Nottingham City Council declares itself 'effectively bankrupt' and blames Liz Truss

Nottingham City Council has declared itself bankrupt after a budget overspend for the 2023/2024 year.

The Labour group who run the authority said pressures had become “unmanageable” blaming Liz Truss’ time as PM and saying it “crashed our economy”.

The main reason for the overspend, Nottingham Labour said, was because of costs for adult and children social care, which made up 90 percent of the overspend.

The council has issued a Section 114 notice, halting all non-essential expenditure and obliging the council leadership to meet within 21 days to come up with a plan for the group’s expenditure going forward.

The Labour group warned “all councils are facing these pressures and many will be considering the issuing of a Section 114.”

Hitting out at central Government, the group said: “Rishi Sunak has little interest in the needs of ordinary working people and cities like Nottingham. He cares only for the rich and prioritises keeping a failing Tory party together.”

The message also said of the Conservative Government: “They have let down the people of Nottingham and our country.

“The only thing that will save local Governments across the country from having to issue more and more section 114s in the future is a Labour Government and proper financial support and funding for local authorities.”

The council revealed in July that it had a £26million gap in its budget for this financial year and despite efforts to make savings, councillors were only able to reduce this to £23million more recently.

Sir Stephen Houghton, chairman of the Special Interest Group of Municipal Authorities (SIGOMA), said: “The situation with Nottingham City Council is more evidence that the funding model is completely broken.

“Our recent survey found that 30 percent of our members risked issuing a Section 114 notice in the next two years. There are fundamental systemic issues with the local Government finance system that have resulted in an increasing number of councils reaching breaking point.

“Councils are operating with a spending power that is 19 percent lower in real terms compared to 2010/11. For more deprived councils the reduction has been greater – for the urban councils we represent, the average is 25 percent, for Nottingham it is 28 percent.”

He warned the rising demand for council services could lead to more Section 114 notices from other councils. He said: It is clear that more funding is desperately needed to avoid more councils also issuing section 114 notices.

“The Chancellor in his recent autumn statement had the perfect opportunity to help address some of the well-publicised pressures in local government and the wider public sector but failed to do so.

“The upcoming local Government finance settlement is a last resort and must be used to stabilise council finances or we risk seeing an epidemic of Section 114 notices.” has contacted Liz Truss for comment.

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