The government has agreed a £16.8 million bailout loan for cash-strapped Stoke-on-Trent City Council.

Council leaders made the request for further 'exceptional financial support', having already received £42.2 million in EFS over the last two years.

Stoke-on-Trent will be one of 30 councils in England to receive EFS in 2025/26, the government has announced.

EFS is effectively a loan which councils can use to cover their revenue spending on services – something which is not normally allowed. The money will have to be paid back, along with interest, typically through the sale of land or buildings.

The city council plans to use £11 million of the EFS to plug a hole in its 2025/26 budget related to children in care placements – with a further £3 million set to be invested into 'transforming services'. But £2.8 million will go towards paying the interest on the previous £42.2 million of EFS borrowing.

Cabinet members formally recommended their final budget proposals, including a 4.99 per cent tax hike and £7.5 million of savings, at a meeting earlier this week. The full council will be asked to approve the budget on March 4.

A cabinet report warned that if the EFS was not granted, the council would have to 'cut pretty much everything that we are not legally obliged to provide'.

Council leaders insist that a plan to improve the authority's finances by reducing demand for children's social care has started to yield results.

Alastair Watson, cabinet member for financial sustainability and corporate resources at the city council, said: "The financial issues we are facing are not of our making. More than a decade of austerity has left us with £97m less to invest in services in 2024/25 compared to 2010/11 in the face of great demand.

"Nonetheless significant strides have been made – both in reducing the need for extraordinary financial support, and in tackling the long-term issues facing this council which have both a financial and social cost for the city.

"We have, for example, seen a reduction in the number of children in care through partnership working and more effective early intervention. We are on the right path.

"This news will allow us more certainty to push on with our plans and focus all our attention on delivering better services, and better outcomes – at a lower cost – for the people of Stoke-on-Trent."

Stoke-on-Trent City Council's EFS package will be far from the largest in 2025/26 – Bradford City Council is set to receive £127.1 million, while crisis-hit Birmingham will get £180 million.

The government says it has made EFS borrowing cheaper for councils through the removal of a one per cent premium on interest payments. This year's support packages will also include instructions that councils should not sell off 'community and heritage assets' in order to pay back their loans.

Minister of State for Local Government and English Devolution Jim McMahon said: "We are under no illusion of the state of council finances and have been clear from the outset on our commitment to get councils back on their feet and rebuild the foundation of local government.

"We are working with local leaders, encouraging councils to come in confidence where needed to seek help and be assured we will offer a relationship of partnership – not punishment – in our joint mission to improve public services for communities and create economic stability as set out in our Plan for Change."

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