Leicestershire residents will see their council tax rise by the maximum amount next year.

The news came as Leicestershire County Council once more said it would struggle to balance its books over the coming years, as it unveiled its draft budget for the next four years yesterday (Wednesday, December 11).

The authority said it could meet its costs for the 2025/26 financial year by using reserves to bridge the gap between income and outgoings. But the position in subsequent years is less positive.

Currently, £42 million of savings still need to be found for the 2026/27 financial year, rising to £95 million by the end of 2028/29, the Conservative-run authority said. Councils have to show a balanced budget each year or they have to file a Section 114 notice, essentially declaring themselves bankrupt.

Despite the "difficult" situation, acting leader Deborah Taylor said there were "definitely" no service cuts on the horizon. She said the authority was already a "very lean" council and that there was "nowhere else to cut".

Instead of reducing services, she said, the authority would be looking to "stem the growth" in its outgoings. Some of the initiatives already in place to help with this include investing in technology to help people continue to live independently at home, and teaming up with Barnardos to set up locally-run children's homes to save on costs of placing vulnerable young people in private-sector homes.

Regarding the increase in council tax, she said there was "no option" but to raise the charge. The increase means the council's precept will amount to an additional £1.54 a week for those in a Band D property. Councillor Taylor said that that would bring in around £20 million – which would "probably" just be "wiped out" by the rise in employer National Insurance rates announced by the Government in its autumn Budget.

Cllr Taylor said: "Obviously, we know how difficult it is out there for some people – the cost of living and the loss of the winter fuel allowance and all those other things that are hitting people, [but we] have no option but to put the council tax up. We can't cover anything at all without pulling that up."

She said the situation the council was in was "difficult". She added: "It always has been difficult for us, but we're very lean, very efficient and we will continue to deliver all those services that our residents heavily rely on us to deliver."

The council said during its budget announcement that it would be increasing spending in some key areas over the four year period to the end of the 2028/29 financial year. This includes around £100 million extra for "supporting vulnerable adults and children" in the county, and an additional £12 million to spend on highways projects and tackling flooding.

Elected members took the opportunity at today's meeting to highlight ongoing concerns around local government finances. Leicestershire County Council has long been the worst funded county authority in the country. If it was paid at the same level as neighbouring Nottinghamshire or Derbyshire councils, there would be £100 million more to spend each year, the council said.

While the Government has promised a review of the way it distributes money to local councils, lead members remain concerned this will not deliver what Leicestershire needs if it remains focused on deprivation. While there are deprived areas in the county, they are balanced out by there also being a number of more affluent areas.

However, Cllr Taylor said the costs of delivering services were higher for a rural council than an urban one, adding tat she wanted to see that taken into account. She said: "I think a really good example is [where you have] someone that goes around and cares for people in their own homes.

"When you're in an urban situation, you can probably do twice as many calls in a day than a person in a rural area can do. So then you need two people to deliver that care for the same amount of people in a rural area as you do in an urban area.

"We will be lobbying hard about how difficult and how expensive it is to deliver rural services. I'm pleased [the review] is happening, but I am concerned about the direction this Government's going."

Key areas of pressure for the council remain social care, special educational needs and disability support, and rising construction costs pushing up the price of projects like the over-budget Melton Mowbray Distributor Road. The council said it has seen a 60 per cent rise in children's social care demand in the last two years, and a 90 per cent rise in the number of education, health and care plans compared to five years ago.

• Councillors will meet in February to discuss the proposed budget for the coming years. They will then vote on whether to adopt it or not.