December 7th 2023
Vital ‘bankruptcy’ public meeting confirmed for Nottingham City Council
A date has been set for the local authority to discuss their next steps after they effectively declared themselves bankrupt last month.
On 29th November 2023 Nottingham City Council became the latest victim of inflation as their finance officer issued a Section 114 notice, making them the 15th council to do so this year.
Despite the rates of inflation beginning to come down, new research from the Local Government Association (LGA) has reported that one in five council leaders and chief executives are fearing a Section 114 following the cashless Autumn Statement.
The LGA estimates that councils in England face a £4bn funding gap over the next two years just to keep services standing.
In regard to Nottingham, the Section 114 notice the council issued forecasted a budget deficit of £56.9m which, after using reserves of £9.4m and other corrective actions, has been reduced to a forecast deficit of £23.4m at the end of the financial year which is in April 2024.
Speaking on the matter, leader of Nottingham City Council, Cllr David Mellen said: ‘The Section 112 Report doesn’t mean that the council is ‘bankrupt’ or insolvent. We have sufficient financial resources to meet our current obligations and to continue to pay staff, supplier, and grant recipients this year.
‘Essential services the council provides such as caring for vulnerable people, protecting children, collecting bins and gritting the roads will continue.’
However, a meeting is due to take place on 18th December at the council house where MPs will gather to discuss whether they accept the Section 114 notice and the views set out in it. An action plan in the wake of the report can also be agreed upon.
In addition, a prohibition period stopping all new agreements that may incur expenditure remains in force and this will end the day after the meeting.
The Labour-run council has attributed its financial problems to issues that are affecting local authorities across England, including an increased demand for children and adults’ social care, rising homelessness presentations and the impact of inflation.
Against this backdrop, Robert Jenrick, the Conservative MP for Newark in Nottinghamshire, said the local authority had shown ‘breathtaking waste and incompetence’ and called for the secretary of state to appoint commissioners to ‘restore order’.
This demand bares a similar resemblance to Birmingham City Council who issued a Section 114 in September as a result of financial problems compounded by a £760m equal pay bill and failed IT implementation costing £100m. Birmingham has now had commissioners step in to try and rebuild the local authority.
Sir Stephen Houghton, the chair of the Special Interest Group of Municipal Authorities (Sigoma), said: ‘There are fundamental systemic issues with the local government finance system that have resulted in an increasing number of councils reaching breaking point.
‘The chancellor in his recent autumn statement had the perfect opportunity to help address some of the well-publicised pressures in local government and the wider public sector but failed to do so.’
Image: kirstiecoolin
Section 114 notice could be forecasted for Nottingham City Council
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