'Multiple' Councils At Risk Of Going Bust

MPs issue a stark warning over town hall finances, urging ministers to draw up contingency plans in case of widespread failure.

The Government does not fully understand the impact of significant cuts to council budgets and needs to prepare for the financial collapse of multiple local authorities, a report by MPs has warned.

The Public Accounts Committee cautioned that funding continued to be cut while demand for some services was increasing, meaning "serious questions will arise about the viability of some councils".

The cross-party committee said the Government should draw up contingency plans to intervene in the event of "multiple financial failures".

The committee's Labour chairwoman Margaret Hodge said: "Central government is cutting funding to local authorities by more than a quarter over four years but does not properly understand what the overall impact will be on local services.

"Departments have provided some information on possible impacts but it was superficial and incomplete.

"Nor has enough work been carried out across government departments to determine how funding reductions in one area of spending might affect services in another: for example, how cuts in local authority adult social care might lead to bed blocking in hospitals."

The central government grant to councils is being cut by £7.6bn in real terms between 2011 and 2015, and major changes to the way authorities are funded are also being implemented, with reforms to business rates and council tax benefits.

So what happens if they go bust?

Space Bandit wrote:
Central gov would take over.

andyh wrote:
Exactly. And the cry would go summat like, "see, we've had years of this form of decentralized democratic government and this is where it has led...Yada Yada..."