Solihull Metropolitan Borough Council's (SMBC) leader says they are a "long way off" effective bankruptcy as the authority's troubled finances went again under the spotlight.

As the Local Democracy Reporting Service recently reported there is currently a forecast £1.4m overspend for this current financial year – which runs until April next year.

The authority's director of resources Andrew Felton told the latest cabinet meeting: "It is relatively modest.

"It is still an overspend and in our current financial context there is still an element of concern."

He said directorates were working "really hard" and spending controls remained in place to improve the situation.

Conservative council leader Karen Grinsell said: "It is good to see we still have got a good grip on our spend and trajectory is going in the right direction."

The director has been warning there is a risk the council will end up needing to seek permission, through Exceptional Financial Support (EFS) from the government, to increase council tax by up to 9.99 per cent in future years.

The latest report to cabinet said: "There is already a significant funding shortfall in both 2027/28 and 2028/29 – clearly, to set a balanced budget for 2027/28 there will need to be difficult decisions.

"In the event insufficient savings can be identified and agreed, and if EFS is no longer deemed a viable option or is rejected, the Section 151 officer (Mr Felton) would be in the position of having to consider issuing a Section 114 notice."

A Section 144 notice means a council is effectively bankrupt as it is unable to balance its budget, and can't commit to any new spending.

Green Party councillor Max McLoughlin said he was concerned about the sale of assets.

"Not only is this a one-off thing that can be done," he said.

"Very often you are either losing community assets or the best performing on the balance sheet are the assets that are generating the revenue – we are creating a greater issue in the future."

Cabinet member councillor Andy Mackiewicz said: "We are not looking at a firesale.

"We are retaining assets that are performing well. Assets not performing we are disposing – that's just good financial management."

Liberal Democrat councillor Ade Adeyemo said: "There have been louder and louder warnings about what Solihull is about to face.

"We have a huge shortfall, we have very few options. What we need to know, what do we need to do?

"If we are going to make cuts, what are we going to cut? If we are going to make savings, where are savings likely to come from?"

The officer replied: "The process we are about to go into is exactly what you have described.

"Officers have been pulling together a revision of the spending pressures, of the savings options, any other options that might be available to us – to give you the options around potentially how we can balance the budget.

"Ultimately you have got to decide, because we don't have a majority council at the moment, how you are going to get to an agreed position.

"Whether you are taking the controlling group's budget, whether there are deals done around that. We will provide the options, the issue is whether those options are palatable to you."

Reform UK councillor Samantha Gethen asked: "If it looks like the budget can't be balanced and you are having to consider a 144, at what point in the process do you have to do that?"

Mr Felton replied: "I might have to do that as we come towards the decision, so in February next year. Unless there is a major issue I don't have to do it before then."

Cllr Grinsell added: "That's a very big if – we are a long way off that at this moment in time."

The meeting was held at the Civic Suite on September 17.