Cash-strapped Nottingham City Council can raise £66m through emergency Government measures

The cash-strapped authority heard on February 29 it is now allowed to raise £25m in the current budget year, which ends around the start of April, and £41.4m for the following 12 months.

The decision has come right down to the wire, as the council needs the support signed off in order to set a balanced budget for the year by Monday.

The funding, known as exceptional financial support, isn’t a grant, but will let the council raise money in ways it wasn’t previously allowed to.

It will be loaned money to balance its budget with the expectation it will pay it back by selling property assets over a number of years.

Special permission will be given to use these ‘capital receipts’ for day-to-day operational costs.

A letter to council leader Coun David Mellen (Lab) from Simon Hoare MP (Con) minister for local government, says this will allow crucial services to continue functioning and protect vulnerable people.

Nottingham councillors have previously warned this method is not a sustainable method of funding operational costs, and will take money away from its other capital projects such as redeveloping the Broadmarsh.

The help has been requested because the council’s budget for 2023-24 is £23m short and there is another gap of £53m predicted for the 12 months from April.

The Labour-run council declared effective bankruptcy in November by issuing a Section 114 notice.

Commissioners were appointed last week to effectively take over the running of its finances.

The council’s past issues have included the collapse of Robin Hood Energy and the unlawful spending of council tenants’ money on the wrong services, which sapped millions of pounds from its reserves.

The authority also blames the Government for a significant decrease in its funding over the last decade.