The Government is looking at a ‘package of measures' to financially support councils hit by soaring costs and plummeting income amid the coronavirus crisis.

An initial £1.6bn provided for local government to deal with the pandemic is ‘clearly insufficient', a leading finance expert has claimed, while the Local Government Association estimates the sector will need closer to £4bn.

According to sector sources, local government minister Simon Clarke moved to reassure councils yesterday that Ministry of Housing, Communities and Local Government would help councils, telling them: ‘In no sense are you alone in this plight.'

The minister has urged councils to speak to the ministry before they consider issuing a s114 order – the power of a finance director to freeze the council's spending during financial difficulties.  

It comes as increasing numbers of councils face growing difficulties with their finances. In addition to the rising costs of providing support, from social care to homeless accommodation, financial woes have been exacerbated further with falling income.

Not only will councils lose business rates and payments for their own services, such as leisure facilities and parking fees, they are also facing a drop in income from unpaid council tax and rent as people struggle with their household bills.

Writing for The MJ, Chartered Institute of Public Finance and Accountancy (CIPFA) associate director Andrew Burns has called for additional funding to support services. While he argues that councils should reduce spending, he said: ‘The only real answer, in these extraordinary circumstances, is for significant additional, direct and speedy support from Government to councils.

‘The £1.6bn grant paid to councils for COVID-19 pressures, paid on 27 March, is welcome and necessary, but clearly insufficient.'

He claimed the money paid to businesses and the NHS – including plans to write off £13bn in debt for NHS trusts – is far more than the ‘relatively smaller' sum needed by local government.

‘A sum nearer to the £4bn identified recently by the LGA to properly fund social care would be a good start,' he added.

COVID-19: Councils need more money to survive in the longer term