Meeting to be held to discuss Nottingham City Council's 'bankruptcy'

The council has pledged to keep people in Nottingham updated on the situation

A meeting has been scheduled for councillors to discuss Nottingham City Council effectively declaring itself bankrupt.

The council issued a section 114 notice on 29 November temporarily halting most new spending.

Leaders of the authority said it has suffered from the Covid-19 pandemic, soaring inflation and government underfunding.

The matter will be discussed at a full council meeting on 18 December.

The council has also admitted past financial failures, including the failed Robin Hood Energy scheme, left it less able to cope with current pressures.

A "Spend Control Board", chaired by chief finance officer Ross Brown, will review all requests for spending moving forward.

Once a section 114 notice has been issued, councillors are required to meet within 21 days.

The council said: "Further spend control measures are likely to be implemented following the meeting of all councillors which will then remain in place until lifted by [the chief finance officer].

"It should be expected that these will remain in place for the foreseeable future."

David Mellen says the council has been "starved of resources"

The Labour-run council had forecast a £23m overspend in the 2023-24 financial year, before the section 114 notice was announced.

This was despite having already reduced the overspend from £57m.

The authority said the Covid pandemic, inflationary pressures, and soaring demand for costly social care and homelessness support accounted for over 80% of the budget gap.

Funding cuts made by central government amounting to £100m a year over the last decade, were also cited.

However, council leader David Mellen admitted past mistakes had played a part in leaving the authority less financially resilient.

In a letter to stakeholders, Mr Mellen and council chief executive Melbourne Barrett said specific major financial crises in recent years had depleted reserves.

Money problems

The collapse of council-run Robin Hood Energy, which resulted in the appointment of an improvement board, cost taxpayers' £38m.

Then in 2021, it was uncovered that £16m intended for council homes and tenants had been unlawfully transferred from the Housing Revenue Account.

Due to inflation, this has now cost the council more than £50m.

Millions of pounds have also been lost amid the collapse of shopping centre giant intu, which had been in the process of regenerating the Broadmarsh Centre.

The council had invested £17m in the regeneration scheme before intu's collapse.

Going forward, money can continue to be spent on existing staff and payroll costs, goods and services which have already been received, and contractual commitments, the council said.