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Leicester City Council has warned that there is a “real prospect” they are facing bankruptcy unless the government provides support.
Mayor Sir Peter Soulsby warned that the council are “running out of options” to balance their books.
He warned that unless there is government support some services will face “savage” cutbacks and follow Birmingham City Council and many others who could issue a section 114 notice.
The Department for Levelling Up, Housing and Communities (DLUHC) said they have provided the council with £32 million in core spending power.
Sir Peter wrote in a letter, “Hardly a week goes by without a local authority warning that it faces financial crisis and the equivalent of bankruptcy, were it a private company.
“Thanks to extremely prudent financial management we are not there yet, but without a serious rethink from the Government, we are rapidly running out of options.
“The pressures on social care are huge and are being experienced by all authorities.
“I don’t believe that the Government has the slightest awareness of the impact the rise in costs will have on councils.
“Indeed, we have been warned to expect a further round of austerity in 2025, which would be disastrous.
“Previous Government cuts have forced us to reduce spending on our other services by 50%.
“I now fear for the future of services such as parks, sports, museums, libraries, cultural services and community centres – indeed all those services that make our city a pleasant place to live.
“Without more Government money, these services face savage cutbacks, and Leicester faces the real prospect that the council will join the ranks of those receiving a section 114 notice before we can set the council’s budget for 2025/26.”
Leicester Council said that they are being hit with increasing costs in social care and more children and adults are needing more support, it is estimated that that social care services will cost and £50 million by 2025.
Amy Oliver, the council’s director of finance, said: “Councils are under unprecedented financial pressures.
“It is a legal requirement for councils to provide some services, such as social care, and if the cost of these services continues to go up, either the Government must provide more money or other services will have to be cut.”
A Department for Levelling Up, Housing and Communities (DLUHC) spokesperson said, “We have made £5.1 billion of extra funding available to local authorities through the Local Government Finance Settlement, with almost £60 billion available for the sector – up 9.4% on cash terms on 2022/2023.
“For Leicester City Council, this represents an increase in core spending power of up to £32.0 million or 9.9% – making available a total of up to £356.2 million in 2023/24.
“Councils are ultimately responsible for the management of their own finances, but we will continue to monitor pressures they face and stand ready to talk to any council that is concerned about its financial position.”
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