What is happening at Nottingham City Council and what could it mean for tax bills?

Nottingham City Council meets after effectively declaring bankruptcy

It has been an incredibly tough few months for Nottingham City Council and for the residents it serves. The authority hit the national headlines last November after effectively declaring bankruptcy.

Since then, there has been a whirlwind of multimillion-pound figures as the council faces a financial crisis. With uncertainty remaining over so many of Nottingham’s services, we have broken down the many issues facing the city council and what they could mean for you.

Should Nottingham City Council have managed its finances better over the last 10 years? Let us know here

Is the council still effectively bankrupt?

Yes. Nottingham City Council’s Section 114 notice, issued last November, was a public statement that it was unable to balance its budget for the ongoing financial year, which ends in April.

Councillors met after the Section 114 notice to agree on a plan on spending controls and once this was agreed, the official Section 114 period came to an end. But the council has still not closed its £25 million budget gap for this financial year, which is why the 114 was issued in the first place.

What happened after the Section 114 notice?

Nottingham City Council agreed tight restrictions on spending which now mean every single act of new spending, without exception, has to be approved by its finance chief. The only spending allowed includes items which are essential for the council to meet its legal duties, such as fulfilling existing contracts, paying staff and safeguarding vulnerable people.

Money for parks, leisure centres and events are among the areas in which spending is unlikely to be approved. For any new spending to be approved, permission has to be given by the council’s Section 151 Officer, advised by a ‘Spend Control Board’ made up of seven council officials.

Although spending for the council to meet its legal duties is allowed, the council says these commitments will only be met at the “minimum level”. These rules are due to remain in place until March 31, 2025.

What is happening with next year’s budget?

The Section 114 notice only applied to the ongoing financial year and, for the next one, Nottingham City Council first revealed plans in December for its budget. Those plans included the cutting of 500 jobs, the closure of care homes and parks and the end of the council’s pest control service.

Closing the Old Market Square fountains, ending grants for lunch clubs and stopping the council’s support for arts venues were also among the plans. All these plans are being presented to a meeting of all 55 Nottingham councillors, currently scheduled to take place at the Council House on March 4.

All these plans have been drawn up because the council is predicting a multimillion-pound budget gap, which will still stand at £41 million even if all the planned cuts are delivered. The council is therefore seeking additional support from the Government.

What does the council want from the Government?

The council has applied for £65 million worth of help from the Government. If the Government approves the council’s request, it would not be giving it a direct cash payment. Instead, it would allow the council greater flexibility in terms of using money from asset sales, which could then be used to plug its budget gap.

Around £25 million of the money would be used to fill the gap remaining in this ongoing financial year, whilst £40 million would then be used for the one starting in April.

Will the budget plans be approved?

We don’t know. Usually, the Labour group of councillors controlling Nottingham would have already effectively agreed to the budget plans drawn up by officers, meaning the only uncertainty would be whether councillors from opposing parties would back them. But the opposition is so small in Nottingham that what they decide is mostly irrelevant to whether the budget will pass or not.

But this time, the Labour Group does not agree with a huge number of the budget plans. Legally, a council has to agree a balanced budget and Labour councillors are therefore taking legal advice on what would happen if they choose to reject the current plan at the March 4 meeting.

Are commissioners taking over Nottingham?

We don’t know. The Government announced in December that it was “minded” to send commissioners into Nottingham. Following this announcement, it launched a consultation, allowing local residents and the council itself the chance to have a say.

This consultation ended in early January and there has been no indication since from the Government as to what decision it will finally make, or when it will make it. If appointed, commissioners would have powers including the hiring and firing of council officers.

They would be in place for two years and would have to be paid for by Nottingham City Council. One councillor says they could cost as much as £650,000 a year.

What is happening with council tax?

The current plan is for council tax to rise by 5% for the upcoming financial year. But Nottingham City Council has also asked the Government whether it can breach the current 5% cap and raise it higher.

It is not clear when the Government will respond, but it has previously allowed other authorities to breach the 5% limit. The highest council tax rise allowed in recent years was in Croydon, where council tax shot up by 15%.