Councils could spend £1.7bn over budget by March

Documents suggests that nine in 10 major local authorities in England do not have enough money to cover their spending plans this year.

Analysis by BBC News has found the coronavirus could see councils this year overspend their budgets by £1.7 billion, with authorities across the country facing ‘spiralling demand’ on their finances.

Although councils have received £4.8 billion in emergency support since the start of the pandemic, the increasing demand on their support services and the cost of providing this support has left many councils struggling financially.

BBC News has analysed the most recent financial monitoring documents published by 144 out of 149 unitary and county councils in England. After taking account of emergency grant funding from central government, the documents revealed nine in every 10 of these councils was forecasting they would overspend their budget this year.

Figures published by the Ministry for Housing, Communities and Local Government showed in the first three months of 2020-21 spending by all councils in England was £1.7 billion higher than it had been in the first three months of 2019-20.

By law councils are not allowed to spend more money than they have in their day-to-day spending budget nor can they borrow money to fund public services.

Hampshire County Council has a net budget gap of more than £80m. Council officers warned the authority needed ‘at least £52.4 million of additional government support’ before it could be considered to be ‘financially sustainable in the medium term’. Elsewhere, Leeds City Council forecast it needed to find £52.6 million by March, saying more than 400 jobs could be lost as a result.

The Local Government Association’s Richard Watts said: “Securing the immediate and long-term sustainability of local services must now be the top priority for the (government's) spending review. This includes the government meeting in full the financial challenges councils face as a result of Covid-19 - including all lost income - and providing long-term investment to allow councils to plug funding gaps, meet demand pressures and improve local services for communities."