Luton and Peterborough councils to be offered government bail-outs because they "can't balance their budgets"

Peterborough council
Peterborough council is one of four across the country to be offered the bail-out Credit: ITV News Anglia

A government bail-out will be offered to Luton and Peterborough councils.

Communities Secretary, Robert Jenrick said they are 'unable to balance their budgets' and are facing serious financial difficulties.

He said the move to offer a taxpayer bailout has been made because of the exceptional circumstances of the pandemic.Jenrick told MPs that a "handful" of authorities are facing serious financial challenges, either due to "very poor management" or the impact of the Covid-19 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.

Mr Jenrick also confirmed he has "reluctantly" met a request to allow a near-10 per cent 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 per cent or more.

Speaking as MPs considered local government finance motions, Mr Jenrick said:

Luton Borough Council Credit: ITV News Anglia

In December, Mr Jenrick announced that councils in England can continue to increase tax by up to 2 per cent without a referendum and boost the social care precept by up to 3 per cent 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:

Conservative MP for Milton Keynes North, Ben Everitt 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."