Bankruptcy warnings spark calls for extra cash for council to tackle virus
PUBLISHED: 17:52 23 March 2020 | UPDATED: 17:53 23 March 2020
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Warnings local authorities could risk bankruptcy due to the strain of coping with the coronavirus outbreak have sparked calls for extra cash from the government.
Norfolk county councillors have called on the Treasury to ensure they have the funds to deal with “reduced cashflow and increased demand”.
Labour group leader Steve Morphew warned that the “already stripped back condition of services makes councils particularly vulnerable”.
While Andrew Jamieson, cabinet member for finance said the authority needed “certainty regarding additional funding”.
The government has pledged to make cash available to deal with the pressure on key services – especially adult social care – but specific details of additional funding have not yet been released.
It comes as Rob Whiteman, chief executive of the Chartered Institute of Public Finance and Accountancy (CIPFA) warned that a “huge amount of common sense and goodwill” would be needed to prevent authorities having to file Section 114 notices – declarations of effective bankruptcy.
Mr Whiteman told the Local Government Chronicle that “rules governing cashflow will need to be relaxed because councils will need to borrow in order to fund services”.
He added: “The government will need to give councils guarantees so that it gets through the crisis.
“There’s no purpose at all to freezing expenditure at the time of the greatest crisis in public services for 75 years.
“So we’re all going to have to do the right thing and ordinary rules don’t apply in my view.”
Mr Morphew said: “The combination of reduced cashflow, increased demand and the already stripped back condition of council services makes councils particularly vulnerable.
Councils and staff will always step up when called upon and we need to make sure staff have what they need so they are protected and can protect others.”
He added: “If the government is to rely on councils to deliver they have to give them the ability to do it.
“That means extra cash, fewer restrictions and putting in an obligation for cooperation.”
Mr Morphew also said it was essential to ensure scrutiny of council’s decision-making continued to take place.
“There is inevitably going to be a short term democratic deficit but we do need to ensure there is proper oversight,” he said.
“A free for all can quickly turn into free fall.”
And Andrew Jamieson, cabinet member for finance, said the council had almost £20m in reserves and would ensure critical services could continue during the spread of the virus.
He said: “I’m reassured that the government is making money available to handle our largest additional pressure – adult social care – and we look forward to receiving further details.
“We are spending what it takes to ensure that the most critical services can continue during the coronavirus pandemic and that the businesses we rely on can continue to trade.
“The council keeps a general fund reserve for unspecified risk and events, which currently stands at just under £20m.
“We are in a good place to respond until we get certainty from the government regarding additional funding.”
It comes as council leader Andrew Proctor briefed Norfolk’s MPs on the area’s response to the COVID-19 virus.
The Norfolk Resilience Forum (NRF), made up of representatives from local authorities and the emergency services, is leading efforts to manage the crisis in the county.
Mr Proctor said: “Along with Tom McCabe, the council’s head of paid service, I convened a conference call with all our Norfolk MPs, to discuss the current situation, how the county council is working to maintain critical services and how we’re keeping the public informed.
“The MPs appreciate all the hard work local government in Norfolk is doing to take swift action to protect and inform the public in this rapidly changing situation.
“Our MPs have pledged to continue to work with us to lobby for any additional government assistance that may be required, in supporting the public through these trying times.”
Speaking after the briefing, South Norfolk MP Richard Bacon said: “There are many questions about how councils can get the right response. MPs are still looking for answers.
“The Department of Health are working round the clock as are people locally and nationally.”