The Government is concerned Peterborough City Council and Wirral Metropolitan Borough Council have not yet fully grasped the scale of the financial challenge they both face.
Minister for levelling up communities, Kemi Badenoch, has written to both councils following the publication of external assurance reviews.
These were ordered after the councils requested exceptional financial support during the COVID-19 pandemic.
The letter to Peterborough City Council states: 'I would like to take this opportunity to thank you for your willingness to engage openly with the review team, and for your personal commitment to the council’s recovery journey.
'I am, however, concerned that the scale of financial challenge facing the council is not yet fully grasped and that further steps can be taken by the council to remedy the situation. I trust that the findings will help you to focus your council on activity that will lead to sustainable change.'
The letter to Wirral Metropolitan Borough Council states: 'I would like to take this opportunity to thank you for your willingness to engage openly with the review team. I am, however, concerned that you have not fully acknowledged or perhaps even understood the severity of challenge that your council faces.'
However, the letters go on to say the councils should be able to respond to these challenges with the right support in place.
Peterborough City Council said it acknowledges the seriousness of its financial position and the need for strong and decisive action.
It said it has taken a number of actions already including setting up a a cross-party member working group that has identified £10m of savings, appointing a new chief executive, and working to a single improvement plan, covering all revenue and capital budgets.
Cllr Wayne Fitzgerald, leader of Peterborough City Council, said: 'This is a serious report with some important recommendations for us to consider. We have already been actively working on many of the areas that the recommendations cover – and because of this we are now able to confirm that we will not be seeking any further exceptional financial support in-year (2021/22).
'I am committed to the locally-led approach which is supported by the two reports and in the Minister’s statement and I will continue to work with CIPFA, DLUHC and the new Improvement Board in order to get the council to a position of financial sustainability as quickly as possible.'
Paul Satoor, chief executive of Wirral Council, said: 'Wirral Council welcomes the indication from DLUHC that the request for exceptional financial support is progressing. As part of the request for this additional support from government, independent assurance reviews have been undertaken.
'We will take time to fully digest the findings and recommendations made in these reviews. We are grateful to DLUHC for their ongoing commitment to supporting the council through this process.'
Both councils have been told to set out the steps they are taking in the immediate and longer term to respond to the reviews within the next month.
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