Council finances move from 'terminal to critical'

Nottingham City Council's financial problems have improved from "terminal to critical", its deputy leader has said.

The Labour-led authority said its budget gap for the year beginning April 2025 has reduced from £69m to £23.4m.

An overall cumulative budget gap over the next four years has also fallen from £172m to £56.8m, the Local Democracy Reporting Service (LDRS) said.

Deputy council leader Ethan Radford said the improved situation was down to a combination of factors, including a better than expected financial settlement from the government and "large-scale transformational changes" within the council.

The council is planning a series of savings and cuts, including £17.9m to be delivered next year, and £24m over the next four years.

It has also proposed raising its share of the council precept by 4.99%, the maximum allowable under capping rules, from April.

However, this is yet to be confirmed, and discussions are still taking place with the government to determine if further increases of up to 9.99% may be needed in future years, budget reports say.

Reviews of adult social care services, including "high-cost" care packages, and "streamlining of layers of management and team sizes" are being considered to cut costs.

Radford said: "While the financial situation has somewhat improved going from a terminal situation to a critical one – which is the direction of travel we want – we still cannot rule out all the options available to us.

"We will receive an extra £30 million plus in our settlement from the government.

"You will see the difference in that in some of the decisions we now have to make."

The council declared itself effectively bankrupt in November 2023, after it was unable to set a balanced budget.

It was subsequently given government permission to use asset sales to fund day-to-day operational costs to the tune of up to £65m.

According to budget documents, published on Monday the council is again expecting to require Exceptional Financial Support of up to £25m for the 2025/26 financial year, and up to £10m in 2026/27, from the government.

It said it aimed to achieve a balanced budget without support after two years, with the help of the government's recovery grant and the delivery of further savings.

A team of government-appointed commissioners was sent in to help run the council in February last year.

In a statement, the commissioners congratulated the council's finance team but said uncertainty remained on some parts of the budget.

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