Councils in England say more funding is needed urgently for them to weather the storm (Picture: PA)

A £1 billion rescue package is being prepared to save a number of English councils from bankruptcy as they struggle to keep afloat amid the coronavirus lockdown.

Many local authorities are suffering from cashflow issues caused by a drop in council tax income and rising costs. They have also had to spend more protecting the most vulnerable including older, disabled and homeless people.

Income they would be getting from leisure facility fees and planning services has also dried up but they still have an obligation to keep paying their staff. In an appeal today the Local Government Association(LGA) has called on the Government for a ‘cast-iron public commitment’ for extra funding to help town halls weather the storm.



The Government had already allocated a £1.6 billion fund in March for social care costs caused by the pandemic. But councils say more money is needed, as about £1 billion of this has already been used to cover a 10% rise in care providers fees.


Councils are spending more on caring for the vulnerable and have lost sources of income (Picture: Getty Images)

Calling for additional funding, the LGA said: ‘Without this urgent government funding guarantee, some councils may be subject to Section 114 reports in the next few weeks.

‘This would lead to spending blocks by councils and in-year cuts to the vital local services that are supporting communities through this crisis and the national effort to beat this deadly disease.’

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In a letter send to ministers earlier this month, the Conservative-controlled County Councils Network (CCN) said ‘no council should become insolvent as a result of the heroic efforts being undertaken across the country to support government at a time of national emergency’, the Guardian reports.

But many local government heads took part in a conference call with communities minister Robert Jenrick on Tuesday and said he had suggested councils should prepare to ‘share the burden’ of the outbreak, rather than have their costs covered by Whitehall.

One council leader said an extra £1 billion ‘buys us a month or two’ (Picture: Getty Images)

Some of the immediate cash flow pressures will have been eased by the Government paying care grants up front and allowing councils to postpone business rates payments to them.

While a £1 billion bailout would be welcomed, one council leader said: ‘It buys us a month or two’.

LGA Resources Board chairman Cllr Richard Watts said: ‘Local government continues to step up to the unprecedented challenge we face as a nation.

It will do everything it can to help residents and businesses but is being stretched to the maximum.

‘Many councils are facing increased cost and demand pressures at the same time as seeing a significant drop in income. This is unsustainable and pushing councils towards financial failure.

‘It is good that the Government has moved to provide some financial help to councils. Additional funding is urgently needed to help councils get through this crisis, support the vulnerable and adapt to life once we defeat this virus when our local services will be needed more than ever to help communities rebuild.



‘It would be wrong and unacceptable if councils are then forced to make further cutbacks to the very services that will have helped the nation through this crisis and the key workers who are producing heroics on the frontline see their jobs placed at risk.’

A Ministry of Housing, Communities and Local Government spokesperson said: ‘The secretary of state [Robert Jenrick] has been clear that we will support councils to provide services to their communities during the pandemic.

‘We’ve already provided £1.6bn of additional funding and have announced new measures to help ease immediate cashflow pressures faced by councils in England.’

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