Tim Farron has said he is ‘fighting the government’ to force a U-turn on cuts to a local authority's funding, which he blames for pushing the council towards effective insolvency.
The MP’s latest comment comes after documents revealed Westmorland and Furness Council is heading towards a Section 114 notice, which is the closest thing in English local government law to an authority’s declaration of insolvency.
The papers, primed for the authority's Corporate Overview and Scrutiny Committee, which is due to gather at Kendal Town Hall today (June 11), said that the issuing of such a notice is "inevitable without change".
Reacting to the council’s warning, Mr Farron, MP for Westmorland and Lonsdale, said: “This is the horrific consequence of the government’s decision to remove 31% of Westmorland and Furness council’s funding.
“The local council is one of the best run in the country, but none of us could cope with such an awful cut without making some really tough decisions.
“I’m fighting the government to get them to undo those cuts, while working with local councillors to protect our communities”.
After Westminster announced its cuts to the funding of Westmorland and Furness Council, effective from now until 2028/29, the authority’s finance cabinet member, Andrew Jarvis, had to force through an unpopular budget for 2026/27 in February, which he described as ‘enforced austerity’.
Cllr Jarvis warned then that if the council does not manage its major financial risks, it is facing a ‘financial crisis’ in the coming years.
The 2026/27 budget saw a 4.99 per cent increase in council tax, the maximum that it can be raised per year by an authority.
It also set out above-inflation increases to parking charges, as well as cost savings in areas such as affordable housing and a charge of £60 for their garden waste collections.
What does the notice actually mean?
A Section 114 notice, named after section 114 of the Local Government Finance Act 1988, is the formal mechanism by which a council's chief financial officer declares that spending is about to exceed available resources.
Once issued, all new expenditure is immediately frozen, with the exception of spending on statutory services such as adult social care, children's safeguarding, waste collection and highways. Councillors must then meet within 21 days to agree a course of action.
What the documents for Thursday's meeting say
The transformation report, authored by the council's senior manager for change and transformation, sets out the financial case for reform.
"Financial reality – current spending is unsustainable," the document states. "£40m of efficiencies must be found over next 3 years. S114 inevitable without change."
The council's 2026/27 revenue budget already contains savings of over £30 million that "must materialise in-year to ensure that the council's budget for 2026/27 remains in balance," the papers add.
Of that, at least £5.75 million is expected to come from the transformation programme itself.
Over the full three-year period, the transformation plan aims to deliver "at least £15 million saved". Officers have warned that if the programme fails, the consequences include "non-delivery of statutory duties," "deteriorating outcomes for vulnerable people" and "increased risk of harm where timely and effective intervention is not achieved".
The current financial position
At the midpoint of the 2025/26 financial year, the end of September last year, the council was forecasting an overspend of £9.973 million against its net revenue budget of £307.271 million.
By the end of the third quarter, that projected overspend had been reduced to £5.839 million, following savings of £9.345 million identified by the council.
The biggest pressure areas are Adult Services and Children's Services, which officers described at the council's March scrutiny meeting as "typically high spending with increasing demand and inflationary cost pressures".
The position is further complicated by a growing deficit in the Dedicated Schools Grant (DSG), the ring-fenced funding used to pay for special educational needs and disabilities (SEND) provision.
The projected increase in the DSG deficit stands at £12.640 million for 2025/26 alone, with the total high needs deficit reaching tens of millions of pounds.
Government plans to fund 90 per cent of SEND transport costs were noted at the March scrutiny meeting, but members were told the remaining 10 per cent "was still a challenge for the council" and that "there was a high cost to meet demand".
Looking further ahead, the council's own budget proposals have flagged that reserves are forecast to fall from £46.1 million at the end of 2025/26 to just £22.4 million by 2028, excluding the Housing Revenue Account and the DSG.
A council under pressure
The financial difficulties facing Westmorland and Furness are not unique. A survey by the Local Government Association found that one in five councils considered it "very or fairly likely" they would need to issue a Section 114 notice in the near future.
In December 2025, Cllr Jarvis described the Government's funding settlement as "every bit as bleak as had been anticipated”. He warned that the government's Fair Funding Review, which he said failed to account for the elevated cost of delivering services in rural areas, was projected to result in a reduction in government grant of more than 30 per cent between 2025/26 and 2028/29.
Furthermore, the papers warn that by 2032, 30 per cent of the area's population will be aged 65 or over - an increase of 11,400 people - while the number of residents aged 85 and over will rise by 2,500. "Current service cannot deliver within budget allocation," the document states.
When approached for comment, a Westmorland and Furness Council spokesperson said: “We have been open about the financial challenges we are facing.
“The increased demand for services in some areas, combined with a severe cut to our financial settlement from central government means we need to move swiftly to bring about change.
“Overall, we are working to realise over £40 million of savings over the next three years to put the council on a sustainable footing.
“Our focus is not on doing more with less at any cost, but on doing things differently – removing duplication, simplifying processes and making it easier to deliver good services for communities.
“Through our transformation programme, we are already starting to:
- reduce repeat demand through earlier help and prevention.
- improve how residents contact us and get things resolved first time.
- make better use of digital tools to save time and effort.
- streamline internal processes so our staff can focus on what matters most.
“Together, we are determined we can meet this challenge and build a council that is sustainable, effective and able to deliver for our communities long into the future.”
The Ministry of Housing, Communities and Local Government was contacted for comment.
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