A report to Nottingham City Council’s Executive Board on 18 July highlights the significant additional pressures on the authority’s budget this year as it meets increasing demand for the services it provides to support vulnerable children and adults.
All councils are facing extreme pressures on their budgets due to the huge and unexpected rise in inflation, a staff pay award agreed nationally, the cost of homelessness driven by the cost-of-living crisis and years of reduced core Government funding.
An early assessment of the 2023/24 budget points to a provisional £26m funding gap which the council will seek to address in the coming months. This work is heavily dependent on achieving savings through an ongoing transformation programme and the council is working hard to ensure this stays on track.
The council, because it is under the scrutiny of a Government-appointed Improvement and Assurance Board (IAB), has a duty to set a four-year financial plan and clearly demonstrate financial stability. As part of its work to improve financial management, the council has brought reports forward to its Executive Board next week looking back at last year’s budget, assessing the current budget situation and looking forward to the medium-term financial plan which runs to 2027/28. This early assessment gives the council the chance to get a good financial grip, strengthen resilience and bring the budget back in line in the coming months to avoid another overspend.
These reports show:
- A £10m overspend at the end of the 2022/23 financial year, which it is proposed will be met from the council’s financial resilience reserve
- A £26m budget gap opening up in the current budget that needs to be addressed before the end of next March
- A gross budget gap for 2024/25 of £51m and £58.7m over the four-year period is inferred but latest estimates based on ongoing work suggest there will be a revised net budget gap of £16m to £17m.
The council has identified areas it will focus on to help it deliver a balanced budget and medium-term financial plan, including best value reviews and service redesign in certain key parts of the organisation, as well as looking at efficiencies, assets, income and debt. These form part of a new ‘One Council’ approach under its transformation programme which is delivering the improvements and efficiencies required by the IAB.
Deputy Leader and Portfolio Holder for Finance & HR, Cllr Audra Wynter, said: “Like all councils, we are operating in a very volatile economic climate, with inflation, rising energy and fuel costs and an increased demand on our services driven in part by the cost-of-living crisis, all combining to make budget setting extremely difficult. This is on top of the continued reduction in core Government funding over recent years and increased reliance on Council Tax for income, which creates a particular problem for places like Nottingham, where the predominant property types don’t allow us to raise sufficient funds.
“There are also issues that led to the appointment of an Improvement and Assurance Board which continue to have an impact on our financial resilience. As part of our drive to improve financial management, we have prudently taken an early look at our budget situation so we can identify any problems and take action to address them.
“The identification of a £26m in-year budget gap is significant and serious, and some difficult decisions about transforming the way we deliver services and doing some things differently will be needed, along with strong financial discipline. We are determined to do so, set a balanced and realistic budget over the medium term, and keep the council on a sustainable financial footing.”