By Joe Locker, Local Democracy Reporter
Nottingham City Council says it still has a multi-million pound budget overspend this year despite “good progress” being made and emergency financial support being used.
The Labour-run authority says it still has a £2.882m overspend in its in-year budget for 2024 to 2025, even after £41m in exceptional financial support has been applied.
The council, which declared itself effectively bankrupt in November last year, was given Government permission to use asset sales to fund day-to-day operational costs to the tune of up to £65m.
In the last financial year, 2023/24, just over £17.5m in exceptional financial support was used to set a balanced budget.
For the current financial year, 2024/25, a sum of £41m in exceptional financial support will be used to help the council balance its books.
While the council continues to report an in-year overspend, “corrective actions” have helped to reduce the gap from £12.595m to £2.882m in the last two months.
During an Executive Board meeting on Tuesday (September 17), Cllr Linda Woodings, executive member for finance, said: “The council’s in-year finances are in an improved position from what they were in two months ago.
“The figures are moving in the right direction, but of course it would be wrong of me to not point out we are still dealing with all of the pressures being faced by other councils in this country after 14 years of Government that decided to massively reduce revenue support grant funding to councils.”
According to council documents significant overspends are being reported in adult social care and children’s social care, which are two of the largest areas of spend for the authority.
Cllr Woodings said some of the costs relate to expensive external care packages, which have been “massively effected by a surge in inflation up to 11 per cent following the disastrous Truss-Kwarteng budget back in October 2023.
“Any overspend in this year’s budget factors into next year’s budget as well so I just want to pay credit to our officers in finance and our leadership for the work they have done to bring us back to £3m from a balanced position,” Cllr Woodings said.
“We know we have a challenge for next year’s budget but we are determined to reverse Nottingham City Council to a sustainable financial footing.”
Leader of the council, Cllr Neghat Khan (Lab), added: “I feel like we are getting a good grip on what we need to do to tackle the problem.
“However like other councils demand continues to rise in our services in adult social care, children’s and homelessness. We are not alone in this.
“There is no magic money tree or a Labour Government bailout coming our way, we are going to have to fix this ourselves.”
Exceptional financial support in 2023/24 was successfully funded using asset sales, council documents show.
However if planned asset sales are not achieved this year, the authority says it may have to borrow to fund the £41m of support in the 2024/25 financial year.
The council says it is anticipating an asset sale shortfall of £7.3m, which means it may be forced to borrow and therefore incur interest charges.
In the upcoming financial year of 2025/26, the council faces a budget gap of £69m and a total gap of £172m up to 2027/28.
Significant cuts have already been made to youth services and jobs, and a consultation on the potential closure of four libraries has just ended.
