Underfunding of local councils is creating a national crisis in essential services, Nottingham City Councillors have claimed.
The local authority is facing a £23m budget gap and the possibility of effective bankruptcy, driven partly by spiralling care costs, among a series of other problems.
During an audit committee meeting on Friday (November 24) Labour members discussed the council’s worrying financial position.
Committee chair Cllr Samuel Gardiner (Lab) said: “National government seems to be the biggest risk to this organisation given the chronic underfunding to local government.”
Council leader Councillor David Mellen (Lab) agreed, saying: “The underfunding certainly makes it more difficult.
“The overspend we’re expecting is mainly influenced by adult social care, children’s care and homelessness.
“These things haven’t been sorted by central government in the way that they should – the systems are clearly broken.
“You could also argue the housing crisis has partially been generated by the government.”
It was revealed this week that the council is paying private companies £3.7m a month to look after children in care.
Cllr Mellen added: “The way some companies are making money off vulnerable kids is immoral.”
The authority is also spending about £22,000 a day housing homeless people in bed an breakfast accommodation because demand has outstripped the supply of emergency housing.
The Government’s Department of Levelling Up, Housing and Communities, which sets policy on council funding, has been contacted for comment.
Councillor Michael Edwards (Lab) referenced the government’s revised net migration figures, which this week confirmed there were 139,000 more people in the UK in 2022 than previously thought.
He told council officers in the audit committee meeting: “Being held to account by people who can’t do basic things like how count many people there are in the country must be hard.”
The meeting also heard changes to fix serious financial concerns in the authority were being put in place.
Accounting firm EY raised the alarm over the council’s financial management in a report earlier this year, saying it had “very serious concerns”, although the full report has not been made public.
It followed the misspending of millions of pounds from the council’s Housing Revenue Account had been unlawfully been misspent.
It emerged the authority had been moving money from the account, effectively rent from council tenants, into its general fund, when the money should have instead gone on improvements to council housing.
A new council report now says the authority is improving its control of money after making progress on a long list of improvements to how it manages finance.
Corporate Director of Finance & Resources Ross Brown said: “This report demonstrates that we have made good progress across different areas.
“70 per cent of the 232 improvement actions, which reflects the low base we have come from, have completed or are active.”
The council is still being monitored by a Government-appointed improvement board which was originally set up following the collapse of council-owned Robin Hood Energy in September 2020.
Improvement board chair Sir Tony Redmond called the Housing Revenue Account misspending “a serious setback” in its bid to improve following the collapse of Robin Hood Energy.
Last week the council warned it could soon issue a 114 notice, declaring effective bankruptcy, because of the current £23m budget gap.
The council says the grant funding it receives from central Government has reduced by £97 million over the last 10 years.
