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Govt has given four new councils in England emergency financial support because they can't balance their books: https://www.bbc.co.uk/news/uk-politics-56018438
All in a better position - more reserves and spent less on commercial property - than Croydon at start of pandemic:
All in a better position - more reserves and spent less on commercial property - than Croydon at start of pandemic:
Reasons for pressure are varied. Loss of airport income in Luton ( https://www.lutontoday.co.uk/news/politics/government-steps-emergency-funding-help-luton-borough-council-balance-books-3131117), knock-on impacts of Covid-19 in Bexley ( https://www.mylondon.news/news/south-london-news/bexley-council-government-taxpayer-bailout-19814001) and Peterborough ( https://www.bbc.co.uk/news/uk-england-cambridgeshire-56003188):
Good news: none 'went bankrupt' (issued Section 114s)- all have been allowed to borrow to fund day-to-day spending through "capitalisation" (normally not allowed): https://www.instituteforgovernment.org.uk/publication/performance-tracker-2019/local-authority-financial-sustainability
Bad news: risk that this is the tip of the iceberg.
Rumoured to be a big list of capitalisation applications: https://www.room151.co.uk/blogs/richard-harbord-delayed-capital-determinations-make-section-25-opinions-a-new-crunch-point/
@RobWhiteman thinks there are lots of councils "in or around a section 114 position": https://www.ft.com/content/600882a5-51cd-43bb-8f6f-c8283b4a7000
Rumoured to be a big list of capitalisation applications: https://www.room151.co.uk/blogs/richard-harbord-delayed-capital-determinations-make-section-25-opinions-a-new-crunch-point/
@RobWhiteman thinks there are lots of councils "in or around a section 114 position": https://www.ft.com/content/600882a5-51cd-43bb-8f6f-c8283b4a7000
Allowing councils to borrow to cover day-to-day rather than give councils £ for lost revenues suggest government is still worried about moral hazard and setting a precedent of bail-outs...
...in normal times, fair enough.
But a pandemic is an exceptional time and there are risks of not bailing out - that council heads of finance start getting twitchy and cutting back (h/t @xtophercook: https://www.tortoisemedia.com/2020/11/27/chris-cook-the-hazards-of-moral-hazard/)
But a pandemic is an exceptional time and there are risks of not bailing out - that council heads of finance start getting twitchy and cutting back (h/t @xtophercook: https://www.tortoisemedia.com/2020/11/27/chris-cook-the-hazards-of-moral-hazard/)
I still think the govt could and should provide an explicit statement to councils about what coronavirus pressures it will cover as many councils are currently fighting the virus while considering how to make large savings...: https://www.instituteforgovernment.org.uk/blog/croydon-councils-bankruptcy-warning-uk-government
(The 2021/22 local government finance settlement sets principles for lost income, but not cost pressures - just gives a figure of £1.55bn. Would be better to explicitly say which costs will/won't be funded by central gov: https://questions-statements.parliament.uk/written-statements/detail/2021-02-04/hcws764)
In case of interest: @Anoosh_C, @PickardJE, @NickGolding, @sjcalkin, @danbates_LGi, @joannepittcipfa, @RobWhiteman
