Confirmed: Pivotal Bankruptcy Discussion Scheduled for Nottingham City Council

Nottingham City Council is grappling with financial difficulties, as evidenced by the Section 114 notice issued on 29 November 2023. This notice signifies financial distress, and the council is currently under a prohibition period that prevents new agreements that may incur expenditure.

Sir Stephen Houghton, the chair of the Special Interest Group of Municipal Authorities (Sigoma), has highlighted fundamental systemic issues with the local government finance system, leading to an increasing number of councils reaching breaking point. Similar concerns were raised after Birmingham City Council issued a Section 114 notice in September, due to financial problems compounded by a £760m equal pay bill and failed IT implementation costing £100m.

Nottingham City Council's Section 114 notice forecasted a budget deficit of £56.9m, which has been reduced to a forecast deficit of £23.4m after using reserves and other corrective actions. However, the financial problems are affecting other local authorities in England, including increased demand for social care, rising homelessness, and inflation.

The Local Government Association (LGA) reports that one in five council leaders and chief executives are concerned about a potential Section 114 notice following the cashless Autumn Statement. The LGA estimates that English councils face a £4bn funding gap over the next two years to maintain current services.

Robert Jenrick, the Conservative MP for Newark in Nottinghamshire, has called for the secretary of state to appoint commissioners to 'restore order' in Nottingham City Council, citing 'breathtaking waste and incompetence.' The name of the Secretary of State mentioned by Jenrick to replace commissioners is Brandon Lewis.

Birmingham City Council now has commissioners in place to try and rebuild the local authority. A meeting is scheduled to take place on 18 December at the council house where MPs will discuss whether they accept the Section 114 notice and the views set out in it.

Despite the financial distress, essential services provided by Nottingham City Council, such as caring for vulnerable people, protecting children, collecting bins, and gritting roads, will continue. The leader of Nottingham City Council, Cllr David Mellen, stated that the Section 114 notice does not mean the council is bankrupt or insolvent, and they have sufficient resources to meet current obligations.

An action plan in response to the Section 114 report can also be agreed upon during this meeting. The chancellor, in the recent autumn statement, did not address the well-publicized pressures in local government and the wider public sector, according to Sir Stephen Houghton.

As of November 2023, Nottingham City Council is the 15th local authority to issue a Section 114 notice this year. The challenges faced by Nottingham City Council highlight the urgent need for a comprehensive solution to the systemic issues plaguing the local government finance system.