Council tax will have to increase beyond the usual maximum limit, residents have been warned – in a bid to stave off bankruptcy.

Council leaders at the Royal Borough of Windsor and Maidenhead are set to approve a rescue plan next week following a report confirming the council’s dire financial circumstances.

The plan warns that the council will have to take ‘tough and in some cases unpopular’ decisions over its services and properties – alongside a proposed council tax hike.

It comes after the Royal Borough said it could spend more than £12 million more than planned this year – and as talks between the council and the Government over a bailout package are ongoing.

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A new report into the council’s finances by public sector accounting group CIPFA says the Royal Borough is on the brink of effective bankruptcy and must take urgent action.

Like many councils across the country, the Royal Borough is facing a challenge to make its funding cover the rising costs of providing services.

But the Royal Borough says its situation is ‘particularly acute’ due to decisions made by previous council leaders and senior staff.

It says these include decisions by previous Conservative council leaders to cut council tax for six years in a row between 2010 and 2016. Council tax in the borough was then frozen in 2016, increased by just 0.95 per cent in 2017, and by 1.95 per cent in 2018.

The council now says this has left it £30 million worse off this year than it otherwise could have been. It says it will need permission from the Government to raise council tax beyond the cap of 4.99 per cent next year.

The council also says previous borrowing has left it with more than £230 million in debts, which it is spending more than 10 per cent of its budget on paying off.

On top of those, the council says accounting errors made in previous years have left it with £16 million less than it previously thought.

These mistakes were only discovered this year when new finance staff carried out the first balance sheet reconciliations – which involve matching spending records with the money in the council's accounts – since 2021.

Councillors on the leading cabinet committee are set to approve an action plan when they meet on Wednesday, October 30.

This will involve looking for new ways to reduce spending on council services – including possible cuts – that will be decided in fresh budget plans set to be published before Christmas.

However the council says it will also need ‘exceptional financial support’ from the government – in addition to the council tax rise – to set a balanced budget. This could involve getting permission to sell council properties so that it use the money to pay off debts and fund services.

The Royal Borough applied to the Government for exceptional financial support in May, and discussions are still ongoing.