Leicester City Council facing "real prospect" of bankruptcy
Leicester City Council is facing "a real prospect" of bankruptcy if the government fails to step in, according the its leader.
Writing a letter to Levelling Up Secretary, Michael Gove, Mayor Sir Peter Soulsby said the council was "running out of options" to balance its books.
He also said ministers did not have "the slightest awareness" of the impact of rising costs, with services facing "savage" cutbacks. Last month, Birmingham City Council issued a section 114 notice before issuing its budget in 2025-26, meaning it is effectively bankrupt.
Other councils including Bradford City Council have joined Leicester in saying their facing similar prospects.
"Government Cuts have forced us to reduce spending"
In his letter, Sir Peter said: "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."
The council has said it is facing large increases in the costs of social care, with more adults and children needing support with day-to-day living and care.
"Councils are ultimately responsible for the management of their own finances"
The Department for Levelling Up, Housing and Communities (DLUHC) said it has given the council a £32 million increase in core spending power and would engage with any authority that was struggling.
A 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."
The government said spending beyond 2024-25 would be assessed in the next spending review.