WHEN council chief executive Ada Burns admits that there were times in drawing up its latest cost-cutting budget that she feared the authority might not survive, it begs the question could a small council like Darlington actually go bankrupt?

The simple answer is no, according to Professor Tony Travers.

Prof Travers, a director at LSE London, a research centre at the London School of Economics and an expert on local and regional government, said: “Smaller councils in general are always going to find life a bit more difficult than bigger ones because they have less to fall back in terms of the absolute size of their budget and reserves.

“However, the chances of them going bankrupt are virtually nil, the reason for that is that local authorities are required by law to deliver a balanced budget.

“They are not allowed to budget for a deficit unlike the UK Government or indeed the NHS, which is forever running deficits.”

So if a council can’t go bankrupt, could they find themselves in trouble for not fulfilling their statutory, legal obligations to provide some services?

The answer to this is yes – councils have been taken to court by members of the public for this reason, although the position is fluid.

“There is evidence from court cases that judges take account of a council’s financial position and apply a reasonableness test,” said Prof Travers.

“But it’s a difficult one to determine. For instance the law says councils are required to provide a library service, but it doesn’t say they are required to have two or three big libraries and 20 smaller libraries. It could just be one library in the town hall.

“In some instances councils are getting round these kind of problems by simply cutting entitlement to services.

“With adult care, they will still have services for older people, but as their resources get squeezed they make the hurdles you have to jump to get this care higher and higher.”

Prof Travers says that a change, introduced by new Secretary of State, Middlesbrough-born Greg Clark, means that a common percentage cut to council budgets is being replaced by cuts to their overall spending power.

This means that in future rural-based county councils are likely to face the biggest financial impact, as opposed to those operating in urban areas.

He also says the Government’s interest in so-called city regions, allied with the massive pressure on budgets some smaller councils face, might lead to a move towards fewer councils.

“It is not inconceivable that at some point in the future a Government would decide there is time for a reorganisation,” he said.

“I think we could well be led to a point where people begin to say should we have fewer, bigger councils, although there is still the question of how you represent local interests.”