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May 26, 2024
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Nottingham City Council appeals against new financial intervention

  • By Joe Locker
  • Local Democracy Reporting Service

Image source, Gerry Molumby

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The council’s deficit is predicted to rise from £23m to £53m in the next financial year.

Nottingham City Council has made a formal appeal over government plans to intervene after it declared effective bankruptcy.

The authority issued a section 114 notice in November after it was unable to close a budget gap of £23m.

The council is already overseen by an improvement board, but Levelling Up Secretary Michael Gove has said he is “minded to” intervene further.

But senior councillors have objected, saying control should stay with them.

“The Secretary of State is minded to appoint commissioners to exercise certain and limited functions as required, for two years,” a government spokesman said in December.

The commissioners would have the power to make significant cuts services and save money to balance the books.

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The authority is already being overseen by an improvement board

The lead commissioner will be paid £1,200 a day by the council while a commissioner for finance and a commissioner for transformation will be paid £900 a day, writes the Local Democracy Reporting Service.

However, before they are officially appointed, councillors and other interested parties had the chance to make representations.

And in a letter to Mr Gove, executive councillor Steve Battlemuch, the portfolio holder for skills, growth, economic development and property, said: “Like many councils we have faced some tough challenges during the past few years, the most difficult being the serious reduction in government grant which has led to drastic cuts to services in recent times and the prospect of more to follow.

“We have worked hard as elected councillors with the Improvement and Assurances Board since 2021, and are naturally now disappointed to receive your minded-to letter on the appointment of commissioners.

“It is hard to work out how the appointment of three new people could do something the three IAB consultants can’t do.”

The letter adds: “We strongly believe that democratic control of the council is a really important principle.

“I urge you to pull back from this step and allow the democratically-elected councillors and senior officers of the council to run the council with appropriate levels of support from your officials and the LGA.”

The Section 114 notice issued in November was an admission the council could not meet its legal obligation to balance its current budget – as local authorities are not able to declare bankruptcy.

Past financial errors such as the collapse of council-run Robin Hood Energy and unlawful spending of money intended for council tenants and their homes were cited as reasons for the Labour-run authority’s poor financial resilience.

A final decision from the Department for Levelling Up, Housing and Communities is expected in the coming weeks.

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