A growing number of councils in England have declared bankruptcy since 2018, most recently Nottingham, Woking, Thurrock and Birmingham. With the situation in the devolved nations of the UK looking similarly precarious, the question of quite what has happened to local government finances in the UK is an urgent one.
A council cannot, technically, go bankrupt. But when its expenditure surpasses its income and it no longer has the funds to cover its statutory duties (of which there are over 1,200), let alone the non-statutory services it provides, it issues a section 114 notice. This entails no new spending commitments and developing a new budget within 21 days. The central government will often then appoint external commissioners to…
