The best value notice to the authority was initially issued in May 2025 for 12 months.
The update from the Ministry of Housing, Communities and Local Government (MHCLG) said it recognised “constructive engagement” from the senior team, including moving to the cabinet system and improvements in children’s services.
But it said ministers “remain very concerned about the scale of challenge still facing the authority”.
“Long-standing gaps in key leadership roles, high turnover and reliance on interims have prevented the authority from making and embedding substantial progress,” it said.
The council’s chief executive recently stepped down after a six month absence.
Ministers also said there were signs of “resistance to cultural change” at the council, which is run by a coalition between Labour and the independent group.
The government set targets for the council and said a report on progress needs to be provided by the end of September.
Cheshire East Council said it had “made some positive progress” in recruiting senior officers and will continue to work on improving its financial sustainability.
“We fully appreciate and understand the scale of the challenge that remains and will continue to liaise with MHCLG, Department for Education, Children’s Improvement Board, Local Government Association and our assurance panel to ensure we deliver the improvements required for the notice to be withdrawn.”
The opposition Conservative group on the authority said the update was “sombre reading” and it had concerns the leadership was “not taking this as seriously as it warrants”.
Stewart Gardiner, the leader of the Conservative group, said: “If the transformation programme required by the best value notice is to proceed, there needs to be an acceptance that without being honest with ourselves and our failings, we can’t deliver the change that is required”.