£600m bailout for councils to help stop them from going bust

COUNCILS have been offered a £600 million government bailout to stave off service cuts and bankruptcies.

The vast majority of the emergency cash will be used to fund care for the elderly after town halls warned they were on the brink of financial ruin.

Ministers have told local authorities they must use the money to tackle urgent pressures rather than saving it. Council bosses must also reduce ‘wasteful spend’ on consultants and diversity drives.

It comes after more than 40 Conservative backbenchers warned the Government that authorities in their areas will have to increase council tax while cutting services in an election year.

Birmingham City Council declared bankruptcy last year. Nottingham, Thurrock and Woking have all filed similar notices.

Almost one in five council leaders and chief executives in England surveyed by the Local Government Association (LGA) think it is likely they will need to issue a Section 114 notice, which prevents all non-essential spending, within the next two years.

Levelling- Up Secretary Michael Gove said: ‘We have listened to councils across England about the pressures they’re facing. This additional £ 600 million illustrates our commitment to local government. We support the incredible and often unsung work they do day-to-day to support people across the country.’

LGA chairman Shaun Davies said: ‘The LGA welcomes that the Government has acted on the concerns we have raised and recognised the severe financial pressures facing councils, particularly in providing services to the most vulnerable children and adults through social care services and delivering core front-line services to communities.’

Cathie Williams, of the Association of Directors of Adult Social Services, said: ‘This additional funding for social care is much needed and will be welcomed by people using and working in care and support.’

Some £ 500 million of the £600 million will be used to ‘bolster social care budgets’. In addition, all councils will receive an increase in ‘ core spending power’ of 4 per cent, up from the 3 per cent announced when the £64 billion of the provisional funding settlement was published before Christmas.

There is also £ 3 million allocated to protecting lowlying areas from flooding.

As part of the deal, town halls will have to create productivity plans setting out how they will improve services while reducing waste.