Over 40 Tory MPs have written to Rishi Sunak to demand extra funding for councils to avoid cuts to crucial frontline services.
Seven former cabinet ministers were among the signatories of the letter, which warned residents face a “double whammy” of reductions in services and higher council tax rates for local authorities to deliver a balanced budget.
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Struggling councils have repeatedly called on the government to provide emergency cash to protect provisions for local communities, as they have grappled with rampant inflation following a decade of significant funding reductions.
Last month ministers announced a £64bn provisional funding package, which, following a consultation, will be finalised in February with a vote in parliament.
However MPs who signed the letter, seen by Sky News, threatened to vote against the Local Government Settlement unless more cash is made available.
The MPs said they are “exceptionally concerned that without any additional investment, the overwhelming majority of upper-tier councils in our areas are planning service reductions and higher council tax in order that they can pass a balanced budget”.
They added: “There is still an opportunity to rectify the situation and ensure MPs are able to support the vote on the Local Government Settlement within the House of Commons in early February.
“We would therefore urge you to do all you can to use the Final Local Government Finance Settlement to provide additional funding for local government to ensure that the councils in our areas can continue to provide the services that our residents depend upon on a regular basis.”
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Signatories of the letter include former local government secretaries Greg Clark and Robert Jenrick, former home secretary Dame Priti Patel, former Tory party chairman Sir Jake Berry, and chairman of the centrist One Nation caucus Damian Green.
It was signed by 44 Tory MPs in total, as well as as well as Labour’s Daniel Zeichner and Liberal Democrat Sarah Dyke.
It poses a fresh headache for embattled Mr Sunak, who has blamed previous cases of councils going bankrupt on the mismanagement of local Labour leaders.
The number of Tories who have signed the letter means the prime minister could find himself facing a significant Commons rebellion when it comes to a vote on the issue next month if more money isn’t provided.
The letter, organised by the County Councils Network, said county and unitary councils face a £650m overspend this year and a £4bn shortfall over the next three years.
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They said there has been particular pressure on the cost of providing care for vulnerable adults and children and any extra funding should go towards this.
It is understood council leaders are lobbying the government for an extra £750m to help ease pressure over the next year.
Ben Bradley, the Mansfield MP and leader of Nottinghamshire county council, said “constructive” talks had been held with Downing Street on the issue.
However, with Chancellor Jeremy Hunt under pressure to cut taxes at the spring budget, it is unclear what fiscal headroom he will have to bail out struggling councils.
The first Office for Budget Responsibility forecast this week will provide clarity on how much money is available for spending and pre-election tax giveaways, which he has made clear are his priority.
The local government finance crisis has been highlighted by a string of section 114 notices, which effectively declare councils bankrupt.
Last year Nottingham Council and Birmingham City Council were among those to issue the notices.
Nearly one in five English councils are at risk of bankruptcy, according to the Local Government Association.
A Department for Levelling Up, Housing and Communities spokesperson said: “We recognise councils are facing challenges and that is why we have announced a £64bn funding package – a real terms increase at an average of 6.5% – to ensure they can continue making a difference, alongside our combined efforts to level up.
“We recently consulted on the final settlement for next year and are now considering the responses carefully.
“Councils are ultimately responsible for their own finances, but we remain ready to talk to any concerned about its financial position.”