Council finance chiefs have been given new guidelines for dealing with financial collapse during the coronavirus crisis.

Under normal circumstances, chief financial officers would issue s114 notices to freeze spending to give them time to create a budget plan. However, halting expenditure during the pandemic could create problems responding to the crisis.

The Chartered Institute of Public Finance and Accountancy (CIPFA) has now issued temporary guidance. It calls for chief finance officers to inform the Ministry of Housing, Communities and Local Government (MHCLG) of financial concerns as early as possible at the same time as warning the council cabinet and auditor.

CIPFA chief executive, Rob Whiteman, said: ‘The challenges posed to local government finance by COVID-19 are likely to deepen as the year progresses. It is essential that local government and its partners in central government respond jointly to this crisis.

‘With the pandemic accelerating demand across all local services, any freezes on spending in any local area could potentially be highly disruptive and not an effective tool at this time.

‘Temporary change to the S.114 notice process creates space to explore other options or financial support that may be available to local authorities, while allowing finance directors to meet their statutory responsibilities.’

CIPFA had hoped to issue joint guidance alongside MHCLG, however, the suggested new rules have been issued by the accountancy body alone.