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Nottingham City Council has declared itself effectively bankrupt after issuing a section 114 notice.

The Labour-run local authority confirmed the announcement on Wednesday, saying its chief financial officer had decided it “isn’t able to deliver a balanced budget for this year, which is a legal requirement”.

As a result of the section 114 notice, all new spending – with the exception of protecting vulnerable people and statutory services – must stop immediately.

It becomes the second local authority this year to fail financially, after Birmingham City Council issued its own 114 notice back in September.

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The council has come under financial pressures after its attempt to enter the power market with Robin Hood Energy (RHE) failed in 2020, losing the authority millions.

It later got into trouble after spending millions of pounds ring-fenced for local housing as part of its general budget.

But the authority was also hit hard by changes to central government funding under the coalition government back in 2013/14, as well as soaring inflation and growing demand for social care.

The Department for Levelling Up decided against bringing in a commissioner after the failure of RHE three years ago, but gave an advisory board more powers to ensure the council adhered to their advice – with the threat of the final option hanging over their heads if their financial performance didn’t improve.

But now the section 114 has been issued, commissioners will likely be brought in to take charge.

A statement from Nottingham City Council said its executive board met last week to discuss a report into its latest financial position, as rumours swirled the authority was on the brink of bankruptcy.

Local or national government – who is to blame for struggling councils?


Sam Coates

Sam Coates

Deputy political editor

@SamCoatesSky

There is only one real political question about Nottingham City Council: Who shoulders more of the blame for running out of money – central government or the local politicians themselves?

Council budgets have been squeezed ever since George Osborne became chancellor in 2010: seen as an easy target for a Treasury hunting for savings.

According to the Local Government Association, since 2010 there has been a 27% real-terms cut in core spending power.

Given the spending pressures from inflation, particularly on social care, councils everywhere are suffering.

That said, of the 113 local councils in England, only 13 councils have issued section 114 notices – the action a local authority must take when it is about to spend more than their income. Birmingham was the last council to make the order in September, with Woking, Thurrock and Croydon before that.

Research by the Institute for Government found there is no correlation between the party that has political control of an authority and the likelihood of issuing a section 114 notice.

However, the government is very keen to make this a partisan issue, since Nottingham is a Labour council, and has been since 1998 – with not a single Conservative in the council chamber.

The council themselves blamed children’s and adults’ social care, rising homelessness and the impact of inflation, and claimed the “funding model” is broken.

However, the saga of “Robin Hood Energy” left a big dent in both the accounts and their credibility.

This scheme was established in 2015, set up to help people struggling with rising bills, and was heralded by Jeremy Corbyn when he was leader of the Labour Party – however it was unable to pay its bills, and ultimately closed, costing taxpayers £38m.

A damning report by an external auditor found the council was guilty of “institutional blindness” over RHE, prioritising political objectives over reality.

It found the council did not know the scale of the risk they had taken on and criticised the culture at the council, the reporting process and the way the company was handled, as well as the lack of accountability.

Hubris or well-intentioned but misguided, the council is still paying the price.

Whether the public draws political lessons remains to be seen.

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Councils ‘running out of road’ to bridge funding gap

It said the report highlighted that “a significant gap remains in the authority’s budget, due to issues affecting councils across the country, including an increased demand for children’s and adult social care, rising homelessness presentations and the impact of inflation”. 

But, it added: “Past issues relating to financial governance… and an overspend in the last financial year have also impacted on the council’s financial resilience and ability to draw on reserves.”

Leader of Nottingham City Council David Mellen told Sky News. “We are going to be paying our staff. We are just saying in this financial year we’ll be overspending against our budget.

“For 13 years we have been underfunded, pressures on us from services are difficult.

“Many other councils are struggling – we are not the first, we won’t be the last. We are not incompetent – the government has not funded us properly.

“We have lost £100m in our budget every year for the past 10 years.”

