Nottingham City Council faces a £58.7m cumulative budget gap over the next four years due to “extreme additional pressures”, including pay inflation and reduced government funding.
A report, which is to be presented to Nottingham City Council’s executive board on 18 July, outlined that the large overspend is due to significant uncertainty over the level of support that central government will provide the council over the medium term.
It also highlighted that the council is facing immediate “additional pressure” on its budget due to the “huge and unexpected rise in inflation, a staff pay award agreed nationally, the cost of homelessness driven by the cost-of-living crisis, and years of reduced core government funding”.
“The overall position of the initial medium-term financial plan (MTFP) refresh is a projected budget gap for 2024/25 of £50.9m rising to a cumulative £58.7m by 2027/28,” the report stated.
Audra Wynter, Nottingham’s deputy leader and portfolio holder for finance and human resources, said: “Like all councils, we are operating in a very volatile economic climate, with inflation, rising energy and fuel costs and an increased demand on our services driven in part by the cost-of-living crisis, all combining to make budget setting extremely difficult.
“This is on top of the continued reduction in core government funding over recent years and increased reliance on council tax for income, which creates a particular problem for places like Nottingham, where the predominant property types don’t allow us to raise sufficient funds.”
£26m budget gap for 2023/24
The report also outlined that Nottingham faces a £10m overspend at the end of the 2022/23 financial year, which is set to be bridged using the council’s reserves.
Additionally, the authority estimates that it will face a provisional budget gap of £26m before the end of next March.
“The identification of a £26m in-year budget gap is significant and serious, and some difficult decisions about transforming the way we deliver services and doing some things differently will be needed, along with strong financial discipline,” Wynter added.
“We are determined to do so, [and] set a balanced and realistic budget over the medium term, and keep the council on a sustainable financial footing.”
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The report outlined that Nottingham will implement a “One Council” approach to help the authority deliver a balanced budget and a MTFP. This will consist of conducting best value reviews and redesigning services in certain parts of the organisation, in addition to looking at efficiencies, assets, income and debt.
Nottingham City Council is currently under government intervention and as part of this is under the scrutiny of an Improvement and Assurance Board.
In June, the government also announced that it was minded to expand intervention at Nottingham due to a “distinct lack of urgency” in delivering financial improvement at the authority.
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