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’

Fortune: Major British city declares bankruptcy as inflation and growing social care costs blow a £23m hole in its budget