Nottingham City Council has told the Government it could be open to raising council tax for residents above the normal limits as part of a financial rescue package.
The authority has requested special permission for various methods to raise £65m to close its gaping budget shortfalls over the next two years.
Ross Brown, the council’s Corporate Director for Finance and Resources, has confirmed a council tax rise above the typical cap was one method it had expressed interest in.
Local authorities can typically only raise council tax by up to 4.99 per cent without a referendum, which is what the council currently proposes from April.
However, other crisis-hit authorities like Birmingham City Council and Croydon Council have received permission to hike it by 10 and 15 per cent respectively in recent years.
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A package known as ‘Exceptional Financial Support’ which Nottingham City Council has requested from the Government, would likely be in the form of loans and the permission to raise money, rather than a grant.
A decision is expected from the Government’s Department of Levelling Up, Housing and Communities in the week beginning Monday, February 26.
Councillors would have to accept or reject an entire emergency package, and would not be able to pick and choose different parts.
Speaking at the Corporate Scrutiny Committee on Wednesday (February 14), Mr Brown said: “As part of the Emergency Financial Support submission, the council has explored what powers could be granted, including raising council tax above 4.99 per cent, which we have expressed interest in.”
He added he hadn’t had specific further discussions with the government about the details of this.
Other powers could include the ability to sell assets and spend the money on day-to-day operational costs, which is usually prohibited.
If the emergency assistance is granted, councillors will need to decide at the full council meeting on Monday, March 4 when the budget is set for the next 12 months.
Finance officers have drawn up the budget on the assumption that it will be granted.
The requested emergency funding would be split into up to £25m for the current year, and up to £40m for the next.
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However, council officials believe the support may only be provided if the authority goes through with sweeping cuts including youth services, community centres, libraries and public transport.
The meeting also heard concern from councillors about the long-term damage that balancing the upcoming budget would cause to the city’s growth.
Councillor Sam Harris (Lab) said: “How are we expected to set a budget that will tie our hands and set us an impossible challenge for the next few years?”
Chief executive Mel Barrett warned the council risked the government appointing commissioners with sweeping powers for several years if it didn’t set a balanced budget.
“We need to survive the next year in order to plan effectively for the medium term,” he said.
The council has a £23m budget gap for the current financial year, and £53m for the 12 months following that.
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