COUNCILS are facing an ‘existential financial crisis’ with those in Yorkshire thought to be among the worst hit. 

In a statement released on Sunday, the cross-party Local Government Association said many authorities are openly discussing the prospect of issuing Section 114 notices, effectively signalling bankruptcy amid the financial impact from Covid-19. 

And the Sunday Times reported that among the councils thought to be the worst hit are those in the Yorkshire and Humber region, who, it said, have discussed making a joint declaration that they have run out of money after running up additional bills of £600m. 

York council told The Press that it currently has a £24m funding gap - with many services under strain - and that it is disappointing that councils are being put in this position again by the government. 

York council has received £4.7m in the first grant of Covid-19 funding and £5.7m in the second tranche. 

Cllr Keith Aspden, Leader of York Council, said: “The £10 million given to the City of York has been welcomed, but the reality is that it is nowhere near enough to cover the costs of supporting residents and businesses during the Covid-19 pandemic, which is now estimated to be £34 million for York. It is quite clear that all local authorities locally and nationally are going to require significantly more funding to weather this crisis and support our recovery.

“As the cross-party Local Government Association says, the Secretary of State promised that councils will get all the resources they need to cope with this pandemic. This commitment must be rock-solid. Services in York are already under strain, having been continuously under-funded. It is disappointing to see this happening again and we will continue to push government ministers to give York and councils their fair share.

“Moving forward, it is vital that the Government supports local authorities to cover the costs of our response to the Covid-19 crisis. At City of York Council, we will continue to work tirelessly to support our communities, having introduced emergency funds for residents and businesses, as well as establishing community hubs to help the most vulnerable. We are ready to play an essential role in supporting economic recovery and our major economic projects are crucial to future inclusive growth for all.

In a statement, Cllr Richard Watts, Chair of the Local Government Association’s Resources Board, said: “Local government continues to lead local efforts to beat this virus but is being stretched to the maximum. Many councils continue to face spiralling cost and demand pressures at the same time as seeing a huge drop in income. This is unsustainable.

“Extra funding for councils will be helpful but they will need up to four times the funding they have been allocated by the government so far.  We are working with councils to provide the most robust evidence to the government on the financial challenges they face. Their latest monthly returns should show the impact of a full month of cost pressures and income reductions and the impact of lower council tax and business rates collection rates.

“The Secretary of State promised that councils will get all the resources they need to cope with this pandemic. This commitment must be rock-solid and include the full cost to councils of meeting COVID-19 pressures and to keep services running normally and compensation for all lost income. This needs to be explicitly guaranteed by the government and demonstrated with ongoing and consistent funding in the weeks and months ahead.

“Without this, councils and the services our communities rely on will face an existential crisis. Some councils have warned that they will soon face the prospect of Section 114 reports. This would lead to spending blocks and in-year cuts to the vital local services that are supporting communities through this crisis and the national effort to beat this deadly disease.”