World News | Central England City of Nottingham Declares Effective Bankruptcy
Get latest articles and stories on World at LatestLY. Nottingham, a city in central England's Midlands region, on Wednesday declared itself effectively bankrupt after its council failed to deliver a balanced budget for the year.
London, Nov 29 (PTI) Nottingham, a city in central England's Midlands region, on Wednesday declared itself effectively bankrupt after its council failed to deliver a balanced budget for the year.
Nottingham City Council, run by the Opposition Labour Party, issued a Section 114 notice over a "significant gap" in the local authority's budget even as it stressed that it is not “bankrupt” and is able to meet its staff salary obligations.
The announcement makes Nottingham the second city to declare financial failure this year after Birmingham City Council issued a similar notice in September.
“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,” a Nottingham City Council statement notes.
“The council 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,” it stressed.
According to the council's assessment report, the council is set for a GBP 23 million overspend in the 2023-24 financial year. With an immediate prohibition period taking effect, a meeting of all councillors must now take place within 21 days to consider the Section 114 report.
Until councillors have met, the 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 officer in charge is immediately stopped.
In September, Birmingham City Council – the largest local authority in Europe comprising over 100 councillors, issued a Section 114 notice to say that all new expenditure with the exception of protecting vulnerable people and statutory services will stop immediately.
“The notice means all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately,” it said at the time.
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