Nearly a million homes are facing massive council tax rises as two further Labour-run local authorities have announced they are at risk of effective bankruptcy.
Both Bradford Council and Cheshire East Council announced they are at risk of effective bankruptcy yesterday.
They may have to issue a section 114 notice, meaning they are unable to balance their budgets by the end of the financial year.
Other authorities which have issued the same notice have previously been given permission by central Government to increase council tax by up to 15 per cent – adding hundreds to annual bills.
Other authorities which have issued the same notice have previously been given permission by central Government to increase council tax by up to 15 per cent – adding hundreds to annual bills
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The Government gave Croydon council permission in April to increase the levy by 15 per cent to ease their debts.
Thurrock and Slough councils were given permission to increase bills by 10 per cent.
Last month Nottingham Council declared itself effectively bankrupt, issuing a Section 114 notice.
A recent report said the Labour-run council was set for a £23 million overspend in the year 2023-24.
Nottingham City Council’s chief finance officer declared that the council is unable to deliver a balanced budget, which is a legal requirement.
The council began considering issuing the section 114 notice earlier this month.
Such a notice prevents all spending apart from on essential services.
This comes less than three months after Birmingham City Council, the largest local authority in Europe, declared itself effectively bankrupt in September.
In June, Birmingham called an unofficial spending freeze after it revealed a £750m bill to settle equal pay claims.
Nottingham Council cited increased demand for children’s and adults’ social care, rising homelessness and the impact of inflation as putting extra pressure on its finances.
It also blamed “past issues relating to financial governance which led to the appointment of an Improvement and Assurance Board”, combined with an overspend in the last financial year.
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It said this has had an impact on its “financial resilience” and ability to draw on reserves.
In a statement, Nottingham Council said: “Senior officers and members remain committed to continuing to work with the Improvement and Assurance Board and the Department for Levelling Up, Housing and Communities to put the council on a stable financial footing for the future.”
