Major British city declares bankruptcy as inflation and growing social care costs blow a $29 million hole in its budget

William of England
By William of England 3 Min Read

Nottingham, dwelling to 323,700 residents, well-known universities and fictional character Robin Hood, successfully declared itself bankrupt on Wednesday as its council is ready to to overspend by £23 million ($29 million) in the 2023-24 monetary yr. 

This means a pause on all non-essential spending on companies not required to be supplied by legislation.

A report raised on the Labour-run Nottingham City Council’s Executive Board assembly final week first revealed the budget shortfall.

The Nottingham City Council highlighted that it was dealing with a slew of challenges ensuing in the gaping hole in its budget in a Wednesday report. These embody excessive demand offering grownup and youngster social care packages, growing homelessness, inflation and inadequate earnings. Other points surrounding monetary governance additionally exacerbated the issue. 

In a assertion given to a number of British outlets, the council mentioned it was not “insolvent” and had “sufficient financial resources to meet all of its current obligations, to continue to pay staff, suppliers and grant recipients in this year.”

Nottingham City Council didn’t instantly return Fortune’s request for remark.

The bankruptcy bandwagon

Nottingham isn’t the primary vital city in Britain to tread in bankruptcy territory—in September, Birmingham, the U.Ok.’s second-largest city, additionally did the identical after not not having sufficient cash to repay $955 million’s price of equal pay claims to authorities workers. Its city council mentioned on the time that it confronted a deficit of £87 million ($109 million) in the present monetary yr.

Other cash-strapped councils like Woking and Croydon have additionally declared bankruptcy in the previous, which has generally resulted in taxes being elevated as a option to enhance funds. 

But this would possibly simply be the tip of the iceberg—in the next two years, councils in England may see funding gaps climb to just about £3 billion ($3.8 billion), estimates by authorities relations group Local Government Association suggests. 

As for Nottingham, the bankruptcy may level to a damaged funding system and broader structural points.

“There are fundamental systemic issues with the local government finance system that have resulted in an increasing number of councils reaching breaking point,” Stephen Houghton, the chair of the Special Interest Group of Municipal Authorities informed the Guardian.

“Nottingham City Council has fallen victim to the Government’s neglect of our vital local services,” Adana Godden, organizer at GMB Union, which is Nottingham City Council’s largest employees union, mentioned in a statement Wednesday in response to the bankruptcy submitting.

“The Council’s funding has been cut by more than 40 per cent since 2010; it’s shocking that this Government are sitting on the side lines as local communities suffer. This news will no doubt cause great anxiety for workers in Nottingham.”

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