NOTTINGHAM City Council declared itself effectively “bankrupt” today.
The Labour-run town hall said it “isn’t able to deliver a balanced budget for this year, which is a legal requirement”.
A Section 114 notice was submitted, meaning all new spending, with the exception of protecting vulnerable people and statutory services, will immediately stop.
Nottingham is the second local authority to issue a 114 this year, with Labour-run Birmingham City Council doing so in September.
The council lost millions after its failed attempt to enter the power market with Robin Hood Energy in 2020.
The financial situation then worsened as millions of pounds ringfenced for local housing were splurged as part of the council’s general budget.
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Inflation and cost of living pressures also contributed to the dire situation.
In a statement, the authority said it has “sufficient financial resources” to meet current obligations to pay staff and suppliers.
The statement added: “At the halfway point of the year, the council is forecasting a gross General Fund pressure of c£57m which is partly being mitigated from one-off in-year management and corrective actions.
“This situation has led the council’s Corporate Director for Finance and Resources and Section 151 Officer, Ross Brown, to issue a Section 114(3) report to all councillors today.
“The council is not ‘bankrupt’ or insolvent, and has sufficient financial resources to meet all of its current obligations, to continue to pay staff, suppliers and grant recipients in this year.”
Immigration Minister and MP for Newark, Robert Jenrick, today slammed the council for “breakthtaking waste and incompetence”.
He said: “Nottingham City Council and its Labour leadership have proven themselves utterly unfit to govern this great city.
“Their breathtaking waste and incompetence have let residents down for long enough.
“It’s time for the Secretary of State to appoint commissioners to restore order.”
Elliot Keck, head of campaigns of the TaxPayers’ Alliance, added: “Nottingham is a case in point that when councils go bankrupt, it is financial incompetence that is to blame.
“These town hall bandits have been playing fast and loose with taxpayers’ money for years, and it’s the poorest who will pay for the excesses of the fat cats.
“This should serve as a warning to council leaders up and down the country thinking of gambling with residents’ cash.”
