WARNING ONE IN 10 COUNTY COUNCILS FACE EFFECTIVE BANKRUPTCY – Local government leaders warned bankruptcy will put vital services at risk

One in 10 county councils in England is facing effective bankruptcy – putting vital services at risk, local government leaders have warned.

In September Birmingham City Council was forced to slash spending after declaring itself effectively bankrupt.

More local authorities fear they could be next, according to a survey by the County Councils Network and they are calling for emergency funding from the government to stave off financial collapse.

The government said it had already made £5.1bn extra available to local authorities for 2022/23 – and was ready to talk to any council concerned about its financial position.

Labour-run Birmingham City Council faces a bill of up to £760m following equal pay claims and a flawed IT system that spiraled over budget, leading to questions about the council’s governance.

However, local government leaders are warning other, “well-managed” county councils could follow suit.

As well as increased funding, councils are calling for longer-term budget settlements to allow them to plan their finances.

Soaring inflation has driven up costs and many councils are facing an increase in demand for the services they provide – such as adult social care, education and highways.