All of the city’s councillors will now have to hold a meeting in the next three weeks to discuss the ongoing issues.

But Nottingham City Council said both senior officers and its members “remain committed” to working with the government and its advisers to “put the council on a stable financial footing for the future”.

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However, Nottinghamshire MP and government minister Robert Jenrick attacked the Labour leadership at the council, saying they had “proven themselves utterly unfit to govern this great city”.

He added: “Their breathtaking waste and incompetence have let residents down for long enough. It’s time for the secretary of state to appoint commissioners to restore order.”

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Woman’s body found in car boot in east London – as murder investigation launched by two police forces

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Woman's body found in car boot in east London - as murder investigation launched by two police forces

A murder investigation has been launched after a woman’s body was found in the boot of a car in east London.

Detectives said a murder inquiry has been launched into the “suspicious” discovery in Ilford.

The woman, who has not been named but is from Corby in Northamptonshire, may have been the victim of a “targeted incident”, police say.

“Fast track” enquiries were made after the force was contacted by a member of the public with concerns about the welfare of the woman.

This led to the discovery of a body inside a car boot.

Northamptonshire Police said: “The investigation is ongoing and there will be continued police activity over the weekend in various locations, including Corby and Ilford.

“Although we believe that this was a targeted incident and there is no wider risk to members of the public, extra patrols will be taking place in Corby in the coming days for reassurance purposes.”

Detectives from the East Midlands Special Operations Unit major crime team and the Metropolitan Police are working on the case, to try and establish the circumstances that led to the woman’s death.

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Police investigating criminal offence after Daily Telegraph columnist ‘dumbfounded’ by social media post probe

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Police investigating criminal offence after Daily Telegraph columnist 'dumbfounded' by social media post probe

Essex Police say they are investigating an alleged criminal offence of inciting racial hatred, after Daily Telegraph columnist Allison Pearson said she was “dumbfounded and upset” when officers knocked on her door last Sunday.

Ms Pearson revealed she was told she was being investigated over a year-old deleted post online.

She said she wasn’t informed which post had been reported, but suggested it could have been related to the 7 October attacks in Israel or pro-Palestine marches.

She claimed the officers told her she was being investigated for a NCHI (a none crime hate incident) an incident involving an act which is perceived to be motivated by hostility or prejudice towards persons with a particular characteristic, but is not illegal.

NCHI reports have long been controversial, with many citing free speech concerns, and Ms Pearson’s account of the police visit has led to widespread support from Conservatives and online commentators, including Tory leader Kemi Badenoch.

But an Essex Police spokesperson has told Sky News its investigation was never for an NCHI, and that the matter was always being treated as an investigation into an alleged criminal offence of inciting racial hatred.

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Speaking on her Planet Normal podcast on Wednesday, Ms Pearson said she found the visit “chilling”.

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“I was dumbfounded, upset, it’s not very nice,” she said. “I was in my dressing gown on the step of the house, these two coppers were there just outside the door.

“There were people gathering for the Remembrance Day parade so there were people watching from the other side of the road.

“Whatever I did or didn’t tweet, if somebody found it offensive, that to me is still not a reason for two policemen to come to my house on a Sunday morning.

“You know, they don’t do that for burglars, do they? We know policing is under-resourced and they are unable to attend often quite serious crimes.

“This was the most extraordinary overreach and state intrusion into my private life and I don’t think I did anything wrong and I think their response was outrageous.”

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In a statement, Essex Police said: “Officers attended an address in Essex and invited a woman to come to a voluntary interview.

“They said it related to an investigation into an alleged offence of inciting racial hatred, linked to a post on social media.

“For clarity: a complaint of a possible criminal offence was made to the police and this is why we called; to arrange an interview.

“Everyone was polite and professional throughout the brief conversation.”

They said an officer told Ms Pearson: “It’s gone down as an incident or offence of potentially inciting racial hatred online. That would be the offence.”

