Our live coverage on news that Nottingham City Council has declared itself effectively bankrupt has now ended.

You can keep up with the latest on this here.

Anna Whittaker
Local Democracy Reporting Service

Linda Woodings - Labour councillor and portfolio holder for adult social care and health - has said, external the council is "drowning".

"We are really suffering with 12 years of austerity," she said.

"We covered losses from our reserves as far as Robin Hood Energy and the Housing Revenue Account are concerned.

"However, it still doesn't address the underlying issue which ourselves and many other councils are saying - we're drowning here."

Fellow Labour councillor Cheryl Barnard added: "We're not bankrupt, we've got assets, we've got money to pay staff but we're overspent this year.

"We've had that many cuts from the government over the last 10 years.

"Adult social care, children's social care and homelessness are the drivers."

Image source, Getty Images

Independent councillor Andrew Rule - posting on X, external, formerly Twitter - said it was "hard to see" how the council would avoid government intervention.

He said: "Important to remember that this is the second 114 notice that has been issued since the Improvement Board has been in post.

"The first one related to the discovery of past unlawful spending of the Council's housing revenue account - the fact it was related to past spending seemed to be the main justification for avoiding the appointment of commissioners previously.

"Hard to see how, given this latest s.114 relates very much to the here & now how the appointment of commissioners will be avoided."

Amy Phipps
BBC News

Two of the confirmed candidates for the East Midlands mayoral election have commented on Nottingham City Council's financial position.

Conservative Ben Bradley, who is the leader of Nottinghamshire County Council and the MP for Mansfield, said the bankruptcy was "very sad news for the city, though not unexpected".

He said: "Unfortunately it will be local residents that will see the impact.

"From a Nottinghamshire County Council perspective, we obviously stand ready to help support local people in any way we can."

Labour's Claire Ward, who is chair of Sherwood Forest NHS Foundation Trust, agreed it was a sad day for Nottingham.

She said: "Councils of all political colours are now in the untenable position of either effectively declaring bankruptcy or having to cut vital services just to make ends meet.

"The current funding model for local government is broken."

Alex Smith
BBC News Online

The council has become the latest local authority to issue a section 114 notice - effectively declaring itself bankrupt.

Here is what we know so far:

• The council's chief finance officer issued a report under Section 114(3) of the Local Government Finance Act 1988
• This was because, in his professional opinion, the council is unable to deliver a balanced budget for this year
• The Labour-run council is currently facing a £23m overspend in the 2023-24 financial year
• The authority says the gaps in the budget are due, in part, to increased demand for children's and adults' social care, rising homelessness and inflation
• The section 114 notice means all spending not already contractually committed or otherwise agreed is immediately stopped
• It could mean severe cuts and increased costs for residents who use council services
• The council's leader David Mellen has said he intends to continue in his role
• The government is "assessing" the situation and "will consider whether further action is necessary"

Image source, PA Media

Amy Phipps
BBC News

The three MPs for Nottingham - Nadia Whittome, Alex Norris and Lilian Greenwood - have issued a joint statement about the city council's section 114 notice.

The Labour trio said: "Like many local authorities across the country, Nottingham City Council's finances have been pushed to the brink by more than a decade of cuts by Conservative-led governments.

"The government's failure to get a grip on unprecedented rising demand for social care and homelessness has now pushed the council over the edge.

"We urge the government to provide our city's council with the funding it requires to be financially sustainable and to deliver the services that our constituents rely on."

Image source, BBC/UK Parliament

The trio went on to say they would be working with local councillors to mitigate the impact of the situation on residents.

They also said they would fight in Parliament for reforms of the social care system.

Amy Phipps
BBC News

The Special Interest Group of Municipal Authorities (SIGOMA) represents 47 urban authorities in England.

Stephen Houghton, from the group, said the situation with Nottingham City Council was evidence that the funding model was broken.

"There are fundamental systemic issues with the local government finance system that have resulted in an increasing number of councils reaching breaking point," he said.

"Councils are operating with a spending power that is 19% lower in real terms compared to 2010-11.

"For more deprived councils, the reduction has been greater – for the urban councils we represent, the average is 25%, for Nottingham it is 28%.

"At the same time, demand on services is rising rapidly."

Mr Houghton said Nottingham City Council spent 31% of its spending power on children's services - up from 19% a decade ago.

He said more funding was desperately needed to avoid more councils issuing section 114 notices.

Amy Phipps
BBC News

Twelve section 114 notices - excluding Nottingham City Council - have been issued by councils since 2018.

Most recently, Birmingham City Council - the largest local authority in Europe - declared itself effectively bankrupt.

