Nottingham city council has hit back at Rishi Sunak after the prime minister accused it of “letting down its residents” and claimed the financial difficulties that drove it to effective bankruptcy last year were triggered not by cuts but poor management.
The authority, which issued a section 114 notice in November after deeming it could not deliver a balanced budget, faces possible government intervention. Four English councils have declared insolvency in the past 12 months, two of them Tory-run.
The Labour-run city council faces a £23m overspend this year and a £50m budget gap in 2024-25. It said austerity cuts had reduced its funding by £100m a year for the past decade, cutting its spending power by more than a quarter.
Speaking at a youth centre in Mansfield, Nottinghamshire, on Thursday, Sunak said the city council’s situation mirrored how Labour would run the national economy if the party won the next general election.
He said it had “essentially bankrupted itself” and “let down its residents” through a series of poor decisions, including losing millions in the failed Robin Hood Energy, a not-for-profit company set up by the council in 2015 in competition with the six main national energy suppliers and later sold at a loss.
Responding, David Mellen, the leader of Nottingham city council, said: “Rather than accept the blame for government underfunding of local authorities, he trotted out the same tired old lines about Labour mismanagement. As always, he is totally wide of the mark.”
He added: “Robin Hood Energy was closed by the council three years ago – we have dealt with the consequences, but this government continues to cause chaos.
“The reduction of funding from government, £100m less every year since 2013 in the case of Nottingham city, combined with rising costs of adult and children’s social care, is pushing local services to breaking point.”
Sunak contrasted the city council’s difficulties with the Tory-led Nottinghamshire county council. He said: “You have to make difficult decisions to run things responsibly, but that’s what Nottinghamshire county council are doing led by Conservatives and more generally, it just illustrates the contrast between Conservatives and Labour when we’re in power.
He added: “You can trust me, the Conservatives, you can trust Ben [Bradley, MP for Mansfield and leader of Nottinghamshire county council] and his colleagues to run things responsibly.”
Last month Bradley co-signed a letter to the chancellor, Jeremy Hunt, with several other Tory council leaders warning the government’s failure to properly fund local authorities would lead to more service cuts. The letter, whose signatories included councils such as Essex, Hampshire, Kent and Surrey, said one in 10 authorities faced potential bankruptcy from April.
Nottinghamshire county council faces a deficit of £60m over the next three years but says it is not in danger of bankruptcy.
Sunak said the city council’s financial difficulties were caused by “clear mismanagement”. Responding to a question from Global Radio about whether the government was to blame, he said: “That’s just simply not what the situation is.”
He added: “You had very clear mismanagement by a Labour-run council and that’s why they’re in bankruptcy.”
