LOCAL authorities are at risk of having to declare insolvency due to costs related to coronavirus, the former leader of Newport City Council has warned.

Baroness Debbie Wilcox, who is also a Newport city councillor, questioned what the UK Government is doing to “stop councils going to the wall” during a House of Lords debate on housing on Monday.

“The MHCLG (Ministry of Housing, Communities and Local Government) said that smaller property developers would be able to defer payments to local councils in a bid to stop them going to the wall,” baroness Wilcox said.

“What do the government intend to do to stop councils going to the wall?


“The County Councils Network has called for a £5 billion income guarantee from government to help councils make it through this ​crisis period.

“Local authorities are at risk of having to declare insolvency as the pandemic continues.

“There is currently a £10 billion gap in council funding in England.

“At this rate, there may not be council planning departments in existence for property developers to request deferment of payment from.”

Lord Stephen Greenhalgh responded by saying no section 114 notices – an emergency measure stopping all new spending except to safeguard vulnerable people – are imminent.

“We need to recognise that this government have provided around £20 billion of investment into local services in just two months,” he said.

“That includes two tranches of £1.6 billion to ease demand pressures on local councils and around £5 billion of cash-flow measures, as well as other measures to support wider transport issues, including the recent bailout of Transport for London.

“I note the noble Baroness’s concerns, but at the moment we have no evidence that councils are about to go to the wall.”