The council faces a £22m gap in its budget for the next year after declaring itself in a state of "financial distress".

In finance reports published this week the Labour controlled council’s interim director of finance Paul McKevitt, said that there had been increased demand for services and "systemic under funding" of local authorities.

He said there had been a 17 per cent demand increase on the council’s budget, against an income increase of just seven per cent.

The Institute of Fiscal Studies published data in 2023 which highlighted the council’s position as in the bottom 20 per cent of worst-funded councils, ranking 122 out of 150 upper-tier English local authorities in terms of money to spend per resident.

The deficit for the year 2024/25 of £22m is to be funded by £5.4m of previously announced cuts with a further £2m being found by "new policy proposals".

The remaining £15.1m gap is being plugged by spending the council’s cash reserves.

According to the report a further £15m of reserves will be needed to balance the books for the years 2025/26 and 2026/27.

An assumption in the budget is that council tax bills will rise by five per cent for residents, with two per cent of that ringfenced to be spent on adult social care.

The budget includes a new policy proposal which is to transfer a £2m dividend from the council’s Townside Fields Ltd into its books.

The council declared itself to be in a state of financial distress last summer and established a voluntary finance improvement panel, with support the Local Government Association, to review all its financial systems and processes.

In the report, finance chief Paul McKevitt said: “The increase in cost pressure has been exacerbated by ongoing increases in demand across all statutory services including social care for adult and children; special educational needs and support services; social housing and homelessness duties.

“For Bury, these pressures come on top of systemic under funding.

“While there has been a recent increase in one off grants and fixed term funding from central government, core funding has gone down by 55 per cent since 2010/11.

“Bury Council is not alone in facing this challenge, The Local Government Association has issued a response to the 2024/25 provisional local government finance settlement stating that based on their analysis of the sector, councils in England continue to face a funding gap of £4bn across this year and next.”

The budget will be presented to the council’s scrutiny committee next week before it is voted on by full council later in February.