Council may ask for tax rise and financial support

Warrington Council said it was facing its "most challenging budget"

A local authority is considering asking the government to allow it to increase council tax by more than the current limit of 5% as it looks to stave off effective bankruptcy.

Warrington Council has also said it needs to ask the government for exceptional financial support and if this was not awarded, the council would need to issue a section 114 notice.

It said it was facing a £90m funding gap over the next four years - and a £39m overspend in the current year.

Warrington Council is to discuss the plans at a meeting on Monday 8 December.

In a report to the council's cabinet, the authority said it was facing its "most challenging budget" and would need to make a number of "very difficult decisions" in the coming financial years.

It said it had "reached the point where it is unable to find the level of savings required to balance the budget on a recurring and sustainable basis".

It said it is facing a £89.3m shortfall over its four-year medium term financial plan.

This could be reduced to £48.2m if savings identified - but not made public - were approved during its budget setting process in March.

It said the reasons for overspending in the current year were increasing demand and inflation pressures in adult social care, children's social care, special educational needs and homelessness.

The council also said it had the 37th lowest, out of 99, Band D council tax of unitary authorities and metropolitan boroughs in the country.

It said it had always made a decision to keep council tax as low as possible, but this was "no longer a sustainable policy".

This year six councils were given permission by the government to increase their council tax above 5%.

A number of councils had received exceptional financial support in recent years, including neighbouring Cheshire East Council.

Exceptional financial support allows councils financial flexibility through a system known as capitalisation.

This could allow it to borrow money or treat some of its day-to-day spending, known as revenue costs, as longer term capital costs.

The council said if the government did not award it exceptional financial support it would have to issue a section 114 notice.

This is when a council is effectively bankrupt and it cannot commit to any new spending along with being required to put forward a new budget within 21 days - which could involve significant cuts to services.

The cabinet is being asked to allow the authority to apply for exceptional financial support and permission to increase council tax above 5% at its meeting on 8 December, with the government expected to publish the list of councils awarded support in February.