Leicester City Council is ‘rapidly running out of options' to cut costs and faces financial crisis ahead of its 2025-26 budget, its mayor has warned local government secretary Michael Gove.

In a letter to Mr Gove, mayor Peter Soulsby said: ‘While we can probably avoid receiving a section 114 report in 2024-25, a 114 report is becoming almost inevitable before we set the 2025-26 budget.'

Mayor Soulsby said Leicester was facing huge cost increases for social care, with services expected to cost an extra £50m a year by 2025, and added that the costs of housing homeless people were being exacerbated by Government policies on asylum seekers.

He said: ‘Despite the problems being common to the sector, I do not feel the Government understands the consequences of the storm breaking across the country.'

Mayor Soulsby said Government cuts had already forced Leicester to reduce spending on services other than social care by 50% between 2010 and 2020.

He added: ‘I now fear for the future of services such as parks, sports, museums, libraries, cultural services and community centres – indeed all those services that make our city a pleasant place to live.'

A Department for Levelling Up, Housing and Communities spokesperson said: 'We have made £5.1bn of extra funding available to local authorities through the local government finance settlement, with almost £60bn available for the sector – up 9.4% on cash terms on 2022-23.

'For Leicester City Council, this represents an increase in core spending power of up to £32m or 9.9% – making available a total of up to £356m in 2023-24.

'Councils are ultimately responsible for the management of their own finances, but we will continue to monitor pressures they face and stand ready to talk to any council that is concerned about its financial position.'