One million households face council tax hikes of up to 15% after Bradford and Cheshire East became latest town halls to warn they are at risk of going bust

A million households in the north of England face massive increases in council tax after two more local authorities warned they are on the verge of going bust. 

Labour-run Bradford City and Cheshire East councils have become the latest to give notice they risk filing Section 114 notices - effectively going bankrupt - without financial help.

In previous cases where councils have filed S114 notices, they have been allowed to increase council tax about the rate of inflation.

In April Croydon Council increased council tax by 15 per cent, adding £235 to the average annual bill and taking it past £2,000. 

Bradford, in West Yorkshire, warned it needs 'exceptional financial support' to stay afloat with a predicted overspend of  £73million in the current financial year and £103.6million in 2024-25. It blames government funding cuts and spending on child social care.

Cheshire East, which includes Crewe, Macclesfield and affluent areas like Knutsford, blamed Rishi Sunak's decision to axe the northern leg of the HS2 rail line.

It had spent £11million - including £8.6million it had borrowed - preparing for the line, which was forecast to bring 5,000 jobs to the area.

In a report presented to the council, officials said: 'HS2 would have provided a step-change in connectivity at Crewe and a catalyst for growth and regeneration for the towns of Crewe and Macclesfield, the borough and the wider sub-region. 

'The Council has invested significant resource, over several years, in planning for the arrival of HS2 and to ensure that the full benefits of this once in a lifetime investment can be unlocked for Crewe, Macclesfield and the wider borough. 

'The Council has incurred over £8million in direct capital costs in planning for HS2 and the Crewe hub. In addition, the Council and its communities has spent time and expense in responding to the scheme proposals through consultation responses, engagement with HS2 Ltd and most recently petitioning the Bill. 

'The Council has incurred over £2million in supporting the HS2 proposals and the consultation and hybrid bill processes. 

'The cancellation of HS2 north of Birmingham by the Prime Minister on 04 October 2023, and the publication of Network North to replace it, is a major setback to the Council, to Crewe and Macclesfield and to the wider communities and business that were set to benefit from HS2 services to Crewe and Macclesfield.'

Nearly one in five council bosses fear that the local authorities they run will declare themselves bankrupt next year, following Labour-run Nottingham and Birmingham, and Woking, which is now Lib Dem but racked up massive debts under a previous Conservative administration.

Councils warned that the risk of financial failure has increased due to lack of Government support in the autumn statement, while others said they may not be able to fulfil their legal duties.