The Labour-run authority issued the notice in September, announcing it had a £760m funding gap.

In November 2022, Croydon Council declared effective bankruptcy for a third time.

The following month, Conservative-run Thurrock Council in Essex issued a section 114 notice.

Slough and Northamptonshire have also issued section 114 notices in recent years.

Dan Martin
BBC News

Nottingham City Council is now only committed to spending on "statutory" services - those it is obliged by law to provide.

These, however, include some of the council's most expensive obligations, such as adult and children's social care and looking after some of the city's most vulnerable people.

The council also has to continue collecting rubbish - another costly service - and maintain the city's transport system and roads.

Image source, Getty Images

Other statutory services include education and school provision, libraries, trading standards, running elections and collecting council tax from residents.

However, while the council has to continue its legally-required spending, the amount it spends could still be cut to save money while still meeting minimum requirements.

Hugh Casswell
Political reporter, BBC Radio Nottingham

Nottingham City Council leader David Mellen has told the BBC he will not be stepping down following the news that the authority is effectively bankrupt.

"We will continue to pay our bills, we will continue to pay our staff," he said.

He added the council was not going to close its new £10m library - which officially opened on Tuesday - but said all non-essential spending "has to be considered".

Image source, LDRS

When asked if he considered his position at the council, Mr Mellen said: "Today is not about my position. It is about the position of the jobs here at the council. It is about the people receiving services from the council."

Facebook

Some of our readers have been responding to today's news on our Facebook page, external.

Gillian Østergaard is concerned about how the effective bankruptcy would affect those living in the city.

"It will directly affect residents of Nottingham drastically in many ways, council tax will double, services will be on its knees and [the] cost of using public transport will be affected and much more," she said.

Robert Dawkins was clear in his opinion on who was to blame for the council's situation.

He said: "This is what you get when you vote in a Labour council. They should never have been in charge of the city finances."

However, Neil Hendry thinks there is more to it than that.

He said: "Deliberate party politics here. Funding comes from central government, Tories will underfund Labour councils to make them look bad and pump money into Tory-led councils to look good.

"It's a tactic to make folks of Nottingham think Labour are performing poorly."

Alex Smith
BBC News Online

The trade union Unison has said it will work with council leaders to "deal with the impact" of today's news.

Unison East Midlands head of local government Rachel Hodson said: "However well prepared council staff were for this inevitable announcement; it won't stop hundreds of workers panicking about losing their jobs and paying the bills. The fact that this has happened so close to Christmas only makes this news worse.

"Unison is committed to working with the council leadership to deal with the impact of the section 114 notice being issued and will support council workers in any way possible."

Amy Phipps
BBC News

The council's dire financial situation has sparked reaction from local political groups in the city.

The Nottingham Labour group said the reason for the authority's financial woes was "simple".

It said: "Demand for our services is rising, while funding from the government gets less in real terms each year.

"All councils are facing these pressures and many will be considering the issuing of a section 114.

"This is happening at a time when we have had years of underfunding from the Tory government."

Image source, Getty Images

The Nottingham Conservatives said the Labour leadership had "finally managed to run Nottingham effectively into bankruptcy".

It said taxpayers would foot the bill, and "hard-working families" would be hardest hit by their "failure to balance the books".

The Nottingham Green Party said the report was "yet more disappointment for the people of Nottingham".

It said: "A result driven by cuts from the Tory government, and poor management from the Labour council."

Joe Locker
Local Democracy Reporting Service

Image source, LDRS

In a statement, the council said: "A report discussed at the council's Executive Board meeting on 21 November outlines the council's latest financial position and highlights that a significant gap remains in the authority's budget, due to issues affecting councils across the country, including an increased demand for children's and adults' social care, rising homelessness presentations and the impact of inflation.

"At the halfway point of the year, the council is forecasting a gross General Fund pressure of [circa] £57m which is partly being mitigated from one-off in-year management and corrective actions (including use of previously approved reserves) reducing the net forecasted pressure for the year to [circa] £23m.

"Past issues relating to financial governance which led to the appointment of an Improvement and Assurance Board, and an overspend in the last financial year have also impacted on the council's financial resilience and ability to draw on reserves.

"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.

"A meeting of all councillors will now need to take place within 21 days to consider the report and an immediate prohibition period takes effect from today. Until councillors have met, the spending controls already in place will be further tightened, with the practical impact being that all spending that is not already contractually committed or otherwise agreed by the Section 151 Officer is immediately stopped.

"Senior officers and members remain committed to continuing to work with the Improvement and Assurance Board and the Department for Levelling Up, Housing and Communities to put the council on a stable financial footing for the future."

