News, Politics

Nottingham City Council still facing £1m budget gap despite use of emergency financial support

By Joe Locker, Local Democracy Reporter

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Nottingham City Council’s finance chief says he’s “cautiously optimistic” the authority will balance its budget this year despite a £1m overspend.

The council says its budget gap for the current financial year, which ends March 31, has decreased to just over £1m.

It must set a balanced budget, as required by law, every year.

The Labour-led authority says it is still overspending despite £41m in Exceptional Financial Support (ESF) being used.

ESF is an accounting mechanism allowing the council to use property sales to cover day-to-day costs, something which is not typically allowed except in serious circumstances.

A series of savings have also been made, including the introduction of charges at the Greyhound Street public toilets, while 500 jobs have been cut and youth services reduced.

During an Executive Board meeting on Tuesday (February 11), Stuart Fair, the council’s interim director of finance, said: “We’re moving in the right direction.

“I’m cautiously optimistic that we will land, by the year end, just under budget.”

The council says some of its main problems include escalating costs, particularly due to increased demand for adult and children’s social care services.

Cllr Neghat Khan (Lab), leader of the council, said: “It is really important we need to get a grip on our finances.

“Previously we’ve heard about the overspend of an extra £4.9m, it is good we have pulled it back down to £1m.

“But £1m is still over. It is good progress but we need to make sure we go further.”

The Labour-led council’s budget gap for the next financial year, beginning April 2025, has also been reduced from £69m to £22.5m.

During the meeting Cllr Linda Woodings (Lab), executive member for finance, said the gap had been reduced even further after the Labour Government confirmed it would be giving the council more money in its financial settlement.

Each year the Government tells councils how much it plans to give them in funding to help run vital services such as social care, homelessness support, housing, bin collections, leisure centres and more.

The Government announced in December its provisional financial settlements for councils, with Nottingham set to get more than £30m extra.

Finalised settlements were confirmed at the beginning of February, and the council was informed it would be getting even more money than set out in its provisional figure.

The council will be getting an extra £732,000 to help with employers’ National Insurance contribution increases, alongside an additional £237,000 to help with children’s social care costs.

This has brought the authority’s budget gap for the year beginning April 2025 down further, from £23.3m to £22.5m.

The overall cumulative budget gap over the next four years has also fallen from £172m to £56.8m.

Budget papers, which will get final approval in March, state the council will again require Exceptional Financial Support of up to £25m for the 2025/26 financial year, and up to £10m in 2026/27.

Cllr Khan said it is hoped the council can achieve a balanced budget without using asset sales after two years, with the help of the Government’s recovery grant and the delivery of further savings.

The authority has proposed a raft of further savings and cuts totalling £24.191m in the four years to 2028/29, with £17.91m to be delivered in 2025/26.

These include reviews of adult social care packages, and a number of “back office” savings, such as reducing team sizes.

It has now been confirmed council tax will rise again by 4.99 per cent from April.