Work to get Nottingham City Council’s finances in order is “paying off”, its deputy leader says.
The Labour-led authority, which was declared effectively bankrupt in 2023, says it is currently anticipating underspending by £14.6m in the current financial year, which ends in March.
This is an improvement from £3m just months ago – which the council’s head of finance says points to a “very promising” position.
An underspend means the council is expecting to have £14.6m left over once all expenditure in its day-to-day services is accounted for.
• Nottingham City Council forecasts £14m in-year underspend
The council’s latest financial position was noted at a meeting of senior councillors on Tuesday (18 November).
Cllr Ethan Radford (Lab), deputy leader and executive member for finance, said: “The council continues to demonstrate financial stability.
“It is clear to anyone looking that the work to get our house in order is paying off, thanks to a much tighter grip on our finances.
“As with any council, there are still some major challenges we face in order to keep our budget on track. Care for adults and children, where demand for vital services continues to increase, remains our biggest risk in terms of pressure on budgets.”
While “promising”, the latest budget report says the underspend has only been achieved due to the continued reliance on emergency support measures.
In February 2024, a team of Government-appointed improvement officials – called commissioners – were sent in to oversee critical changes.
At the same time, the Government gave the council permission to use tens of millions of pounds in Exceptional Financial Support (EFS) to help balance its budget.
This accounting mechanism allows councils to sell property and land and use the money made for day-to-day spending, something which is not typically allowed outside exceptional circumstances.
Without the use of EFS, the council would still be overspending as in previous years, documents say.
Despite its use, Cllr Radford said that the council utilised much less EFS than anticipated.
Around £25m has now been used, despite the Government giving permission for the use of up to £101m, and next year’s budget is expected to be set without it.
Stuart Fair, the council’s finance director, said there remained “a couple of things to manage”.
One of the most significant risks, which is yet to be added to the budget forecast, is lost income from the Integrated Care Board (ICB).
The ICB – which commissions health care services across the city and county – has already made £252m in savings across the system in the 2024/25 financial year.
This financial year, which began in April, it is planning a further £282m in savings.
The widespread cuts have left city councillors concerned the authority will be left to pick up the pieces.
In Nottingham alone, there is now a possible £9.3m black hole should the ICB follow through with funding reductions for services it jointly funds alongside the city council.
Another concern is that the 2025/26 budget also includes savings of £39.1m – of which only £26.7m are delivered or on track to be delivered.
But Mr Fair added: “All in all it is a very strong result. It gives us confidence for the budget-setting process for 2026/27. It is very promising.”
