By Joe Locker, Local Democracy Reporter
Hundreds of vehicles which belonged to Nottingham City Homes have been bought by the city council as part of bringing the housing provider back under its full control.
Nottingham City Homes (NCH) operated as a wholly-owned subsidiary of the Labour-run council, meaning its stock was owned by the authority, but it had its own management structure and corporate culture.
Bringing it back in-house had been on the cards since the beginning of 2021 following the fallout from the collapse of Robin Hood Energy, with suggestions it could help reset the relationship the council had with some of its own companies.
The council’s hand was then forced further upon the discovery of a series of unlawful payments from the Housing Revenue Account (HRA) at the end of 2021, the cost of which is now estimated at around £51m.
A series of payments, some unlawful, had been made over a number of years, with money intended for council housing improvements wrongly transferred to the council’s general fund.
Following subsequent investigations into the payments, reports from investigators Richard Penn and the Chartered Institute of Public Finance and Accountancy (CIPFA) recommended NCH be brought back in-house, because existing arrangements did not allow for money to be “adequately protected”.
The recommendations were carried out and the move cost around £750,000 in transfer fees.
The delivery of the council housing service transferred from NCH to the council in March this year.
In a delegated decision published in August, documents reveal the council has also paid £1.12m to purchase NCH’s vehicle stock.
Council documents say: “As part of that delivery NCH run a fleet of
288 vehicles.
“These are used primarily for the repairs and maintenance service but also cover the Independent living service and pool vehicles.
“The value has been assessed by NCC who have held the contract for maintaining the vehicles and so have extensive knowledge of the age and condition.
“NCC considered the options of lease or purchase of the vehicles and concluded that purchase was the best options as the fleet will need to be replaced within a few years of transfer.”
Despite the council having owned NCH as a subsidiary, the vehicle assets could not simply be transferred or gifted due to legal reasons.
In February the council allocated £2m over its Medium-Term Financial Plan for the purchase of the vehicles, funded from capital receipts in the Housing Revenue Account.
Speaking of why a financial transfer must be made, a Nottingham City Council spokesman said: “It’s understandable why this transfer of the former Nottingham City Homes (NCH) fleet to the council seems odd.
“However, it’s a legal requirement in terms of the accountancy process for a balancing transaction to have taken place.
“NCH Ltd is not permitted to gift these vehicles to the council because the company still legally exists and is required to secure value for its assets to comply with Accounting and Companies Act rules.
“The £1.1m figure is to reflect that the fleet of 289 vehicles will cease to appear on NCH’s assets register and instead sit on the council’s.
“As NCH is a wholly-owned subsidiary the value of the assets within the group balance sheet remains the same.”
