Yorkshire councils could face a new £125m funding black hole this year following a change in Treasury rules, Labour has warned.
Former Local Government Minister and South Yorkshire MP John Healey has written to Communities Secretary Eric Pickles demanding answers following reports his department has been investigating scenarios where councils would suddenly be hit with emergency in-year budget cuts of up to five per cent.
Local authorities have already been forced into unprecedented spending cuts since 2010 after seeing their Government grants reduced by up to a quarter as part of the Coalition’s austerity drive.
But in April the Treasury announced every Government department must find a further five per cent contingency fund “that could be re-prioritised if new pressures emerge”.
Wentworth and Dearne MP Mr Healey said: “Councils are struggling to cope with deep cuts and a fresh recession. The last thing they need is a stealth cut to cash they’ve been provided with. Ministers must be straight about any in-year cuts, claw-backs or withholds.”
The issue dates back to a surprise announcement made by Danny Alexander, the Chief Secretary to the Treasury, in April that every department must be in a position to cut spending by five per cent at immediate notice should spending priorities suddenly change.
A Treasury spokesperson insisted: “Tighter spending control rules announced earlier this year will not apply to the Local Government settlement.”