Four English councils that were unable to balance their budgets will be allowed to borrow millions of pounds to boost their revenue accounts.

The councils – Bexley LBC, Eastbourne and Luton BCs and Peterborough City Council - were granted permission due to their ‘unique circumstances or residual issues'.

They have each been awarded a capitalisation direction, enabling them to borrow in order to fund revenue costs, with a 1% premium on the interest rate.

Luton will be allowed to borrow up to £35m and will undergo an ‘external assurance review' focused on its financial position, which will also examine the council's commercial arrangement with London Luton Airport.

The Government has already advised Luton to reduce its reliance on its 100%-owned airport company, which brought in a £19m dividend for the council in 2019/20. Luton still faces a budget gap over the next two years of £7.9m.

Peterborough will receive an additional £4.8m and up to £20m for 2021/22 thanks to its capitalisation direction from the Government.

Council leader, Cllr John Holdich, said: ‘In allowing us a capitalisation direction they are acknowledging that the council has done everything it can to deliver much-needed services efficiently. This includes the implementation of a financial recovery programme, and an extensive review of our services and contracts to ensure they are achieving best value.'

Eastbourne, which has reported a ‘significant drain on its budgets and reserves due to the impact of COVID-19 on its income from tourism, said its £13m request for ‘exceptional financial support' for 2020/21 and 2021/22 had been granted.

It said the capitalisation direction was ‘critical to the authority's long-term financial sustainability and to demonstrate its ability to regain a sound financial position and maintain the appropriate levels of reserves to support the council's financial and delivery plans'.

The Government has issued a capitalisation direction for Bexley for £9m to be used in 2020-21 and 2021-22.

Bexley leader Teresa O'Neill said: ‘The directive is a further tool to help us manage the financial uncertainty the pandemic has created.'

Cabinet member for resources, Cllr David Leaf, said members and officers were ‘focussed at reducing the forecast overspend in the current financial year'.

Eight other councils are understood to still be in talks with the Ministry of Housing, Communities and Local Government (MHCLG).

They include Copeland BC, Nottingham City Council, Slough Council and Wirral MBC.

MHCLG has privately indicated it is happy to approve a capitalisation direction up to a maximum value of £14.8m for Wirral that will allow it to report a forecast balanced position for 2020-21.

A council report warned that if the capitalisation direction had not been approved Wirral would have needed to look at using its reserves, selling assets and stopping services to balance its budget.