Essex Police say they have complained to the Independent Press Standards Organisation (IPSO) over what they call “false reporting” regarding the ongoing investigation.

What is a non-crime hate incident?

Non-crime hate incidents (NCHIs) are defined by the government as an incident involving an act which is perceived to be motivated by hostility or prejudice towards persons with a particular characteristic.

Those characteristics can include race, religion, disability, sexual orientation and transgender identity.

These incidents do not amount to a criminal offence, but they are reported to police and recorded in case they escalate into more serious harm or indicate heightened community tensions.

It can be reported to police by anyone, whether they are directly affected by the alleged NCHI or not.

Not all incidents reported to police are recorded as NCHIs.

They need to meet this threshold, according to the government: “A single distinct event or occurrence which disturbs an individual’s, group’s or community’s quality of life or causes them concern.”

Furthermore, the personal data of the person reported should only be included in the reports if the incident in question presents a “real risk of significant harm” to individuals or groups with a particular characteristic and/or a real risk that a future criminal offence may take place against them.

The origins of NCHI recordings stem from the murder of Stephen Lawrence in 1993, who was murdered by a gang of racist attackers in southeast London as he ran to catch a bus.

An inquiry into his death in 1999 called for the creation of “a comprehensive system of reporting and recording of all racist incidents and crimes”.

The first guidance on NCHI was published in 2005, but there have been updates over the years in response to scrutiny over protecting free speech.

The latest guidance was published in June 2023, when an updated code of practice set out a “common sense and proportionate approach that should be adopted by the police”.

The guidance, introduced under the Conservative government, clarified “that debate, humour, satire and personally-held views which are lawfully expressed are not, by themselves, grounds for the recording of an NCHI” and that an NCHI should not be recorded if police deem a report to be “trivial” or “irrational”.

In an interview with The Telegraph published yesterday, Kemi Badenoch said police visiting a journalist over a social media post was “absolutely wrong” and that “we need to look at the laws around non-crime hate incidents”.

“There has been a long-running problem with people not taking free speech seriously,” she said.

She challenged the prime minister to review the laws, saying: “Keir Starmer says he is someone who believes in these things. Now he needs to actually show that he does believe it. All we’ve seen from him is the opposite.”

Ms Badenoch added: “We need to stop this behaviour of people wasting police time on trivial incidents because they don’t like something, as if they’re in a nursery.

“It’s like children reporting each other. And I think that in certain cases, the police do it because they’re afraid that if they don’t do it, they will also be accused of not taking these issues seriously.”

Essex Police said the officers went to the address to invite Ms Pearson to attend a voluntary interview as part of their investigation, which was passed to them by another force.

“The report relates to a social media post which was subsequently removed,” the statement read.

“An investigation is now being carried out under Section 17 of the Public Order Act.”

Essex Police also said they made attempts to contact Ms Pearson before the visit.

Other prominent Conservative voices such as Boris Johnson, Liz Truss and Chris Philp have also leapt to Ms Pearson’s defence online, as has X owner Elon Musk, who quoted a post about the incident and said: “This needs to stop.”

Police commentator Graham Wettone told Sky News the police are “duty bound to investigate allegations of crime”.

“They’ve had an allegation of crime made there,” he said. “They will investigate it. If at the end of this they decide that no criminal offence has been committed – and we’re not at that stage yet – then it can still be recorded as a none crime hate incident.”

The police, he said, are duty bound to keep a record of none crime hate incidents.

“Parliament said they want the police to do this, to investigate and record incidents like this. So they are doing exactly what parliament and society asked them to do, and they are getting criticism for doing what people want.”

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Sir Keir Starmer vows to defend budget decisions ‘all day long’ as farmers slam ‘disrespectful’ PM

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Sir Keir Starmer vows to defend budget decisions 'all day long' as farmers slam 'disrespectful' PM

Sir Keir Starmer has said he will defend the decisions made in the budget “all day long” amid anger from farmers over inheritance tax changes.

