Coronavirus: advice british fear bankruptcy despite the cost of Covid-19


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Leeds city council has said that the government had to intervene and help stabilize the finances of local authorities

Some of the greatest advice brits say that they may have to declare themselves effectively bankrupt unless the government agrees to continue to support.

Five councils have reported that controls of emergency spending – the so-called notice of article 114 – may be necessary due to the impact of Covid-19.

Nearly 150 authorities have provided for a budget deficit to a combination of at least 3.2 billion pounds, has revealed to the BBC.

The government stated that it was working on a “comprehensive plan” for the advice.

A BBC survey found through the Uk:

  • At least five tips English have warned that they could meet the criteria for issuing a notice under section 114 at any given time without more support from the government, who is actually bankrupt
  • They include some of the largest authorities unit of the Uk- Leeds, Wiltshire, Trafford, Tameside and Barnet
  • The mayor of Liverpool, Joe Anderson, has previously warned that the city could decide to issue a notice under article 114, but the authority said on Wednesday that it planned now to set a revised budget in September to close a deficit of 58.6 million pounds.
  • Birmingham city council – the highest authority of Europe – said ” given the size of its forecast deficit of 212 million pounds sterling between 2020-2021 and 2021-2022. after a public funding of 70 million pounds already received, a notice under section 114 ” is not correct not this situation “
  • About 173 local authorities who responded to questions from the BBC, 148 have predicted a budget deficit
  • At least 20 local authorities plan to hold a budget emergency or in the course of the year
  • The Highland Council in Scotland, the estimated gap is equivalent to 411 pounds for each resident

Whitehall has already granted funding of $ 3.2 billion pounds sterling to all boards English in two tranches to cover the costs of coronavirus.

Why boards experience financial difficulties?

The decline in business rates, exemptions, tax advice and payments emergency for families whose incomes have disappeared have all affected the revenues of the councils of upper-tier, at the same time that the rising costs of adult care, and the provision of protective equipment for caregivers.

Some of these tips will depend also of the tourism for large incomes, such as dividends of the airports they own, or the costs of visitor parking.

Facilities such as the leisure centres owned by the municipality, which would normally generate revenue for the authorities, are also closed.

The collapse in the number of passengers at Luton airport contributes to a shortfall of 49 million pounds sterling from the authority which is the owner, Luton Borough Council. A spokesman said he had “no other choice than to accept the cuts without precedent in the key services” if more money was not available.

Manchester city council loses more than 130 million pounds sterling this year from sources such as the condominium by the board of Manchester Airports Group (MAG).

Sir Richard Leese, leader of Manchester city council, said: “It is not an exaggeration to say that we are at the edge of a precipice of financial.

The british minister for local Government, Simon Clarke, said that the funding of 3.2 billion pounds already granted to local authorities “was part of a wider package of support from the government as a whole for communities and local firms – totaling over 27 billion pounds – including grants and subsidies, the reduction in business rates and for local transport” .

“Get rid of the pain.”

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Council of Highlands


With the highest proportion of employees on leave in Scotland, the loss of revenue from tourism has put an additional pressure on the Highland Council, said its chief financial officer.

Approximately 230,000 people live in the Highlands, but the region covers a little less than half of the landmass of Scotland.

Its main sources of income – car parks, tourist, mooring fees and sale of marine fuel in its ports, have been reduced to “zero of the day at the following day” following the pandemic, indicated by the Highland Council.

The chief financial officer, Ed Foster, has stated that the balance of its deficit of 96 million pounds sterling, would not be possible ” without a lot of pain “.

“Because a large part of our budget is related to staffing, in order to balance, we need to reduce the workforce “, he said.

The BBC has asked the boards if they thought that they would meet the criteria for issuing a notice under section 114.

The Barnet Council in London, has made reference to a report of a meeting of a committee where he stated that “the expected costs of the disruption remain in the resources available to the council, but without the levels of additional funding, the council will be exposed to a significant risk of not being able to stay in balance if the period of disruption continues” .

A spokesman further pointed out that it did not provide for the necessity of publishing a notice under article 114, adding: “We have financial reserves that far exceed the impact that Covid-19 will have during the current year.

“This impact is felt by all local authorities and we welcome the government support already received. We will remain in contact with the government about the importance of continuous financial support to the local authorities. “

Alistair Jones, associate professor of policy at the Local Governance Research Center, University of De Montfort in Leicester, said: “The local governments are left behind.

“The list of tips near bankruptcy will get longer unless more support is available. ”

He said that the guidance “should be given greater autonomy to increase their own income,” or that additional funds would be needed to support the long-term.

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University De Montfort


Alistair Jones stated that he was “not surprised” that the six councils warned that they could issue a notice under section 114 within 18 months

What is a notice under section 114?

Notice under article 114 are issued in England, where a board cannot reach a balanced budget.

In February 2018, the Northamptonshire County Council became the first local authority for nearly 20 years to warn that it might not comply with its legal obligation to balance the books this fiscal year.

To deal with the pandemic of sars coronavirus, the councils revealed that they provided a mixture of responses, including the use of cash reserves, reduction of services and the cancellation or deferral of expenditure on major projects.

As the government says?

The government was not aware of any council “at imminent risk” of publishing a notice under article 114, said last week Jeremy Pocklington, the top official of the ministry of Housing, Communities and local Governments.

The patrons of the Council, however, had previously stated that the funding they had received was “not even close” to cover the costs of what had already been spent during the pandemic.

Mr Clarke said: “We are working on a comprehensive plan to ensure the financial sustainability of councils during the coming year we will continue to work closely with them to ensure that they manage their costs and that we have a collective understanding of their costs. oriented. ”

Councillor James Jamieson, president of the Local Government Association, which represents the interests of the councils, said he was pleased that “the government has indicated that it was working on a comprehensive plan to address the current financial challenges,” but “urged the government to provide details … as Soon as possible “.

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The unit of shared data puts data journalism in the disposition of the organs of the press in the media industry, in the framework of a partnership between the BBC and the News Media Association. These data were collected with the help of the Local Democracy Reporting Service.

For more information on the methodology, click here. For the full data set, click here. Learn more about the partnerships and the local news here.

Team reporting: Alex Homer, Anna Khoo, Paul Lynch, Peter Sherlock, Daniel Wainwright and Rob England


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