Manchester City Council could be in the “territory” of issuing a section 114 notice by this autumn as it battles a financial shortfall of £133.2m, its treasurer has said.
Covid-19 has left the council with £166.9m of reported pressures – predominantly lost income – but has only received £33.7m in additional funding from the Ministry of Housing, Communities & Local Government.
Carol Culley, the council’s deputy chief executive and city treasurer, yesterday said: “We are taking some practical measures… to balance this year’s budget. However, I’m already concerned about the financial impact on 21-22.
“Because of the way our budget is structured much of the impact will fall in the following year and unless further support is forthcoming we are going to have to have difficult budget decisions to make.”
She noted how the Chartered Institute of Public Finance & Accountancy issued revised guidance stating that councils should not declare a section 114 notice – effectively signalling their bankruptcy – until after they had held talks with the Ministry of Housing, Communities & Local Government.
Ms Culley said she had always been “careful” about discussing a section 114 notice because the issue was “quite emotive”.
“I would come back to that in the autumn when we have looked at the July fiscal statement [expected from the chancellor} and are clear what the support to local government as a whole and Manchester is. It’s fair to say that if further support isn’t forthcoming we could be in that territory by then.”
She predicted the impact of coronavirus on Manchester’s budget would be felt over the next three to five years.
Manchester is not alone in its predicament. Yesterday, Greater Manchester’s 10 councils said their combined shortfall was £298m – even after allocating nearly £100m of reserves to reducing it.
Authorities including Leeds and Liverpool city councils, Wiltshire Council, Cumbria CC and Windsor & Maidenhead RBC have expressed concern that they may have to issue a section 114.
From the Local Government Chronicle