‘No suggestion' of bumper council tax rise for Nottingham city residents amid crisis

Other authorities which have effectively declared bankruptcy have been allowed to raise taxes by 10 or even 15 per cent.

Nottingham’s budget papers released ahead of today’s (Tuesday) executive meeting currently propose a 4.99 per cent increase, the maximum normally allowed.

The Government has the power to give permission for higher tax increases in exceptional circumstances, but the council says that this isn’t currently on the table.

However, when asked by the Local Democracy Reporting Service, a council spokesperson did not clarify whether the council had specifically asked the Government for permission to set higher tax rises in future.

Birmingham City Council, which has also issued a Section 114 notice amid its own financial crisis, was this week given permission to raise council tax by 10 per cent.

Financially-strapped Croydon Council was able to raise it by 15 per cent last April, while Thurrock and Slough also obtained 10 per cent rises.

If Nottingham were ever to be granted a higher rise, vulnerable residents would receive help from its council tax support scheme.

The authority issued a Section 114 notice last year, meaning it wouldn’t be able to set a balanced budget for April.

Council tax rises are seen as a measure to buy time while an authority takes money-saving measures and rebalances its budget.

A newly-released budget report says: “The advantage of increasing council tax is that the council gains the benefit of the increase on an ongoing basis.

“A capitalisation direction does not solve the budget gap on an on-going basis. It is simply a mechanism that provides the council time to radically change and develop sustainable solutions.”

The proposed budget will be decided by the executive today and finalised by full council in March.

The council has applied for £65m of emergency funding from the Government, which would be split into £25m for the current financial year and £40m for the next.

This would likely be in the form of loans and special permissions to raise money rather than a grant.

However, council officers believe that the council will only receive this if it goes ahead with all of the drastic proposed budget cuts.

The decision is in the hands of MP Michael Gove, the Secretary of State for Levelling Up, Housing and Communities.

Nottingham is currently reporting a £53m budget gap for 2024-25, and £172m over the next four years.