Sheffield Council faces a £16m deficit dealing with coronavirus

Some of the UK’s largest councils say they will effectively have to declare themselves bankrupt unless the government provides more cash, an investigation says.

Tuesday, 23rd June 2020, 3:47 pm

Nearly nine out of 10 local authorities face budget deficits as a result of the coronavirus, with the estimated shortfall forecasted to be as high as £3.7 billion .

Councils face increased costs from supporting vulnerable people, while their income from fees and rates is falling.

Grant funding of £34.37 million has been allocated to Sheffield Council to date, to cater for its 584,853 residents – h owever, this gives an estimated shortfall of £27 per person, or £16 m in total.

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Leaders previously said funding already allocated was " not even close’ to covering costs or money that had already been spent.

At least six councils say it is possible they will have to issue an S114 notice if further government support is not forthcoming, effectively declaring themselves bankrupt.

Of 173 councils which responded, 148, or 86 per cent, predicted a budget shortfall, and in Sheffield the council is expecting to meet its defict using its reserves.

In Yorkshire as whole, all 13 of the councils who responded predicted a shortfall of between £282.7m and £364.2m.

A Sheffield Council spokesman said: “There was already a well acknowledged problem with shortage of funding for local councils, even before the crisis, particularly for social care costs.

“Everyone knows local councils had their funding cut earlier and harder than any other part of the public sector.

“We will not ‘go bankrupt’ this year, but in two years’ time we will run out of reserves we can prudently use unless the government addresses the impact not just of the crisis.

“ We have received other grants, but these have been to pass on to other people rather to use to cover our costs e.g. we have now paid out more than £80m to businesses affected.

“ The current crisis has proved the importance of local councils being properly funded to provide support to the city, not just in times of crisis, but in the future.”

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