Section 114 notice could be forecasted for Nottingham City Council

The local authority have said that if they cannot manage their £23m budget gap they will have to declare themselves as bankrupt.

The cost-of-living crisis has caused various councils across England to tragically fall into bankruptcy. In the most recent example, Nottingham City Council have said that whilst they are not bankrupt, or ‘insolvent’, they do need to assess whether they can deliver a balanced budget.

In a statement, which was issued on Tuesday, the local authority said: ‘The council is not ‘bankrupt’ or insolvent, the organisation has sufficient financial resources at hand to meet all of its current obligation, to pay staff, supplier, and grant recipients.

‘However, due to the forecasted overspend, the council’s corporate director for finance and resources and Section 151 officer, Ross Brown, will need to consider the appropriate next steps for the authority, which will include a further assessment for the council’s ability to deliver a balanced budget in-year.

‘If this assessment concludes that it is not feasible for the council to balance its budget, consideration of the issuance of a report under Section 114 of the Local Government Finance Act 1988 will need to be made.’

One of the reasons the council have landed in such deep financial waters, is because the demand for children and adult social care services, an increase in homelessness and the impact of inflation.

The unfortunate news regarding Nottingham City Council has come as other local authorities in England are also facing similar pressures. The mayor of Leicester City Council, Sir Peter Soulsby, said in October that bankruptcy was ‘a real prospect’ for the authority and that it could also issue a Section 114 notice before issuing their budget for 2025-26.

Image: ian kelsall

More on this topic:

Leicester’s nightmare before Christmas: Section 114 ‘almost inevitable’

Record funding shortfalls have forced councils ‘on their knees’