Joe Locker
Local Democracy Reporting Service

As previously mentioned, all Nottingham City Council spending - other than on the services the council must provide by law - will now stop.

The Labour-run authority's chief finance officer, Ross Brown, issued a report under section 114(3) of the Local Government Finance Act 1988.

The notice was issued because, in Mr Brown's professional opinion, the council isn't able to deliver a balanced budget for this year as required by law.

While councils cannot go "bankrupt" in the traditional sense, a notice can be issued if it is considered the council has no prospect of setting a balanced budget.

A report published by the council recently showed it has so far managed to bring the in-year deficit of £26m down to just over £23m.

Mr Brown said it had previously stood at £57m before a "whole host" of corrective actions were applied.

Alex Smith
BBC News Online

Jonathan Carr-West, chief executive of the Local Government Information Unit (LGiU) - a thinktank and charity - said today's news was "no surprise".

He added: "We know that around one in 10 councils are at risk of effective bankruptcy. This represents a tragedy for millions of citizens who see the services they rely on at risk even as their bills rise.

"Councils have been continuing to pull every lever available to them to balance their books - raising council tax, cutting services, and spending their finite reserves, and still we are seeing an ever-increasing number of councils unable to make ends meet in the face of central government spending cuts and increasing demand for - and cost of - council services, particularly adult and children's social care.

Image source, Getty Images

"Councils need multi-year financial settlements, where funding is connected to service demand, not to political expediency and they need more powers over raising and spending their own revenue.

"Nottingham isn't the first to issue a section 114 and certainly won't be the last."

Dan Martin
BBC News

A council cannot technically go bankrupt - but it can issue a section 114 notice, as Nottingham City Council has today, in which it can't commit to any new spending, and must come back with a new budget within 21 days that falls in its spending limit.

When they do, it often means an impact on residents - with severe cuts to front-line services and increased charges for services it continues to provide.

You can read more about this here.

Image source, LDRS

James Lynn
BBC News, Nottingham

Here are some of the comments we've had so far in response to the city council's announcement.

Dan Martin
BBC News

The city council has faced a number of major financial shocks in recent years.

One of the major challenges has been been the long-running saga over the renovation of the Broadmarsh centre (pictured below).

Work to revamp the 1970s complex began in 2019, but within months owners Intu went into liquidation leaving the city council, which had invested £17m in the project, picking up the very expensive pieces, leading the scheme to sort the half-demolished site.

Soon after, the council found itself with another financial and reputational headache in the form of the failed Robin Hood Energy scheme.

The flagship project - a community-minded energy supplier that counted former Labour leader Jeremy Corbyn as one of its customers - came crashing down in September 2020.

Image source, Nottingham City Council

Just five years earlier it had been set up, vowing to tackle fuel poverty and challenge larger suppliers.

But it emerged it had not only never made a profit, but had required millions in council funding to prop it up.

An audit report accused the council of "institutional blindness" and of putting political priorities over financial reality.

A total of 230 jobs were lost at the firm, and leaked documents estimated the cost to local taxpayers to be as high as £38.1m.

Image source, LDRS

The government subsequently appointed an oversight board in January 2021 to determine whether commissioners should run the council.

The council said "inadequate" funding from central government had meant it needed to make £271m in savings from 2010 to 2020.

A March 2021 budget saw a further £12.5m in cuts and the loss of 272 posts.

It cited the pressures of the Covid-19 pandemic, but the authority has come under fire for its own financial decisions.

Later in 2021, it was found nearly £16m of funding - legally ringfenced for housing - had in fact been spent on general services.

The cost of the wrongful spending rose to more than £51m, it was later revealed.

The government had been closely monitoring the council's finances but, in February this year, announced it was stopping short of appointing commissioners to help run the council.

Alex Smith
BBC News Online

The GMB union, one of the city council's largest staff unions, has responded to today's announcement.

Adana Godden, GMB organiser, said: "Nottingham City Council has fallen victim to the government's neglect of our vital local services.

"The council's funding has been cut by more than 40% since 2010; it's shocking that this government are sitting on the side lines as local communities suffer.

"This news will no doubt cause great anxiety for workers in Nottingham."

Amy Phipps
BBC News

Here's a bit more from the council on today's news.

In a statement, the Labour-run authority said the authority had "sufficient financial resources" to meet current obligations to pay staff and suppliers.

A spokesperson said: "At the halfway point of the year, the council is forecasting a gross general fund pressure of £57m, which is partly being mitigated from one-off in-year management and corrective actions.

"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."

Image source, Google