Nottingham City Council budget at risk as Government still to decide on emergency support

Ross Brown, the finance director and S151 Officer at Nottingham City Council
Ross Brown, the finance director and S151 Officer at Nottingham City Council
By Joe Locker, Local Democracy Reporter

The Government has been urged to make a decision on giving Nottingham City Council emergency funding because the authority cannot balance its budget without it.

The Labour-run authority has asked for something known as Exceptional Financial Support from the Department for Levelling Up, Housing and Communities (DLUHC) to the tune of £65m.

On Friday, the council’s finance chief said the authority now “really needs” a decision on the request – because it faces not being able to balance its books without it.

The help has been requested because the council’s budget for the year is £23m short, and there is another gap of £53m predicted for the 12 months from April.

The shortfalls led to the council declaring effective bankruptcy in November.

On February 22, DLUHC announced the appointment of three commissioners to help run the council amid the continued financial troubles, replacing an Improvement and Assurance Board which has been in place for three years.

During an Audit Committee meeting on Friday, February 23, councillors asked for assurances a decision would be made before the final budget is due to be approved on March 4 at Full Council.

They said the situation was proving a “risk” for the council.

Shabana Kausar, the director of finance, said: “We really need DLUHC to approve our request because the [budget] is based on it being approved.

“At the moment if we do not have that assurance the council cannot really approve a balanced budget.”

Even with the sweeping cuts to services proposed in the 2024/25 budget, the £53m hole cannot be entirely filled.

The council has therefore requested the mechanism known as Exceptional Financial Support (EFS) from the Government for £25m for the current year to fill the £23m gap, and £40m for the following year to fill the £53m gap.

Support will not come in the form of a Government grant. Instead the council will be loaned money to balance its budget with the expectation it will pay it back by selling property assets over a number of years.

Special permission will be given to use these ‘capital receipts’ for day-to-day operational costs.

Councillors previously said it is not a sustainable method of funding operational costs and it means less money is available to go towards capital projects such as redeveloping the Broadmarsh or refurbishing buildings the council owns.

Ross Brown, the council’s corporate director for finance, said if a decision is not made soon a Full Council meeting will be delayed for the second time.

It had been planned to take place on Monday, February 26, but was delayed by a week until Monday, March 4.

“I’ve been in continuum dialogue with DLUHC,” he said.

“They continue to offer me assurances there is nothing stalling the process from their perspective and that they intend to let us have the decision, I don’t want to presume it will be a confirmation, but a decision before our Full Council date of March 4.”

Mr Brown added: “Just to remind members and colleagues there is a statutory requirement to set a balanced budget by March 11.”

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