By Joe Locker, Local Democracy Reporter
The deputy leader of Nottingham City Council has refused to say if tax will rise again in the future amid a £26m gap in its budget.
Documents published by the Labour-run authority reveal the gap has opened up for the current financial year, meaning the council is currently predicted to spend more money than it has coming in up to April 2024.
The council says reduced Government funding, rising inflation, a nationally-agreed staff pay rise and soaring homelessness support costs are causing the shortfall.
The gap is also predicted to widen to £50.9m in the 2024 to 2025 financial year, before this increases again to £58.7m over a four year period up to 2027.
On top of the projected financial problems the council has also reported a £9.8m overspend last year.
This will be met entirely using a fund called the Financial Resilience Reserve, but this cannot be used to fill future gaps because there is not enough money in it to do so.
During an Executive Board meeting at Loxley House on July 18, councillors discussed the situation and the anticipated ‘difficult’ decisions which may lie ahead.
Speaking to the Local Democracy Reporting Service after the meeting, Cllr Audra Wynter (Lab), the deputy leader who also oversees finances, said she could not confirm what savings may be needed.
“In terms of council tax, we will review council tax as we would do on an annual basis and see whether or not there is going to be an increase in council tax,” she said.
“In terms of services, we will be reviewing as part of the budget process our services, but at this stage I cannot say whether or not any services are going to be affected.”
Of the £26m sum, £21.7m is due to pressures in the council’s various departments.
Significant costs have been reported in People’s Services, including adult and children’s social care, with the department reporting pressures of more than £14.5m.
But some costs are also because of the council’s need to make improvements, having had an improvement board appointed by the Government as a result of its Robin Hood Energy failings, which cost the taxpayer in the region of £38m.
Agency and consultancy staff have been required to deliver rapid improvements, with the council’s own workforce lacking the necessary expertise, and the board itself has been allocated £300,000 until 2026.
Cllr Wynter added: “We are introducing a financial improvement plan in terms of the way the council is managed and run, that process is under way, we are actually undertaking best value reviews of our services.
“You will see there are now processes in place to ensure situations like Robin Hood Energy can not actually happen again within this council.”
Opposition councillor Kevin Clarke, the leader of the Nottingham Independents and Independent Group, said city residents should expect another council tax rise.
While council tax cannot be set again until next February or March for the 2024/25 financial year, and therefore cannot be increased to fill the £26m gap this year, it could rise again after this point to help the authority set future budgets.
His comments come as the authority continues to rely more heavily on money brought in through taxation to support services.
Ross Brown, the council’s finance director, says this is due to a dwindling Revenue Support Grant, which is typically awarded to councils from central government.
Since 2014, this grant has been reduced by £97m per year, or roughly 76 per cent.
“The Revenue Support Grant over the following 10 years has effectively been reduced down to a very small proportionate amount,” he said during the meeting.
“At the same time…there has been a real shift in the direction of travel of how our core spending power is comprised.
“So there is a really reduced Revenue Support Grant and there is a greater dependence on local tax.
“The dependence on council tax has increased significantly over that period.”
