ANOTHER Labour-run council verges on bankruptcy: Middlesbrough set to ask Government for emergency funding - following Birmingham, Woking and Nottingham

Middlesbrough is the latest council set to ask the government for emergency help to avoid going bankrupt.

A report to the authority’s executive said a request for exceptional support must be made this month.

If sufficient cash isn’t provided Middlesbrough Council could become the 10th local authority since 2018 to issue a section 114 notice – meaning it is unable to fulfil its legal duty to balance the books.

The report stated the council’s ‘financial position is critical’ with a £6.3million budget gap for the next financial year starting in April.

The council has already signed off on the sale of assets, while further proposals to save around £14million are currently out for public consultation – including job cuts, reduced waste collection, and a council tax increase of 4.99 per cent.

Middlesbrough (pictured) is the latest council set to ask the government for emergency help to avoid going bankrupt

The iconic Selfridges building in Birmingham city centre, UK

An application to the Department for Levelling Up Housing and Communities is said to be the only solution to the ongoing crisis.

A council spokesperson said: ‘The council is taking this decision in order to seek to avoid the more severe consequences of issuing a Section 114 notice, which have been issued recently by other local authorities, but that risk remains if a balanced budget cannot be achieved by the statutory deadline of March 11.’

Labour took control of Middlesbrough Council last May. It had previously been run by an Independent-Conservative administration, with both sides blaming each other for the financial problems.

The report to the Executive blamed the council’s ‘critical’ financial position, in part, on ‘past failures’ to establish and deliver sufficient savings plans and ‘over reliance’ on revenue reserves to meet overspending.

Children’s social services overspent by £9.4million this year.

In December, Tees Valley Mayor Ben Houchen and Middlesbrough and East Cleveland MP Simon Clarke wrote to Simon Hoare, Parliamentary Under-Secretary of State for Local Government, requesting commissioners step in and take over the running of the council.

But Middlesbrough’s mayor Chris Cooke told the executive that issuing a section 114 or accepting an equivalent level of intervention would place the authority in a ‘much worse place’.

In December, Secretary of State Michael Gove said each of the authorities that have issued section 114 notices have had ‘failures of leadership, management and governance’, with some taking ‘unmerited risks.

A Hawker Hunter aircraft mounted on a pole outside the Big Apple entertainment centre in Crown Square, Woking town centre

Nottingham tram crossing a bridge travelling from Nottingham city centre

Birmingham, Woking and Nottingham issued section 114 notices last year.

Lord Morse, chair of the Office for Local Government, said last month that councils going broke was down to ‘failures in management or failures in governance’ rather than a lack of funds.

In December, Nottingham City Council became the seventh local authority to declare bankruptcy since 2018, but insiders told MailOnline up to 30 more councils could follow suit over the next few years.

The Labour run council was forced to issued a section 114 notice yesterday declaring that they were unable to balance their 2023/2024 budget, and was on course for a £23 million overspend.

Jonathan Carr-West, Chief Executive of the Local Government Information Unit, told MailOnline: ‘Nottingham isn’t the first to issue a section 114 and certainly won’t be the last. More and more well-run and effective councils are saying that they could be next.

‘Government is quick to point the finger at ‘failing councils’ but the truth is we have a broken system.’

He said the news was ‘no surprise’ as ‘around one in ten councils are at risk of effective bankruptcy’.

‘This represents a tragedy for millions of citizens who see the services they rely on at risk even as their bills rise,’ he added.