By Joe Locker, Local Democracy Reporter
An auditor tasked with checking Nottingham City Council’s historic and current accounts says it is “very concerned” over the authority’s financial position.
Grant Thornton has been reviewing the council’s yearly accounts from 2019 through to 2023, amid a string of serious financial problems.
It is now in the process of looking at the authority’s in-year accounts for 2023 to 2024.
An audit involves the examination of the financial books of an organisation. All local authorities have their accounts reviewed in this way to ensure finances are in order and being managed in the correct way.
In July the City Council said it was anticipating a £26m gap in its budget for this year, due to factors including rising inflation, a nationally-agreed staff pay award, an increase in homelessness and reduced Government funding.
During an Audit Committee meeting on Friday, September 29, Andrew Smith, key audit partner for Grant Thornton, said: “Back in February time we reported a number of significant weaknesses as part of our value for money work.
“Some of the key recommendations related to the financial sustainability of the council and obviously we have been keeping a close eye on the council budget and progress in year to date.
“Just to say our concerns are quite high at the moment based upon the in-year position. I will be raising those concerns with the chief executive.
“I will be writing to the chief executive to discuss the council’s plans to hopefully address the in-year position and hopefully bring the council back on track.
“I just wanted to make the committee aware we are very concerned about the in-year position.”
On top of the current budget gap, the council is also predicting a gap of £50.9m in the 2024/25 financial year, before rising again to £58.7m over four years to 2027.
People Services are forecasting the most significant pressures of £14.5m, of which £7.1m relates to adult social care, largely driven by external placement costs and growing demand, as well as a further £6.9m relating to children’s services due to similar reasons.
Cllr Michael Edwards (Lab) asked Mr Smith if, as part of his work, he covers other local authorities, including those with adult social care and children’s services responsibilities, and if they are experiencing similar problems to Nottingham.
Mr Smith replied: “It is true that most local authorities are facing similar demand pressures in those areas, they are common areas where councils are facing overspends in.”
Ross Brown, the council’s director of finance, added: “Our ability to cope with in-year financial pressures of the significance we are talking about is more limited in some instances than others, and that is because our financial resilience, as articulated through our overall useful reserves, has clearly been depleted due to a number of historic issues which we have had to fund quite rightly as an authority.
“So our ability to deploy resources of a reserves nature on an in-year basis is more limited.
“But this is the direction of travel for all local authorities that are experiencing significant pressures in the areas of adult social care and homelessness.”
Cllr Edwards said: “Someone somewhere in this country has to face up to this and do something about it and I think it is just extraordinary that we keep turning around to people like yourselves saying do something about it.”
The council is still being monitored by a Government-appointed review board, chaired by Sir Tony Redmond, following a string of financial problems including the collapse of council-run Robin Hood Energy.
