BRADFORD Council is on the brink of effectively declaring bankruptcy.

A new report into the Council’s finances says that without “exceptional” Government support, the authority will have to issue a Section 114 notice – meaning the Council is essentially bankrupt.

Councils legally have to balance their budgets at the end of each financial year, and the report says Bradford Council is unlikely to achieve this.

Financial support for local authorities that the Council hoped would emerge in the Chancellor’s Autumn Statement last month did not happen – and the statement actually added to Bradford’s financial black hole, the document adds.

The Section 114 Notice would mean Bradford Council could make no new spending commitments – and may have to reduce the services it provides to just those deemed essential, including social care and bin collections.

The Council has said it will have to implement a “significant savings plan” – likely to include job cuts, raise income, and carry out “a plan for the disposal of Council owned land and assets.”

Budget proposals will be revealed early in the New Year.

Bradford Council bosses have blamed Government cuts and spiralling costs of children’s social care placements for the predicted overspend, which now stands at £73m for the current year.

The budget for the Bradford Children and Families Trust alone is expected to overspend by over £45m.

A report going before the Council’s Executive next Thursday says the Authority will make a request to Government for “exceptional financial support” over the next two years.

It explains: “The Council faces an unprecedented financial situation with significant funding gaps forecast for the current financial year and for 2024-25 and beyond.

“Since 2011 Bradford Council has had to find over £350m in cuts and savings due to national austerity measures, inflation and increased demand. More recently exceptional inflation and energy prices have put additional pressure on budgets for all local authorities.

“The Council is currently forecasting budget pressures of £73m in the current financial year and £103.6m in 2024-25.

“The Council has a track record of delivering balanced budgets and maintaining healthy balances of reserves.

“Deployment of reserves to balance the 2022-23 budget and set a budget for 2023-24, in the face of soaring inflation and cost and demand pressures has however, left them depleted.

“Reserves will be exhausted by the end of 2023-24 with a consequent impact on the Council’s financial resilience, meaning a request for Exceptional Financial Support in both 2023-24 and 2024-25 will be required.

“The Chancellor’s Autumn Statement provided no new funding for Local Authorities in 2024-25 beyond those amounts that had been announced in last year’s Autumn Statement, nor did it make reference to the pressures on children’s social care.

“However, the increase in National Living Wage to £11.44 was higher than had been factored into inflation estimates, and it will add £5m of pressures to Bradford’s contract expenditure.

“The Council has been in close dialogue with Department for Levelling Up, Homes and Communities and the Department for Education about its financial challenges over the last year, and Exceptional Financial Support is the only mechanism available to support the Council through a difficult financial position.”

Referring to the overspend in Children’s Services, the report says: “Soaring growth in demand for, and the costs of, children’s social care is a national phenomenon which is being experienced particularly acutely in Bradford where it represents the biggest single financial pressure.”

A statement from the Council said: “The numbers of children in care rose by 61 per cent between 2012 to 2022 while the rate of children in need increased by more than 60 per cent over a similar period.

“The cost of providing placements for children has increased with residential placements going up from an average cost of £3,600 a week for each child in 2020-21 to an average £6,000 per week in 2023.

“For context this means that the average cost for one placement each per year is now £312,000, which is similar to the annual council subsidy of a small leisure centre.

“As a measure of the extraordinary pressures facing the Council, forecast spend on Children’s Services and Adult Social Care would be equivalent to over 87% of the Councils approved budget in 2023-24.”

Bradford Council Leader Councillor Susan Hinchcliffe said: “Our finances, like many other across the country, are in a perilous position.  “We are being forced to look at all the services that we provide and make extremely difficult decisions and we know these will not be popular and will have an impact on our residents.

“The Bradford Children and Families Trust is led by a respected and experienced chief executive and I am calling on the government to make sure that is properly funded. We need the government to provide better funding for disadvantaged children across the children’s social care sector nationally.”

Reacting to the report, Councillor Mike Pollard, Conservative spokesman for finance, said: “The Council is, as expected, and as specifically outlined in my speech to Full Council on Tuesday, seeking Exceptional Financial Support from.

“This is a fairly frequent precursor measure sought by Councils attempting to stave off the better known and I believe, slightly more onerous, Section 114 Notice. The scale of the gap needed to be bridged to balance the Council’s budget outturn for the current financial year and for 2024/25 is so great as to give me major cause for concern.

“Councils receiving Section 16/20 ‘Exceptional Support’ via a ‘capitalisation direction’ enabling the treatment of revenue budget (i.e. ‘day to day’) costs as capital expenditure, are usually expected to demonstrate a feasibly achievable Financial Recovery Plan.

“If that is not capable of being so demonstrated, the Section 114 route is inevitable. Under either ‘route’, however, the financial terms of any capital borrowing are much the same – it would be with a ‘proxy asset life’ repayment term of 20 years at a 1 per cent premium on standard Public Works Loan Board rates.”