Cash-strapped Cheshire East Council has applied to the government for exceptional financial support in the form of a capitalisation direction for up to £17.6m .

This means the council won't receive any extra money but instead is able to create a 'negative reserve' similar to that already in place for the overspend on the special educational needs budget.

The corporate policy committee yesterday (Tuesday) gave the council's chief executive the go-ahead to submit the request.

A report to the committee said the council's general budget pressures are associated with high needs education spending, the impact of the cancellation of HS2 and inflation.

Council leader Sam Corcoran (Lab) proposed the recommendations and said: "Nothing we say today is to in any way deter officers and members from going to government and saying Cheshire East residents should not have to pay for the money we spent preparing for HS2.

"We do want reimbursement from government for HS2 and also the high needs education budget."

But he said he was supporting the proposal because the low reserves leave the council vulnerable.

"The budget before us results in our reserves going to a very low level, I think the word used was inadequate," said Cllr Corcoran.

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"Therefore we need to make contingency plans and part of that contingency plan is to seek a capitalisation direction from central government.

"We receive no money under capitalisation. We receive nothing other than the ability to move money into a negative reserve, so in that sense it's quite similar to the special educational needs negative reserve.

"What it would do is restore the general reserve to a more sustainable level."

But Conservative group leader Janet Clowes said she had 'deep concerns' about the capitalisation proposal when the council already had a negative deficit for high needs.

The deficit is expected to hit £90m by the end of this financial year.

"We are proposing setting up another negative deficit to get us through this financial crisis with a payback period of 20 years when we are still going to have to deal with the day-to-day budget requirements which we already still present pressures to us," she said.

"I am concerned we are simply digging another deep hole for ourselves."

The proposal was approved. The Conservatives voted against.

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