COUNCILS are in urgent need of more government support to tackle potential huge budget holes left by the coronavirus which could trigger more cuts to services and even bankruptcy, a new report has warned.

The report by accountants Grant Thornton analysed the biggest shire county councils in England, which includes Worcestershire County Council, found a second wave of coronavirus could leave authorities with millions of pounds worth of gaps in budgets triggering a series of new emergency cuts to services and even bankruptcy.

The County Councils Network (CCN), which commissioned the report, warned that even without a second wave, councils faced huge reductions in service this year unless the government addressed the long-term funding crisis for councils and agreed a bailout plan.

Councillor Simon Geraghty, leader of Worcestershire County Council said he welcomed the report as it highlighted the financial pressures on councils dealing with coronavirus.

He said the council would "likely" face issues from receiving less money through council tax and business rates and would continue to “encourage” ministers to consider a fund underpinning the council’s lost income.

The council leader said “positive discussions” had taken place with the Government but "further funding may also be needed later in the year to recover and respond."

Cabinet reports from earlier this month revealed the council did not yet know the true cost of coronavirus.

However, the council has put forward a £3.5m plan to ‘kickstart’ the local economy in the wake of the coronavirus lockdown – which would be funded by the council's reserves.

The plan, which will be discussed by councillors this morning (June 25), would see the council hand over grants to struggling businesses over the next two years in order to get up-and-running again.

Council estimates show the economy in Worcestershire could have seen as much as a 40 per cent decline because of coronavirus.

The CCN also called for a government-backed “income guarantee” to support council finances over the next five years, as well as short-term emergency funding to keep authorities afloat as they struggle with falling council tax and business rate income and the ever-mounting cost of social care.

The report found member councils would have fully exhausted their reserves within 18 months under current projections, leaving many unable to fulfil their legal duty of balancing the budget.

With the huge financial holes, many councils would have little scope to make further cuts following years of reductions in central government funding, the report said.

“A decade of real terms funding reductions has left most councils with significantly fewer options to drive out further efficiency or to make cuts to front line services.

“This is made more difficult by the need to cover the additional costs to social care, which is the largest area of spend, and the difficulty in raising additional sources of income during a recession,” the report said.