Bexley Council offered emergency bailout from government

The London borough is to be one of four councils in the country announced by the Local Government Secretary to be given a multi-million taxpayer bailout because it is "unable to balance its budget."

Robert Jenrick told MPs that a "handful" of authorities are facing budget black holes, either due to "very poor management" or the impact of the Covid-19 pandemic.

Bexley Council has been hit hard financially by the impact of coronavirus, but a substantial gap in its budget already existed prior to the pandemic.

He did not confirm the identities of the four authorities receiving extra support when speaking in the Commons.

But the Ministry of Housing, Communities and Local Government later said they were: Bexley, Eastbourne, Luton and Peterborough.

Leader of Bexley Council, Teresa O'Neill OBE, said: "The Government has issued a capitalisation directive today for £8.995m to be used in 2020/21 and 2021/22, with the difference of £6.005m being the additional grant received by the Council in pandemic support in 2021/22.

"We have been through a 10-week process, including an external review, which ensured that our planning assumptions were robust and stacked up against our ask.

"The directive is a further tool to help us manage the financial uncertainty the pandemic has created. We will only use it if we need to."

The Council's latest in-year budget monitoring position and Medium Term Financial Strategy was reported to Bexley's Cabinet in January.

The local authority said it was on target to set a balanced budget for 2021/22, meeting its legal duty, but that "there continues to be significant uncertainty due to the pandemic."

READ MORE: 150 jobs could be cut at Bexley as authority stares down financial black hole

It comes as the government announces an extra £2.3bn of funding for council's core spending by next year after local authorities have warned of financial ruin amidst pressure from coronavirus.

Mr Jenrick also confirmed he has "reluctantly" met a request to allow a near-10% council tax rise in London without the need for a referendum.

He said the final decision rests with Mayor of London Sadiq Khan and urged him to "abandon this ill-judged pursuit of tax hikes and behave responsibly".

A referendum is usually required if councils propose raising the tax by 2% or more.

Speaking as MPs considered local government finance motions, Mr Jenrick said: "We know that a handful of councils face serious financial challenges.

"Some, it has to be said, due to very poor management, but others due to the exceptional events of the past year. There is quite a broad range.

"Today we're publishing details of the targeted support we're providing to four councils unable to balance their budgets without an additional recourse to Government.

"This aid is provided on an exceptional basis, with these councils subject to rigorous reviews of their financial positions, their governance, ability to meet some or all of their budget gaps for the next year without Government funding.

"Taxpayer support of this kind is never provided lightly and in return for the increased flexibility afforded to councils next year, we expect sound financial management with residents shielded from unaffordable increases."

He added: "I wish I could say that here in our nation's great capital that the Greater London Authority is blazing a trail others might wish to follow, but sadly the opposite is true."

Mr Jenrick explained he had "reluctantly placed before the House today" an order to "allow for the Mayor of London's request to increase council tax by £15 on band D properties without holding a referendum in order to fund transport concessions above the level available elsewhere".

Mr Jenrick went on: "This brings the total increase in precept he is seeking from Londoners to nearly 10%.

"While the final decision on the increase rests with the mayor and the mayor alone, I'd urge him to abandon this ill-judged pursuit of tax hikes and behave responsibly at a time of great difficulty for Londoners."

In December, Mr Jenrick announced that councils in England can continue to increase tax by up to 2% without a referendum and boost the social care precept by up to 3% in 2021/22.

For Labour, shadow communities secretary Steve Reed said the Government has chosen to "clobber" hard-working families with a council tax hike after the "Government's own incompetence left the country facing the worst crisis of any major economy".

He said: "Household budgets are under pressure like never before, millions of people are fearful for their job security, millions have seen their incomes plunge, millions more families are using foodbanks or going into debt just to survive. Now thanks to this Government, families are being forced to pay the price for Conservative failure with a council tax hike made in Downing Street."

Conservative MP Ben Everitt (Milton Keynes North) urged the Government build more housing in former "red wall" seats it won in the 2019 election.

Mr Everitt told the Commons: "What we need to do is recognise that housing is the answer and the solution and part of the process of the solution to levelling up."