Nottingham City Council declares itself "effectively bankrupt"

Labour-run council says it cannot deliver a balanced budget

Nottingham City Council, which is controlled by the Labour Party, has declared itself "effectively bankrupt" due to its inability to deliver a balanced budget for the year. The council issued a Section 114 notice, which means that all new spending, except for protecting vulnerable people and statutory services, will be immediately halted. This is the second local authority to issue a Section 114 notice this year, following Birmingham City Council in September.

Losses from failed power market venture and overspending on local housing

The financial crisis faced by the council can be attributed to several factors. One major loss came from the council's failed attempt to enter the power market with Robin Hood Energy in 2020. Additionally, millions of pounds that were supposed to be allocated for local housing were instead spent as part of the council's general budget. Inflation and cost of living pressures have also contributed to the dire situation.

Council assures it has sufficient resources to meet obligations

Despite the declaration of being "effectively bankrupt," Nottingham City Council has stated that it has enough financial resources to meet its current obligations, including paying staff, suppliers, and grant recipients for this year. The authority's Corporate Director for Finance and Resources, Ross Brown, has issued a Section 114(3) report to all councillors, outlining the financial situation.

Government officials criticize council's financial management

Immigration Minister and MP for Newark, Robert Jenrick, has strongly criticized Nottingham City Council, accusing its Labour leadership of "breathtaking waste and incompetence." Jenrick called for the appointment of commissioners by the Secretary of State to restore order. Elliot Keck, head of campaigns at the TaxPayers' Alliance, also condemned the council, stating that financial incompetence is to blame for its bankruptcy. Keck warned other council leaders against gambling with taxpayers' money.