Nottingham has joined Birmingham in announcing upcoming insolvency
Nottingham City Council House and Old Market Square, January 13, 2021, Nottingham, UK © Getty Images / Guida Simoes
The UK city of Nottingham, home to folklore legend Robin Hood and birthplace of iconic designer Sir Paul Smith, effectively declared itself bankrupt on Wednesday.
In a statement, Nottingham City Council announced it has a huge budget gap and is unable to balance the books for the 2023-24 financial year. The authority issued a section 114 notice, meaning it will shut down all new spending, with the exception of funding for vulnerable groups and for statutory services such as social care and waste collections.
According to earlier reports, Nottingham is headed for a £23 million ($29.1 million) budget overspend this year. The city council said a recent surge in social care demands for children and adults, rising homelessness, and persistently high inflation are putting additional strain on the budget.
However, the authority also has to deal with financial troubles piling up from previous years, such as the collapse of the council-run Robin Hood energy scheme in 2020, which cost taxpayers some £38 million.
Council leader David Mellen insisted to the BBC that the city “will continue to pay our bills.” He previously blamed the city’s financial woes on the year-on-year reduction of funding from central government, estimated at some £100 million annually over the past decade. In his statement on Thursday, Mellen warned that the lack of state support was a countrywide problem and said more cities could go insolvent.
“Councils are using their reserves in greater value than us this year to solve their budget problem, and unless the government come forth with proper funding of social care, they will be in problems next year. This is a national thing where local government is being starved of resources,” he stated.
A meeting of all city councilors is expected within the next 21 days to discuss the situation in Nottingham and ways to fix it.
Nottingham is not the first UK city to find itself in financial distress in the past several months. In September, Birmingham, the largest metropolitan area in the country outside of London, issued its own section 114 notice over a £760 million equal pay bill. Overall, 13 UK local authorities have issued section 114 notices since 2018. Prior to that, the last such notice had been filed in 2000.
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