Ailing councils to receive extra government help

Wirral Council is one of 30 local authorities across England to be offered additional financial support

Four financially struggling councils in the north-west of England will be able to access additional support from the government.

Cheshire East will be offered £25m, while Halton, Trafford and Wirral will respectively be offered £32m, £10m and nearly £8m in the coming financial year.

More councils across England have requested exceptional financial support this year than in any since the current process was established in 2020, the government said.

Local Government Minister Jim McMahon said: "We are under no illusion of the state of council finances and have been clear from the outset on our commitment to get councils back on their feet and rebuild the foundation of local government."

The authorities will be allowed to use Treasury loans or cash from selling assets to cover day-to-day spending, which they are normally banned from doing.

Ministers will, however, encourage councils not to sell off "community and heritage assets" to help meet current spending pressures.

McMahon said the government wanted to "offer a relationship of partnership - not punishment - in our joint mission to improve public services for communities and create economic stability".

The BBC has approached the Conservatives for comment and has also asked the other main parties for comment.

The co-leader of Wirral Green councillors, Jo Bird, said: "This £27.5m loan from government lays bare the scale of the financial crisis at Wirral Council.

"It's the second bailout loan to Wirral Council in four years."

Bird said increasing costs of social care affected all authorities "but this makes the failure of Wirral to get a grip of our broader finances especially concerning".

The four north-west authorities are among 30 across England that are being given "exceptional support" by the Ministry of Housing, Communities and Local Government (MHCLG).

It will be provided through a process known as capitalisation, which enables councils to borrow money or sell assets to meet day-to-day running costs.

It is the first time that councils have been ordered not to dispose of community and heritage assets as a way of balancing their books.

The £69bn local government finance settlement for 2025-26 represents a 6.8% increase on the previous year, it said.

What help will the four councils receive?

Cheshire East Council has been offered support of £25.3m during the next financial year, along with £17.6m (revised from £6m) for 2024-25.

Last month, the Labour and Independent Group coalition-run authority announced it had an £18.3m funding gap.

Halton Borough Council is being offered £32m for the financial year from April, with nearly £21m in support agreed for 2024-25.

The Labour-run authority, which is part way through a three-year programme of cuts and restructuring, said in September it was facing a budget shortfall of nearly £20m.

Trafford Council is to be offered nearly £10m as it seeks to address a £12m deficit.

Earlier this month, the Labour-run authority said £300m had been cut from its budget over the last 14 years.

Wirral Council in January made an urgent request to the government for about £40m.

Ministers have responded by approving a package of £7.5m for the next financial year, along with £20m to cover 2024-25.

Wirral Council is led by a minority Labour administration, meaning decisions have to be made on a cross-party basis.

The local authority asked for government support after finance bosses warned it was "effectively bankrupt".

Despite securing additional funding, some £25m of cuts are still expected from April, the Local Democracy Reporting Service said.

This could see libraries under threat, Birkenhead Town Hall closing and sweeping job cuts within the local authority.

Council leader Paul Stuart, who recently announced he would stand down in May, said that while it was "never ideal to have to ask for additional financial support", he welcomed it.

"We will continue delivering essential public services, protecting our community assets, and promoting economic stability for Wirral," Stuart added.

'Exceptional circumstances'

The government said it would "work with councils on improvement and actions they can take to help manage their position to ensure value for taxpayer money".

The MHCLG said additional support had only been agreed on "an exceptional basis".

Not all requests were granted and no requests were agreed in full, it said.

Meanwhile the government has also pledged to provide multi-year settlements from 2026-27 "to provide certainty and economic security to councils setting budgets".

The PA news agency said the vast majority of England's top-tier local authorities were seeking to increase council tax by 4.99% - just under the threshold that would ordinarily trigger local referendums.

Additional reporting by Ed Barnes, Local Democracy Reporting Service