Nottingham City Council is considering issuing a section 114 notice as its next step as the feasibility of balancing its budget looks increasingly unlikely.
Corporate director for finance and resources and section 151 officer Ross Brown is to make a further assessment of the council’s financial situation and will “consider the appropriate next steps for the authority”.
The council’s latest budget monitoring update highlights an in-year overspend of £23.3m, which is down just £2.5m from the nearly £26m predicted in previous updates. This is despite budget control measures being put in place over the last few months.
The “significant” budget gap is due to issues “affecting councils across the country”, according to the authority. These include an increased demand for children’s and adults’ social care, rising homelessness presentations and the impact of inflation.
However, the council was keen to stress it is not “bankrupt or insolvent”, and had “sufficient financial resources at hand to meet all of its current obligations, to pay staff, suppliers and grant recipients”.
Nottingham City Council did state though that should a section 114 report be issued, a meeting of full council would take place within 21 days of the issue date and an immediate prohibition period would be implemented. In this period, the spending controls already in place “would be further tightened, with the practical impact being that all spending that is not already contractually committed or required to deliver statutory duties at the minimum level, or otherwise agreed by the section 151 officer, would be stopped”.
Nottingham City Council is already being overseen by an Improvement and Assurance Board appointed by the Department for Levelling Up, Housing and Communities. The council said it was committed to working with both parties to find “a stable financial footing for the future”.
The latest budget monitoring update will be considered at a meeting of the council’s Executive Board on 21 November.
On the authority’s financial position, the update report read: “Despite the extensive efforts of the council [since July] to manage its position, the operating environment and wider economic context continues to be volatile with small changes in cost and demand disproportionately materialising in large financial pressures, especially in children’s social care. To date, no additional support to meet these pressures is being made available from government for the current financial year.
“The overall pressure is mainly dealing with the impact of rising costs due to continued high level of inflation, increase in demand and complexity of need and costs of social care, SEND transport and temporary accommodation and the impact of cost of living crisis which also affects important income streams of the council.”
Children’s services accounts for £13.5m of the in-year net pressure, with adults’ services seeing a £4.97m forecasted net pressure.
The update also noted that while progress is being made on the council’s transformation programme savings of £15.671m, with £6.155m delivered or on track, “the challenge still remains on how to convert the remainder £9.516m savings at risk or non-delivery into outcomes which deliver cashable savings”.
The authority’s current year capital programme of £323.298m is projecting slippage of £69.211m and an underspend of £1.317m. However, expenditure to date remains low and the council “is at risk of further slippage in the delivery of projects within 2023/24 unless delivery against capital projects (and spend) is accelerated”, according to the update.
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