Derby City Council 'not facing bankruptcy', bosses insist

Derby City Council changed from a Conservative-run administration following elections in May

Derby City Council has said it is not about to declare bankruptcy as other local authorities have done, despite its finances being "absolutely dire".

Earlier this week. Europe's biggest local authority Birmingham City Council halted all spending on anything other than services it must legally provide.

Derby council bosses have called for urgent help due to its "extremely challenging" financial situation.

But they insisted the council was not considering a Section 114 notice.

The declaration of such a notice effectively means a council does not have the financial resources to conduct the statutory duty of balancing its budget, according to the Local Democracy Reporting Service(LDRS).

'Plans to mitigate'

A recent report said the city council had a forecasted overspend of more than £6m on its main revenue budget, while one of its main reserve pots had a "current-year forecast balance of zero".

The council told the LDRS that despite this, it "has plans to mitigate" its challenging financial situation.

Director of finance Alison Parkin said: "The council's position is no different to the rest of the sector and our finances remain very challenging due to rising demand and inflation.

"We do have plans to mitigate these as much as possible and at this time we are not considering issuing a Section 114 notice.

"We will be taking our medium-term financial strategy to council cabinet in October, which will outline our plans to balance our budget next year."

The council faces increasing pressures in relation to staff pay, social care and high inflation, according to the LDRS.

Unite said Derby Homes staff had voted in favour of strike action over pay, putting further pressure on the authority.

After taking over as leader from a Conservative-run administration following elections in May, Labour council leader Baggy Shanker said efforts must be made to increase the council's own savings.

He said his party "have inherited a very serious situation" and the council's finances were "absolutely dire".