CUTS to services in York are essential if the city is to avoid issuing a "legal notice" of financial distress, a council boss says.

Cllr Katie Lomas, City of York Council's executive member for finance, said "extremely difficult" decisions were being made in a bid to avoid the same fate as Birmingham City Council, which has effectively declared itself bankrupt.

As revealed by The Press online, council officers have warned that “immediate action” must be taken following predicted forecasts that York council would overspend by £11.4 million next year.

A published council paper said the local authority would “exhaust its reserves” if it did not reduce its spending.

York Labour has blamed inevitable cuts to services on the Liberal Democrats’ management of finances during its time in office with the Green Party.

But the Liberal Democrats suggested the financial situation was due to the new Labour administration’s actions since it took power in May this year.

Cllr Nigel Ayre, Liberal Democrat group leader, said: “Labour may blame inflation and other factors but the reality is that these service cuts and hiked fees are down to their mismanagement of the council budget.”

But Cllr Lomas, the Labour council's executive member for finance, said inflation wasn't to blame.

“Liberal Democrats have been living for years in another universe, ignoring the structural problems of the council that led to them plundering almost £5 million of reserves and contingency funding last year, without which they would have failed to balance the budget,” she said.

“This kind of nit-picking highlights how deluded they still are about the major financial problems the council faces.

“It simply cannot continue to fund core services with reserves that will run out.

“The old Liberal Democrat administration managed the council’s finances as though they wouldn’t be around to worry about the consequences, which has proven to be the case.

“The changes being made now are extremely difficult, but they are essential if the council is to avoid issuing a legal notice to say it can’t fund running its services in future, as other councils have done.

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“York needed new leadership to take these tough decisions to put the council back on a sustainable financial footing, and that is what Labour will do.”

Councils across England are struggling financially, including Birmingham City Council which effectively declared bankruptcy by issuing a 114 notice.

Kirklees Council is also taking measures to avoid a similar fate.

Details in the City of York Council report read: “This is a significant overspend that is of serious concern and it is very clear that the council cannot afford to keep spending at this level.

“The general reserve is £6.9 million and, whilst we have other earmarked reserves that we could call on if required, continued spending at this level would quickly see the council exhaust its reserves.

“Given the scale of the forecast overspend, immediate action is needed to bring spending down to an affordable level, both within the current financial year and over the next four years, to safeguard the council’s financial resilience and stability.”

Car parking charges will be increased by 10p an hour, which will raise about £145,000, and recruitment, agency, and overtime will be frozen where possible.

Other measures will be reviewed on September 14.