Councils cannot technically go bankrupt, but if they cannot balance their budget for the financial year, they can issue what is called a section 114 notice., external
This means they cannot commit to most new spending, and residents could see reduced services, such as fewer bin collections or cuts to libraries.
Before 2018, only two councils had issued a section 114. Twelve have been issued since.
Birmingham City Council went bust in 2023, with a £760m black hole. It followed Woking Council, Thurrock and Croydon (for the third time).
A number of local authorities in England have not issued section 114 notices but are receiving so-called “exceptional financial support”, external to help manage their budgets.
Middlesbrough Council is one of 19 authorities allowed to borrow money to fund day-to-day spending in 2024-25.
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