Nottingham City Council accepts £35m government loan package

Nottingham City Council has agreed a £35m loan package from central government to secure its finances.

The authority will be allowed to borrow £20m this year as part of plans approved at a special executive board meeting on Friday.

It comes days after plans to cut 272 jobs and raise council tax by nearly 5% were approved.

Council leader David Mellen said the move "will help us change the way we operate".

In addition to the £20m to cover costs for this financial year, the Labour-run council will also be able to loan £15m for the 2021-22 annual period, the budget for which was passed on Monday.

The process is known as a "capitalisation direction", and involves the Ministry of Housing, Communities & Local Government (MHCLG) granting councils permission to borrow from the Public Works Loan Board for day-to-day running costs.

Normally councils can only borrow money for investments or capital projects such as building works, but four other local authorities in England secured capitalisation directions for emergency funding last month.

The package comes after what the city council has described as a "difficult" year.

As well as financial pressures caused by the Covid-19 pandemic, the authority presided over the collapse of its company Robin Hood Energy, leading to criticism of its governance and government calls for it to "act quickly" in rectifying its finances.

Mr Mellen said the loan agreement will not change council plans for developing Nottingham.

"This is not a grant to the council, it is permission to spread the costs of Covid and other one-off costs over a longer period," he said.

"Despite the challenging economic climate over the past year, our ambition for Nottingham remains undimmed."

The MHCLG has been contacted for a response.

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