SIGOMA responds to Nottingham S114
Posted on November 29, 2023
Responding to the news that Nottingham City Council has declared a Section 114 notice, Cllr Sir Stephen Houghton, Chair of the Special Interest Group of Municipal Authorities (SIGOMA), said:
The situation with Nottingham City Council is more evidence that
the funding model is completely broken. Our recent survey found that 30% of our
members risked issuing a Section 114 notice in the next 2 years. There are
fundamental systemic issues with the local government finance system that have
resulted in an increasing number of councils reaching breaking point.
Councils are operating with a spending power that is 19% lower in real
terms compared to 2010/11. For more deprived councils the reduction has been
greater – for the urban councils we represent, the average is 25%, for
Nottingham it is 28%.
At the same time, demand on services is rising rapidly,
particularly in the care sector. Nottingham City Council now spends 31% of its
spending power on children’s services, up from 19% a decade ago. Stubborn
inflation is also significantly impacting across a range of cost pressures from
energy to pay.
It is clear that more funding is desperately needed to avoid more
councils also issuing section 114 notices. The chancellor in his recent autumn statement
had the perfect opportunity to help address some of the well-publicised
pressures in local government and the wider public sector but failed to do so. The upcoming local government finance settlement is a last
resort and must be used to stabilise council finances or we risk seeing an
epidemic of S114 notices.
Read coverage of our comments in the following publications:
The BBC: As it happened: Nottingham City Council announces ‘bankruptcy’
The Times: Nottingham City Council sixth to ‘declare bankruptcy’
The Guardian: Nottingham city council issues notice in effect declaring itself bankrupt
The Mirror: Nottingham City Council ‘effectively bankrupt’ with desperate please for government help
The Daily Mail: Labour-run Nottingham City Council declares itself ‘bankrupt’ after revealing more than £23m overspend in just one year
The Express: Nottingham City Council declare itself ‘effectively bankrupt’ and blames Liz Truss
New Statesman: Council bankruptcy tracker: authorities under increasing financial strain
Bloomberg: UK’s Nottingham files for bankruptcy after £23 million budget hole
Bloomberg UK Politics: All About the Money
Newcastle Chronicle: Newcastle Labour leader attacks government as another council declares effective bankruptcy
LGC Plus: Nottingham section 114 shows ‘funding model is broken’
Building: Nottingham City Council declares itself ‘bankrupt’ over £23m budget black hole’