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‘Absolute confidence’ County Council will avoid effective bankruptcy despite worsening budget shortfall

By Joe Locker, Local Democracy Reporter

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Nottinghamshire County Council’s finance boss says he has “absolute confidence” that the authority will avoid the need to declare effective bankruptcy despite the widening of its budget gap.

In February this year, the Conservative-run council’s funding shortfall to 2027/28 stood at £36m.

However, it now estimates it could spend between £58m and £76m more than its predicted income over the next three years.

Its in-year budget gap for the current financial year could also rise from £3.4m to £4.4m.

But the authority’s finance director, Nigel Stevenson, has insisted it will “balance out” by the end of the year.

The overspending has largely been put down to significant pressures on demand for services, particularly adults and children’s social care, as well as economic and inflationary pressures.

“I’ve got every confidence that will come down,” Mr Stevenson told the Local Democracy Reporting Service.

“I won’t be at all surprised that we just balance out by the end of the year.”

The entire local government sector is experiencing significant financial problems.

The Local Government Association (LGA) says councils’ spending power has dropped by 27 per cent since 2010, and at the same time, demand and costs for social care have hit record levels.

In November last year, neighbouring Nottingham City Council issued a Section 114 notice, effectively declaring bankruptcy.

Government commissioners were then appointed in February, before a raft of service cuts were later approved in March.

“There will be no issue of a Section 114 [notice],” Mr Stevenson said of Nottinghamshire County Council’s financial position.

“I have absolute confidence in that this year, and I have got confidence that will not be the case in the next financial year.”

Cllr Richard Jackson (Con), cabinet member for finance, said his council’s financial position will become clearer once members and officers have been able to sift through the new Labour Government’s Autumn Budget, announced October 30.

An increase in the National Living Wage (NLW) up to £12.39 per hour could end up costing the authority up to £45m, which he says would be “absolutely enormous” in the context of its overall £660m budget.

This would bring the budget shortfall over the next three years to £76.2m.

Chancellor Rachel Reeves (Lab) has since confirmed the NLW will rise to £12.21, which means the cost to the council will be slightly lower.

Cllr Jackson says the County Council is currently focusing on reducing costs in adults’ and children’s social care, and there are no planned cuts to services, including libraries.

“The key for us is a longer-term issue in preventing demand,” he added.

“It is about keeping people healthy for longer with early interventions.

“Things like looked-after children is a huge cost pressure, we are significantly lower than similar authorities because we have been doing this for years.

“But we are effectively over the barrel at some points in time, as every other authority is. There is need to reform that market.

“We need the room to be able to invest in it now to keep people healthier and reduce demand in five to 10 years time.

“We are one of few authorities that has not closed a single library and we are not planning to do that in the future.”

Mr Stevenson says the authority will not require Exceptional Financial Support (EFS), whereby special permission is given so money from asset sales can be used to fund day-to-day costs, “in the short term.”

However he says in the long term the funding of local government “needs to be looked at.”

The authority’s cabinet will discuss the council’s finances at its meeting on November 7.