Nottingham City Council bankruptcy: Leader blames 'problems of the past' as sends message to city

he council is now effectively bankrupt after a Section 114 notice was issued

The leader of Nottingham City Council has pointed to "problems of the past" which he says - along with a lack of support from the Conservative Government - has led to the city's dire financial situation. The council is now effectively bankrupt after a Section 114 notice was issued on Wednesday, November 29.

The Section 114 notice triggers a period in which entering into any new spending is effectively banned unless the Chief Financial Officer (CFO) gives permission. The law says that a CFO may give permission if they think the spending would prevent the situation from getting worse, improve the situation or stop it happening again.

When asked if he has a message for the people of Nottingham, Cllr Mellen said: "It is concerning but I would want to reassure the people who work for the city council that they will continue to be paid, for those who receive services such as adult social care those will continue. And for those who are owed money by the council for their services, we will be meeting those commitments as well."

Cllr Mellen, who has led the Labour-run authority since 2019, has put the blame primarily on the door of the Conservative Government, which he says has been reducing support for cities like Nottingham for years. In 2013, Nottingham City Council received £123 million in funding from the Government - 10 years later and the city receives around £26 to £27 million.

"That's a £100 million reduction at a time when costs are going up," he said. "So it's not surprising that we can't meet our demands. That is the case for many councils, so yes - we have been trying to save money all the time, but those savings have not been enough.

"Since I have been leader, we have been discovering problems of the past. We have shut down Robin Hood Energy because we didn't want to continue wasting money there. We discovered some unlawful payments and we have had to deal with that as well. There has been a lot of work done putting that right."

At the end of 2021 it emerged money from the council's ring-fenced Housing Revenue Account had been incorrectly credited to its general fund since 2014/15, with more than £40 million being misspent overall. The HRA is supposed to be used for the management and maintenance of the council's housing stock.

Meanwhile, Robin Hood Energy, which was set up in 2015, ended up costing £38m - with 230 staff at the company eventually being told they were being made redundant.

Questions will now be raised about high profile projects in the city, such as the regeneration of Broad Marsh, and how the Section 114 announcement may affect them going forward. Mr Mellen said: "We were really pleased to open the Central Library yesterday and before that we had opened the car park and the bus station as well. With Broad Marsh, we have always said we would need investment, and through the Levelling Up bids we have received money for Bulwell and BLANK but we have not got money for Broad Marsh which is a massive shame as we see it as an important investment in our city."