Did city council really need to go down 'bankruptcy' route?

Senior councillors say they were prevented from scrutinising the move, which has been described as “pessimistic”, as other councils in a worse financial position avoided a similar fate. JOE LOCKER of the Local Democracy Reporting Service investigates

- 

QUESTIONS have been raised over whether Nottingham City Council should have been declared effectively bankrupt two years ago.

The authority has passed on information about the decision which has contributed to further widespread cuts in the city to a financial organisation.

Senior councillors say they were prevented from scrutinising the move highlighting that councils with far greater budget gaps avoided a similar fate.

On November 29, 2023, the Labour-led council's corporate director for finance known for legal reasons as its Section 151 officer issued a notice that, in effect, declared the authority bankrupt.

While councils cannot technically go bankrupt in the traditional sense, the issuing of the Section 114 notice meant the authority was unable to set a balanced budget as required by law.

Ross Brown, who was appointed to the position in December 2022, said at the time that in his opinion “the council is unable to meet its statutory requirement to deliver a balanced budget for 2023/24”

He said the council had been facing a £56.899m budget shortfall - largely due to rge soaring costs of people’s services, such as adult social care. While the authority managed to bring this down to £23m, Mr Brown deemed it necessary to pull the final emergency lever.

In response, the former Conservative government made the decision to appoint a team of commissioners to the council just months later in February last year, and the team has been working to oversee critical improvements ever since - at significant cost to the taxpayer.

The decision is now being brought into question, and the Local Democracy Reporting Service was told that information relating to the decision to issue a Section 114 notice has been passed to accounting standards-setting body, the Chartered Institute of Public Finance and Accountancy (CIPFA), for review.