‘Bankrupt’ council facing £50m spending gap as cuts to services loom
Nottingham City Council has proposed a wide range of cuts in order to plug the budget gap.
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Your support makes all the difference.A council which declared itself effectively bankrupt has proposed cutting more than 500 jobs as it faces a £50 million budget gap in the next financial year.
Nottingham City Council issued a section 114 notice on November 29, meaning it cannot balance its budget, after a £23m in-year overspend in 2023-24.
The Labour-run authority has said that it is now facing an even larger budget gap for 2024-25, with the council claiming that its core spending power has reduced by more than 28% and money from the Government has reduced by £97 million every year since 2013-14.
The council has proposed several measures to close the gap, including removing council contributions to arts and cultural organisations, closing some council buildings including libraries and care homes, and making all customer service transactions digital-only.
Like many other councils, we are faced with some extremely tough decisions over the coming months with our budget gap next year being the worst in living memory
It also proposes increasing council tax by 4.99% and reviewing several services to cut costs.
The council said that while more than 500 jobs would be lost, “every effort” would be made to limit compulsory redundancies.
The steps are to be discussed at a meeting of the council’s executive committee on December 19, with the public encouraged to comment on the proposals.
The final budget will be set in February next year.
Leader of the council David Mellen said: “All of our services are important to us as councillors.
“Like many other councils, we are faced with some extremely tough decisions over the coming months with our budget gap next year being the worst in living memory.
“But we are all in this position due to the continued underfunding of local government over many years and the huge increases we are seeing in demand for services as a result of the national cost of living and housing crises.
“We want to be open and transparent about the scale of the challenge the council faces and the difficult decisions that need to be made, and give people the chance to have their say.”
We have expressed concern over the lack of urgency demonstrated by the council in addressing these challenges, despite the efforts of the Improvement and Assurance Board
Mr Mellen said that many other councils were facing a financial “crisis”, with the authority claiming that social care, housing and homelessness accounted for 62.5% of the council’s revenue budget.
The authority’s financial difficulties come after Birmingham City Council – Europe’s largest council – issued a section 114 notice earlier this year.
Earlier this month, the Labour-led Local Government Association (LGA) found that one in five council leaders and chief executives believe it is very or fairly likely that their authorities will need to issue a section 114 notice this year or next due to being unable to balance their budgets.
The Government has previously intervened in the council by setting up an Improvement and Assurance Board to address its financial challenges.
It has previously criticised the authority stating that it must “increase the momentum with which change is being made”.
The Department for Levelling Up, Housing and Communities said on Tuesday that while commissioners had not yet been sent in as they have in Birmingham, it continues to monitor the situation.
It also said that a further £5.1 billion was provided to councils in England in 2023-24, a 9.4% increase in cash terms on the previous year, which represented an increase in core spending power in Nottingham of up to £30.9m.
A spokesperson said: “We used our statutory powers to intervene at Nottingham City Council last year over serious governance and financial issues and have been clear that improvements must be made.
“We have expressed concern over the lack of urgency demonstrated by the council in addressing these challenges, despite the efforts of the Improvement and Assurance Board.
“Ministers have been clear that the onus is on the council to deliver the necessary improvements to the board’s satisfaction.
“We are assessing the situation and will consider whether further action is necessary.”