Covid leaves UK councils with £3bn financial black hole

UK councils face a £3bn black hole in their budgets as they emerge from the pandemic, a BBC investigation into their finances can reveal.

… struggling to carry out statutory duties and …. at risk of bankruptcy…

BBC News writes:

Some local authorities were struggling to carry out statutory duties and were at risk of bankruptcy, a local government expert said.

And 10 councils have asked to borrow £300m of emergency money from the government to plug financial holes.

The government says it has handed councils £12bn during the pandemic.

A spokesman for the Ministry of Housing, Communities and Local Government (MHCLG) said: “In the coming months, we will take stock of the demands faced by councils and the resources available to meet them and will decide on the timetable for future funding?reform.”

The spokesman claimed there were a small number of councils that were “in severe financial distress such as Croydon and Slough due to poor leadership and chronic financial mismanagement, long predating the pandemic.

“These councils have badly let down their residents.”

Analysing 170 upper-tier and single tier councils in the UK the BBC Shared Data Unit found:

  • UK local authorities plan to make at least £1.7bn worth of savings in the 2021-22 financial year while also using more than £500m worth of reserves to balance the books
  • A quarter of those savings – some £434m – will be made in adult social care departments, which provide support to the elderly and vulnerable
  • Despite making the cuts, local authorities predict a £3bn shortfall in their budgets by 2023-24
  • Nearly 60% of councils in England have risen council tax by the new statutory maximum of 4.99% to compensate for losses, a rise of about £100 on a yearly Band D bill in many areas….

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