Wigan Council faces £40m shortfall from Covid-19

The figures have been collected as part of a wide-ranging BBC Shared Data Unit investigation into the risk to local authority finances posed by the massive public health emergency.

Fortunately Wigan Council told the probe that it was not in a position of having to consider declaring itself effectively bankrupt.

However, this dire situation involving filing an S114 notice is being considered by some of the country’s largest local authorities unless more support is provided from the government.

Wigan Council leader Coun David Molyneux, speaking as part of his role with the Greater Manchester Combined Authority (GMCA), called for more funding from Westminster at the start of this week.

The data shows Wigan has received £19.47m in emergency grant funding to date, with £3.2bn being dished out to English councils in two separate government pots.

However, leaders have warned this is “not even close” to covering the costs of tackling the coronavirus and the economic shortfalls from lockdown and other restrictions.

The Government, though, says”unprecedented” sums have been given out to local authorities during the crisis.

Wigan Council said an in-year budget to look at the town hall’s financial position is currently under consideration.

The town hall said it will “need to look at all options” to cover the shortfall but “don’t have any specific details yet”.

Dipping into the council’s reserves to cover the shortfall, reviewing revenue or capital programmes and raising council tax are all measures under consideration in Wigan.

Speaking as Greater Manchester’s councils as a whole announced a likely financial cost of £732m from Covid-19, Coun Molyneux, who is also GMCA’s portfolio lead for resources, said:

“Local government finances have been under pressure for many years, and what this health pandemic has done is exposed how our public services have been stripped to their bare bones.

“We’ve risen to the challenge to help those who need it, but it’s been at a massive expense. The balance sheet of expenditure and losses shows the stark financial toll we’re having to bear.”

The North West has been badly hit as a whole, with the region suffering the second-largest shortfall per person behind London and the third-biggest financial black hole in absolute terms.

Among Greater Manchester’s 10 authorities Manchester City Council is facing the third-biggest funding gap of any authority in the country while Tameside and Trafford are two of at least six town halls which told the BBC Shared Data Unit filing for effective bankruptcy was potentially on the cards.

In fact, with an average shortfall of £113m across the 22 authorities in the North West, Wigan could be said to be in a better position to ride out the problems than many others.

The BBC Shared Data Unit quizzed all 216 councils which have responsibilities for adult social care, the biggest cost to town hall purses. Experts said the Covid-19 pandemic was likely to have far-reaching implications for local services.

Alistair Jones, associate politics professor at the Local Governance Research Centre at De Montford University, said: “Shortfall is not necessarily an issue if councils can balance the books over the next few years.

“But the reality is the damage the shutdown has done is not a short-term thing. Some of the issues with regard to social services are going to lead to long-term problems, and they’re going to need the resources to deal with it.”

Prof Jones said there had been a “huge disconnect between what central government thinks councils should be doing and what they actually need to do.”

Ultimately, he said the options facing ministers were giving councils more power to raise their own revenue or putting in more money from Westminster.

Minister for local government Simon Clarke said: "We're giving councils an unprecedented package of support, including £3.2bn non-ringfenced emergency funding, to tackle the pressures they have told us they're facing.

"We are working on a comprehensive plan to ensure councils' financial sustainability over the financial year ahead. We will continue to work closely with them to ensure they are managing their costs and we have a collective understanding of the costs they are facing."