The government has agreed to provide £42.2 million of emergency support to Stoke-on-Trent City Council – staving off the immediate threat of bankruptcy.

Council leaders had previously warned that they would have to cut 'pretty much everything', including museums and leisure centres, if their request for 'exceptional financial support' (EFS) was not granted.

But today the authority received an 'in principle' decision to allow it to borrow £42.2 million over the next two years. This money will allow the council to balance its budget for the coming year, as well invest in transforming children's services to bring down future spending.

How the loan will be paid back has yet to be agreed, but the council has previously talked about using funds raised through the sale of land and buildings. Council leader Jane Ashworth says that while the EFS will give the authority breathing space in the short-term, long-term financial sustainability will need fairer funding from government.

She said: "The loan will be over two years, so we will have that headroom to start to make the necessary changes. But the fundamental thing we need from central government is that fairer funding formula, so that poorer cities like ours are not just left to our own devices, raising money through council tax.

Council Leader, Jane Ashworth, says the EFS will give the authority 'breathing space' (LDRS).

"This is what the Local Government Association is calling for, and the LGA is a multi-party organisation. I've yet to speak to anyone, either at the city council or anywhere else, who doesn't think a fairer system is needed. The system we have is creaking and it needs to be sorted out.

"There have been years of austerity in which we have been forced to make £270m in savings, and we are not alone– at least one in five councils are facing the prospect of not being able to set a balanced budget in this or future years."

Ms Ashworth explained that a portion of the EFS would be spent on expanding early intervention for struggling families in order to reduce the number of children being taken into care – currently one of the biggest drains on council finances. As of the end of December the council was looking after 1,150 vulnerable youngsters, which is far above the average.

Ms Ashworth said: "This situation is bad for children, bad for families and bad for the council. So we will be carrying out this work, with our health partners, the police and community organisations, so that fewer children are taken into care."

Between 2020 and 2023, a total of 16 councils in England were granted exceptional financial support by the government. These include Slough, Thurrock, Croydon and Nottingham. Slough and Croydon have received support in each of the last four years.

Stoke-on-Trent is among 19 councils in England which have been granted EFS this year, with the others including Cheshire East, Middlesbrough, Medway and Southampton.

Dr Phil Catney, senior lecturer in politics at Keele University, believes that the growing number of EFS requests is a sign that the whole system of funding local government is 'on the verge of collapse'. He said: "The government seems to be handling this issue in a very piecemeal way – we don't really know the criteria for this exceptional financial support, or the fineprint on how the money is paid back.

"What is really needed is a major change in the way local government is funded, whether that means changes to adult social care, re-evaluating council tax bands – which would be politically toxic – or bringing back the system of redistributing council tax income. But it doesn't seem that the Conservative government is interested in doing that, and I'm not sure Labour have any ideas either.

"So instead they are just kicking the can down the road, with councils like Stoke-on-Trent being able to hobble onwards for another couple of years."

The city council's budget for next year, which includes £8 million of cuts and a 4.99 per cent tax hike, is set to be approved at full council on Tuesday. Proposals include a new £40 annual charge for garden waste bins, the cessation of cultural grants, and a reduction in library opening hours.

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