Council bankruptcy warning without government deal

Council leader Jane Ashworth warned the authority faced closing numerous services in order to balance the books without the extra government funding

Stoke-on-Trent City Council said it would have to cut “pretty much everything” it was not legally obliged to provide if it failed to agree a financial support deal with the government.

The authority said discussions to date were “constructive and positive” but without an agreement, its worst case scenario would be to declare effective bankruptcy.

The Department for Levelling Up, Housing and Communities (DLUHC) said the government was ready to talk to any councils concerned about their financial position.

Under its budget proposals, the council said it would be forced to introduce year-round charges for brown bin collections, reduce staff numbers and stop some cultural grants.

But even these cuts would leave the authority in a vulnerable state financially, it said in its plans.

The council said it would be forced to issue a Section 114 notice - effectively declaring itself bankrupt - if a deal was not reached with the government and any additional cuts it made were ineffective in balancing its books.

Stoke-on-Trent City Council plans to increase council tax by 4.99%

Council leader Jane Ashworth said: “If we don’t get a deal with the government, we will still be legally obliged to set a balanced budget.

“This exercise will require further cuts and see many of our essential valued services diminish further.”

She said failure to balance the books would result in the government stepping in to run the council, as it had done in places like Birmingham and Nottingham.

This, she said, would lead to the closure of leisure centres and museums, as well as reductions in street cleaning, grass cutting and highway maintenance.

“We don’t want any of that to happen; we want to save our services and save our city,” she said.

Bosses at the council currently estimate a funding gap of about £14m for the 2024-25 financial year, which they said was directly linked to increasing costs in children’s social care.

One in 56 of all children in Stoke-on-Trent were in the council's care, a total of 1,150 with 3,500 vulnerable adults also needing support, the authority said.

As a proportion of its budget, the council said 59% of the total was forecast to be spent on social care services in 2023-24 - an increase from 48% of its budget in 2013-14

'Bare bones'

The council hoped an additional £44.7m from the government for this financial year and the next would cover the shortfall.

It was also planning to increase council tax by 4.99% which it estimated would cost most people between 99p and £1.48 each week, depending which council tax band their house was in.

“Like many local authorities, particularly those in deprived urban areas, we are down to the bare bones," the report on the budget proposals said.

The council also said its reserves were at an “absolute minimum” and were below the level required for financial resilience.

Councils were ultimately responsible for their own finances, a DLUHC spokesperson said.

“We recognise they are facing challenges and that is why we have announced a £64bn funding package to ensure they can continue making a difference, alongside our combined efforts to level up," they added.