BOSSES at Southampton City Council are in 'informal discussions' with Government over its dire finances, the latest bombshell report into its budget has revealed.

The Labour-led council has already been forced into making voluntary redundancies to save cash as it is facing a £20.9m shortfall this year alone.

That is set to hit £56.97m by 2026/27 in a 'worst case scenario' laid bare today.

Leader Satvir Kaur said her administration is facing "austerity on steroids" but opposition Tory councillors have accused her of being on the brink of asking for a bailout.

It comes as a council-run nursery was yesterday refusing to accept new children as it cannot be sure it will have enough staff.

Major capital programmes have been "paused", the home to school transport service is under review and major partnerships with the operators of the city's highways, St Mary's Leisure Centre and the Guildhall are under review.

The council will also cut the number of vehicles in its fleet, and will reduce the number of buildings it occupies to try and save money.

The report published last night recommends the council should not declare effective bankruptcy - a section 114 notice - but instead bosses have put the council into 'recovery' mode.

Spending on children and adults social care is under weekly monitoring, and external experts have been brought in to scrutinise the council's departments.

The report said: "Other councils have avoided financial failure by taking strong and early action to avoid the greater risk to frontline services which would occur by not taking action.

"By acting in this transparent and clear way we aim to identify and take the further difficult decisions that will be needed in a planned and effective manner that minimises the potential for disruption."

Another report by Chartered Institute of Public Finance and Accountancy said the council's reserves have 'eroded' to a level that means they cannot support the council if it continues to fail to make savings.

And it said in 2022/23 the council's overspending saw its run rate hit £1.8m a month.

The CIFPA report concludes: "It is crucial that the council delivers the savings identified as planned (timing and value) and expenditure is controlled within the presented budget.

"Failure to do this will rapidly increase the risk of the need to issue a s114 notice either in 2023/24 or 2024/25 financial years”.

The Conservatives in Southampton blasted Labour for ‘hosing cash’ on ‘pet projects’ - and accused the administration of asking for a bailout.

Reacting to the financial report, Southampton Itchen MP Royston Smith told the Echo: “Labour have run the city council for 10 of the last 11 years. 

“They have hosed cash around on their pet projects, such as cycle lanes that almost no one uses, a cultural trust after failing to be awarded City of Culture, and a bloated council which talks a lot and delivers little. 

“This crisis, and it is a crisis, is entirely of Labour’s making and completely predictable.

"Finally they are forced to go cap in hand to the government to bail them out.

"This episode has brought shame on Southampton and the Labour Council should be ashamed of themselves.”

Tory group leader Cllr Dan Fitzhenry added: "The Labour council have denied for months there was a problem, but now only two months after the recent local elections, they admit they have a £50m gap in their finances.”

He said his year as leader ended in May 2022 with a £10m underspend and £30m in reserves.

Cllr Kaur - Labour leader - has said the council’s recovery plan has ‘confidence’ from Government.

Cllr Kaur - who also blamed the Tory’s one-year stint in power locally - said: “Every council in the country, irrespective of their politics, is facing financial hardship with the national economy on its knees. We are experiencing austerity on steroids, with record high interest rates and inflation making the situation worse.

“In Southampton, local Conservative mismanagement of the finances when they were in power locally have added to the problem, with their poor financial decision making, as stated in the report.

“Despite the national economic chaos we find ourselves in, we remain committed to being proactive with the budget challenges, and have a clear recovery plan that has the confidence of auditors, CIPFA and Government.

"It is a plan that still delivers on our promises, gives value for money to local people, and focuses on growth and jobs.”