a result of coronavirus costs.
Greater Manchester Combined Authority, said on Friday that coronavirus will leave the city’s 10 borough councils £541 million out of pocket.
A spokesman for the Local Government Association last week told the BBC that some councils may be subject to Section 114 reports in the near future.
While Windsor and Maidenhead council is teetering close to bankruptcy amid a £14million shortfall
A Section 114 notice bans all new expenditure and effectively means a council is declaring bankruptcy. Northamptonshire County Council followed this process in 2018 after they ran out of money.
Sir Stephen Houghton, the leader of Barnsley borough council, told the newspaper: ‘Even for those councils that are not at that cliff edge, the ability to deliver key services effectively – children services, adult services and waste management, for example – will be in question.
‘Services may be running now but we will see the effect will come through in six to 12 months’ time.
‘You get to a point where the frequency of waste collection is cut and the time taken to assess vulnerable peoples needs takes longer and so on.’
A government spokesperson told The Guardian: ‘The secretary of state has announced £3.2bn of funding for councils to support their response to the pandemic.
‘This new funding will support them through immediate pressures faced by councils to respond to coronavirus and protect vital services.’
Newcastle-under-Lyme Borough Council has said it has already used its £65k additional funding, and only has £1.5million reserves
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