Thursday, February 29, 2024

Section 114 report issued as balanced budget not possible for Nottingham City Council

Nottingham City Council’s chief finance officer has issued a report under Section 114(3) of the Local Government Finance Act 1988 because, in his professional opinion, the council isn’t able to deliver a balanced budget for this year, which is a legal requirement.

A report discussed at the council’s Executive Board meeting on 21 November outlines the council’s latest financial position and highlights that a significant gap remains in the authority’s budget, due to issues affecting councils across the country, including an increased demand for children’s and adults’ social care, rising homelessness presentations and the impact of inflation.

At the halfway point of the year, the council is forecasting a gross General Fund pressure of c£57m which is partly being mitigated from one-off in-year management and corrective actions (including use of previously approved reserves) reducing the net forecasted pressure for the year to c£23m.

Past issues relating to financial governance which led to the appointment of an Improvement and Assurance Board, and an overspend in the last financial year have also impacted on the council’s financial resilience and ability to draw on reserves.

This situation has led the council’s Corporate Director for Finance and Resources and Section 151 Officer, Ross Brown, to issue a Section 114(3) report to all councillors today.

The council has emphasised that it is not “bankrupt” or insolvent, and has sufficient financial resources to meet all of its current obligations, to continue to pay staff, suppliers and grant recipients in this year.

A meeting of all councillors will now need to take place within 21 days to consider the report and an immediate prohibition period takes effect from today. Until councillors have met, spending controls already in place will be further tightened, with the practical impact being that all spending that is not already contractually committed or otherwise agreed by the Section 151 Officer is immediately stopped.

The council noted that Senior Officers and Members remain committed to continuing to work with the Improvement and Assurance Board and the Department for Levelling Up, Housing and Communities to put the council on a stable financial footing for the future.

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