Labour-run Leicester city council on brink of going BANKRUPT despite being handed MILLIONS in extra funding

Sir Peter Soulsby has now written a letter to the Levelling Up Secretary, Michael Gove, asking for urgent financial assistance.

He warned that budgets covering sports, social care, leisure, parks, museums, and libraries could be slashed, as the council were “running out of options”.

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The mayor said that without assistance from Whitehall, the authority would have to declare a section 114 notice, effectively making it bankrupt.

If this were to happen, Leicester city council would join the likes of Birmingham City Council, who issued the notice last month.

By ordering a Section 114 notice, the council is effectively asking the government for help to finance its budget.

When in place, it restricts all spending with the exemption of protecting vulnerable people and key services.

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The Government has insisted that it was “ready to talk to any council concerned about its financial position”, stating it gave Leicester an additional £32million this year.

However, the council has cautioned that it is facing a budget shortfall of £34.1million for 2023/24, which will rise to £64.4million in 2025/26.

“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”, Soulsby wrote in his letter.

"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.”

He noted that Governments in the past have forced the council to reduce spending on other services by 50 per cent.

He continued: “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.”

If the Labour-led council issues a section 114 order, the authority then has 21 days to come up with a new budget within its spending commitments.

Amy Oliver, Leicester's director of finance, said: “Councils are under unprecedented financial pressures.

“It is a legal requirement for councils to provide some services, such as social care, and if the cost of these services continues to go up, either the Government must provide more money or other services will have to be cut.”