By Jamie Waller and Anna Whittaker, Local Democracy Reporter
Nottingham City Council, which has a budget deficit of £23m, declared effective bankruptcy this week, issuing a ‘Section 114 notice’ because it expects it won’t have enough money to cover its costs in the current financial year.
Councils across the country have struggled with budget black holes over the last few years as a result of cuts, rising social care and wage costs and – in some cases – their own expensive decisions.
Nottingham City Council Leader David Mellen (Lab) said while he accepted past decisions had cut its reserves, the authority’s decline pointed to a worsening national picture for the finances of local councils.
Each of Nottinghamshire’s nine major local authorities set a budget and forecast around March each year.
But changes to service costs, pay and energy bills have seen some council’s budgets put under renewed pressure in recent months.
By law all councils must be able to set a balanced budget – meaning they do not spend more money than they receive in 12 months.
The Local Democracy Reporting Service asked Nottinghamshire County Council and each of the seven local district and borough councils for their latest financial positions as of Friday (December 1).
If they were now forecasting a deficit in this financial year, we asked how they plan to close them.
The financial picture differs wildly between councils, with some expecting to dip heavily into their reserves, while others are spending less than expected, and others appear to be on track.
Nottinghamshire County Council
A report that went before Cabinet in November reported the council as running at £700,000 over-budget for the financial year – around 0.1 per cent of its annual budget. However, it is confident this will be closed within the financial year.
Leader Councillor Ben Bradley (Con) said during a November meeting: “We’re in a reasonable position given the challenges everyone is facing. We are managing the situation well.”
Senior councillors were hopeful of closing the gap, and said it compared favourably to other nearby county councils such as Derby, which has a £46m predicted overspend.
Over the next three financial years to 2026/27, it is estimated Nottinghamshire County Council will spend £60.2m more than it brings in, although this gap too could close.
Broxtowe Borough Council
As of March 2023, Broxtowe Borough Council said its budget gap for 2023/24 was £938,000, which is less than half what was predicted in autumn 2022.
They said at the time: “We will be able to meet this from General Fund reserves, meaning that we can keep the proposed Council Tax increase as low as possible at 2.94 per cent; below the headline inflation rate.”
The council did not supply an update on Friday (December 1).
Mansfield District Council
Mansfield District Council currently has an in-year deficit of £86,000 for 2023/24.
It says it is working with all departments to make in-house savings and set a balanced budget for the next year.
It had already earlier set aside £222,000 from its reserve fund to meet this year’s gap; however this will be increased to £306,000 to cover the current deficit.
Ashfield District Council
Ashfield District Council reports it doesn’t have a deficit, and its current forecast spend is “significant within budget for this financial year”.
As a result, no reserves will need to be used.
Rushcliffe Borough Council
Rushcliffe Borough Council’s finances also appear healthy -it is projecting a surplus of £287,000 for the first six months of 2023/24.
A spokesperson said: “The Council is mindful though of ongoing challenging financial environment and this provides some insulation in terms of the Council’s budget in the short term.”
Newark and Sherwood District Council
Newark and Sherwood District Council said as at quarter one, its forecast showed that a shortfall of £20,000 for the General Fund may need to be met by reserves.
However, as at quarter two, the authority said it is indicating that £422,000 would be transferred into the reserves, meaning it does not have a deficit.
Bassetlaw District Council
Bassetlaw District Council’s latest figures from a Cabinet meeting in November show that there is an overspend of £588,000 as of quarter two.
The council says this will be met with “in-year management actions (£251,000) and the use of reserves (£337,000) to address one-off pressures”.
Gedling Borough Council
Gedling Borough Council estimated that £978,700 would be required from the reserves when it set its budget in March 2023.
“The challenges that lie ahead are increasing compared to those in previous
years, due to inflationary pressures, but whilst recognising the significant
challenges ahead, this plan is considered robust,” a council report said at the time.
“Gedling is not alone in facing this challenge as it is a national problem, but with the council’s long track record in delivering successful efficiency programmes it is well placed to react and to develop strategies to meet the set efficiency targets.”
It had not provided an updated figure at the time of writing on Friday.
