Nottinghamshire County Council has warned that it faces continuing financial pressures in the years ahead, with a forecast shortfall of nearly £16 million by 2029 despite extensive efficiency measures, as it prepares for a major overhaul of its operations and the prospect of local government reorganisation.
The report due to be presented to the authority’s Cabinet on 6 November 2025 sets out the Council’s current and medium-term financial position and the steps being taken to manage its budget while maintaining essential services. The document confirms a projected overspend of £3.1 million this year, largely driven by rising demand in adult social care and transport services, and identifies a cumulative deficit of £15.9 million by 2028/29 even after savings plans are factored in.
The County Council, like many others across England, continues to grapple with a combination of rising demand, inflationary pressures, and funding uncertainty. The report says that the authority “can no longer afford to operate in the same way that it has in the past” and must continue to transform how services are delivered. Much of this transformation is aimed at strengthening community-based support and preventing higher-cost interventions later on, especially in adult and children’s social care.
A key focus of the Council’s strategy is the development of preventative services that allow more residents to live independently and reduce pressure on high-cost placements. The report highlights that Nottinghamshire is investing in innovation and partnership working across the public sector to safeguard services “without placing additional burdens on residents”.
An Efficiency Working Group, established in June 2025, is carrying out a wide-ranging review of financial management, procurement, and contract oversight. Its findings will feed directly into the 2026/27 budget. Meanwhile, a Highways Review has produced an Improvement Plan that shifts the focus from reactive road repairs to a more strategic, long-term maintenance approach, with better use of data and stronger contractor oversight.
The national picture remains bleak. A March 2025 survey by the Local Government Information Unit found that more than a third of councils could face financial failure within five years without reform. The Local Government Association has warned that demand pressures could add £21 billion to council costs by 2028/29, with adult and children’s social care and home-to-school transport continuing to dominate budgets.
The government’s long-awaited “Fair Funding Review 2.0” and a planned reset of the business rates system are expected to take effect from 2026/27, but Nottinghamshire says it cannot yet predict the financial impact. The report notes that no comprehensive reassessment of local authorities’ relative needs has been carried out since 2013/14.
Locally, inflation remains a serious concern. While national inflation fell below the Government’s target in 2024, it has since climbed back to 3.8%, eroding the Council’s spending power. Each 50p increase in the National Living Wage adds an estimated £13 million to its costs, and further pressures are expected when the next rate is confirmed in the Autumn Statement later this month. The authority already anticipates that rising wages in the social care sector will significantly affect budgets from 2026/27.
The Council’s Medium-Term Financial Strategy (MTFS), which runs until March 2029, assumes an annual 4.99% rise in council tax and a 1.2% yearly increase in the tax base from new housing. The General Fund balance stood at £35.9 million at the end of March 2025, but officers caution that reserves are being used only as a short-term buffer and “do not represent a sustainable solution”.
To help close the gap, the Council has identified £45.3 million of mitigation measures through its “Public Service Reform and Mitigations Plan”. These include programmes to increase family-based placements for children in care, improve inclusion and special educational needs support, and enhance preventative schemes under the Thriving Communities initiative. A new transformation plan is also being drawn up for adult social care, focusing on outcomes, commissioning, and efficiency.
The budget process for 2026/27 will run alongside public consultation between 3 November and 14 December 2025, with final proposals due before Cabinet on 29 January and Full Council on 26 February 2026.
Looking ahead, the report warns that the Council must remain “flexible and resilient” as it faces ongoing national uncertainty and prepares for a major structural change. Under current proposals for Local Government Reorganisation in Nottinghamshire, the existing two-tier system would be replaced by new unitary authorities, with final decisions expected in spring 2026 and a start date of 1 April 2028.
