Blame game begins as Nottingham City Council declares it is effectively bankrupt

A war of words has broken out over the grave situation at Nottingham City Council, which yesterday issued a Section 114 Report – a blunt admission that it won’t be able to deliver a balanced budget for its 2023-24 financial year.

The move comes after the council confirmed earlier that it is facing a spending black hole of some £23m for its current financial year.

The Section 114 Report means the council will be cutting all spending bar that which it is legally obliged to carry out.

The leader of the council, councillor David Mellen, is blaming the Tories for subjecting it to a series of funding cuts over the last decade.

Posting on X (formerly Twitter), Mellen said: “The combination of Conservative austerity, out of control inflation and rising demand in social care has caused Nottingham City Council to signal our difficulties with delivering a balanced budget today.”

Meanwhile, Robert Jenrick, the Conservative MP for Newark and Home Office minister, said: “Nottingham City Council and its Labour leadership have proven themselves utterly unfit to govern this great city.

“Their breathtaking waste and incompetence have let residents down for long enough.

“It’s time for the Secretary of State to appoint commissioners to restore order.”

David Mellen

A recent report published by the council’s corporate director finance and resources, Ross Brown, shows that its People spending – which includes care and special needs services – is worst affecting, with an £18.7m overspend.

The authority had already cut £27m from its financial years budget, which runs to April.

A statement from the council said: “A report discussed at the council’s Executive Board meeting on 21 November outlines the council’s latest financial position and highlights that a significant gap remains in the authority’s budget, due to issues affecting councils across the country, including an increased demand for children’s and adults’ social care, rising homelessness presentations and the impact of inflation.

“At the halfway point of the year, the council is forecasting a gross General Fund pressure of c£57m which is partly being mitigated from one-off in-year management and corrective actions (including use of previously approved reserves) reducing the net forecasted pressure for the year to c£23m.

Robert Jenrick MP

“Past issues relating to financial governance which led to the appointment of an Improvement and Assurance Board, and an overspend in the last financial year have also impacted on the council’s financial resilience and ability to draw on reserves.

“This situation has led the council’s corporate director for finance and resources and Section 151 officer, Ross Brown, to issue a Section 114(3) report to all councillors today (November 29).

“The council is not ‘bankrupt’ or insolvent, and has sufficient financial resources to meet all of its current obligations, to continue to pay staff, suppliers and grant recipients in this year.

“A meeting of all councillors will now need to take place within 21 days to consider the report and an immediate prohibition period takes effect from today. Until councillors have met, the spending controls already in place will be further tightened, with the practical impact being that all spending that is not already contractually committed or otherwise agreed by the Section 151 Officer is immediately stopped.

“Senior Officers and Members remain committed to continuing to work with the Improvement and Assurance Board and the Department for Levelling Up, Housing and Communities to put the council on a stable financial footing for the future.”