Nottingham City Council has become another victim of the financial crisis in the UK in the sphere of local government.
The mentioned city has faced problems such as inflation and rising demand for its services. The council on Wednesday, November 29, issued the so-called section 114 notice after a £23 million hole was discovered in Nottingham’s budget for the current year. These actions of the authorities actually mean bankruptcy.
The city in the Midlands in central England is one of the largest local authorities that are in the zone of financial pressure that has fallen on councils. In this case, the situation is negative due to circumstances such as an increase in the level of demand for social assistance, equal pay disputes, high inflation, and commercial investments that are guaranteed to be unsuccessful.
Nottingham City Council stated that its notice means that expenses not specified in the contract or not agreed upon by a Department 151 employee are terminated immediately.
Woking and Birmingham faced similar financial problems in the United Kingdom this year. Experts also say that dozens of other British cities are gradually approaching the same situation. Municipal budgets may face increased pressure shortly. According to experts, this probability is due to the general elections, which are expected next year.
Currently, in the United Kingdom, critics of the ruling Conservative Party accuse it of implementing a policy to reduce the amount of funding for councils in real terms since 2010.
Nottingham authorities report that there is a significant gap in the administration’s budget due to problems affecting councils across the country. In this context, the influence of high inflation, an increase in the number of cases of homelessness, and the growing demand for social assistance for children and adults are mentioned. Separately, it is noted that the current state of affairs is partly due to past problems related to financing. Nottingham has already published a section 114 notice at the end of 2021.
Stephen Houghton, chairman of the Special Interest Group of Municipal Authorities, says that the situation in Nottingham is another evidence of a complete violation of the funding model. According to him, 30% of the members of the mentioned group risk publishing a notification under Article 114 within the next two years. He also stated that there are fundamental problems in the financial system of local self-government, which have caused the number of councils that have reached a critical point to increase.
City councilor Kevin Clarke, leader of the opposition Nottingham Independent group, said he believed the current situation was inevitable. According to him, the council’s past expenses caused the authorities to lose resources on which they could rely.
The Nottingham Conservatives said vulnerable residents, including children in schools and hardworking families, would be hardest hit by Labour’s failure to balance the books.
A spokesperson for the Department for Levelling Up, Housing and Communities (DLUHC) stated that last year this organization used its legal powers to intervene in Nottingham City Council due to serious managerial and financial problems, and understanding the need for improvements.
As we have reported earlier, Bank of England Official Says Technology Increases Risk of Bankruptcy.