Chancellor Rachel Reeves announced last month in her key speech that from April 2026, farms worth more than £1m will face an inheritance tax rate of 20%, rather than the standard 40% applied to other land and property.

The announcement has sparked anger among farmers who argue this will mean higher food prices, lower food production and having to sell off land to pay for the tax.

Sir Keir Starmer

Sir Keir defended the budget as he gave his first speech as prime minister at the Welsh Labour conference in Llandudno, North Wales, where farmers have been holding a tractor protest outside.

Sir Keir admitted: “We’ve taken some extremely tough decisions on tax.”

He said: “I will defend facing up to the harsh light of fiscal reality. I will defend the tough decisions that were necessary to stabilise our economy.

“And I will defend protecting the payslips of working people, fixing the foundations of our economy, and investing in the future of Britain and the future of Wales. Finally, turning the page on austerity once and for all.”

He also said the budget allocation for Wales was a “record figure” – some £21bn for next year – an extra £1.7bn through the Barnett Formula, as he hailed a “path of change” with Labour governments in Wales and Westminster.

And he confirmed a £160m investment zone in Wrexham and Flintshire will be going live in 2025.

‘PM should have addressed the protesters’

Among the hundreds of farmers demonstrating was Gareth Wyn Jones, who told Sky News it was “disrespectful” that the prime minister did not mention farmers in his speech.

He said “so many people have come here to air their frustrations. He (Starmer) had an opportunity to address the crowd. Even if he was booed he should have been man enough to come out and talk to the people”.

He said farmers planned to deliver Sir Keir a letter which begins with “don’t bite the hand that feeds you”.

Farmers' tractor protest outside the Welsh Labour conference in Llandudno, North Wales
Image:
Farmers’ tractor protest outside the Welsh Labour conference in Llandudno, North Wales

Mr Wyn Jones told Sky News the government was “destroying” an industry that was already struggling.

“They’re destroying an industry that’s already on its knees and struggling, absolutely struggling, mentally, emotionally and physically. We need government support not more hindrance so we can produce food to feed the nation.”

He said inheritance tax changes will result in farmers increasing the price of food: “The poorer people in society aren’t going to be able to afford good, healthy, nutritious British food, so we have to push this to government for them to understand that enough is enough, the farmers can’t take any more of what they’re throwing at us.”

Mr Wyn Jones disputed the government’s estimation that only 500 farming estates in the UK will be affected by the inheritance tax changes.

“Look, a lot of farmers in this country are in their 70s and 80s, they haven’t handed their farms down because that’s the way it’s always been, they’ve always known there was never going to be inheritance tax.”

On Friday, Sir Keir addressed farmers’ concerns, saying: “I know some farmers are anxious about the inheritance tax rules that we brought in two weeks ago.

“What I would say about that is, once you add the £1m for the farmland to the £1m that is exempt for your spouse, for most couples with a farm wanting to hand on to their children, it’s £3m before anybody pays a penny in inheritance tax.”

Read more:
Ex-Labour adviser suggests doing to farms ‘what Thatcher did to coal mines’
Farmers ‘could block ports and disrupt food supply’

Welsh farmer Gareth Wyn Jones
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Welsh farmer Gareth Wyn Jones

Ministers said the move will not affect small farms and is aimed at targeting wealthy landowners who buy up farmland to avoid paying inheritance tax.

But analysis this week said a typical family farm would have to put 159% of annual profits into paying the new inheritance tax every year for a decade and could have to sell 20% of their land.

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The Country and Land Business Association (CLA), which represents owners of rural land, property and businesses in England and Wales, found a typical 200-acre farm owned by one person with an expected profit of £27,300 would face a £435,000 inheritance tax bill.

The plan says families can spread the inheritance tax payments over 10 years, but the CLA found this would require an average farm to allocate 159% of its profits each year for a decade.

To pay that, successors could be forced to sell 20% of their land, the analysis found.

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