Nottingham City Council effectively declares itself bankrupt - years of mismanagement or chronic underfunding?

Nottingham City Council issued a section 114 report on November 29 which means it will stop all spending beyond the services it must provide by law. The Labour-run council was set to go over its budget for 2023-24 by a massive £23m and sadly, it represents an eventuality that city residents - like myself - had long dreaded and feared.

A statement on Nottingham Labour's social media reads that adult and children's social care and homelessness represented over 90% of Nottingham City Council's in-year overspend.

And now the blame game begins. Depending largely on their political persuasion, some are pointing the finger at a national level, while others are highlighting local mismanagement.

The case for local mismanagement is a strong one and one that the council itself has admitted to. It largely centres around certain projects that have left the council with less reserves to get itself out of its current financial turmoil. If you're from the city, Robin Hood Energy springs to mind.

The failed scheme led to historic loses and a section 114 notice also being issued back in 2021 when £16m fron the Housing Revenue Account - meant for property repairs - was unlawfully spent from 2014 to 2020.

Its intentions were lofty - to tackle fuel poverty and create jobs while taking on the 'big six' energy firms. It did have more than 125,000 customers at its peak - including Jeremy Corbyn - before the ceiling came crashing down in late 2019.

As well as 230 job losses at the end of Robin Hood Energy's short-lived life-cycle, leaked documents said the council lost an estimated £38.1 million here. And almost as a metaphoric insult, the company was transferred to British Gas - one of the 'big six' it was trying to tackle.

But, of course, Nottingham isn't the only council that has declared effective 'bankruptcy' which means some questions must be raised over government funding too. Slough, Birmingham, and Croydon are among three of the 12 - excluding Nottingham - that have issued section 114 notices since 2018.

Nottingham City Council's leader David Mellen has said: "We will continue to pay our bills, we will continue to pay our staff. Today is not about my position. It is about the position of the jobs here at the council. It is about the people receiving services from the council."

While I agree with the council leader's statement on who priorities lie with here, questions must still be asked of the council. And that's exactly - unsurprisingly - what the government thinks too. The other side of the argument has been put forward in a joint statement by Nottingham's three Labour MPs - Nadia Whittome, Lilian Greenwood and Alex Norris.

Their statement said: “We urge the government to provide our city council with the funding it requires to be financially sustainable and deliver the services that our constituents rely on.

“Our constituents should not be made to suffer forced cuts for local services at a time when they face the biggest drop in living standards since records began."

It's hard to disagree that the future of the city being a prosperous one is hard to see right now. The city council seems to have reeled in the success of its new library in the nick of time just before this announcement. A play to soften the blow?

And central government hasn't held back either. A spokesperson for the Department for Levelling Up, Housing and Communities said: "We used our statutory powers to intervene at Nottingham City Council last year over serious governance and financial issues and have been clear that improvements must be made.

"We have expressed concern over the lack of urgency demonstrated by the council in addressing these challenges, despite the efforts of the Improvement and Assurance Board. Ministers have been clear that the onus is on the council to deliver the necessary improvements to the Board's satisfaction."

Whoever is to blame, it is the hard-working families of Nottingham who will largely be left with the highest price to pay. The House of Commons Library website states that councils in dire financial situations can raise council tax beyond the 5% limit.

Croydon, Slough and Thurrock all did this at 15%, 10% and 10% respectively. A similar rise in Nottingham could be catastrophic for its residents in a city that often ranks as the lowest for disposable income in the UK.