By Matt Jarram, Local Democracy Reporter
Nottingham City Council has managed to keep government commissioners at bay despite ‘unlawfully’ spending more than £15m on the wrong services.
The authority is being monitored by a Government improvement board after a string of serious financial problems.
And concerns were raised in December that the secretary of state could intervene further when it emerged the council had ‘unlawfully’ spent £15 million of ring fenced council rent money from its Housing Revenue Account.
But the latest update from the board, and the Government’s response, shows the authority has avoided the step of commissioners being called in to run the council, as has happened in other parts of the country when councils have faced serious financial issues.
Former government ombudsman, Sir Tony Redmond, is chair of the board and reports back to the government quarterly on the council’s progress.
His most recent assessment, and the Government’s reply, was made public today, (Wednesday, March 9).
It is not an up to date picture as the minister is responding to findings Sir Tony made in November.
Kemi Badenoch, Minister of State for Equalities and Levelling Up Communities, aired her concerns on the misspent £15 million, but crucially does not escalate intervention beyond the board’s involvement.
“It is clear the council continues to face many challenges as it seeks to address its past failings,” she said.
“The historic unlawful Housing Revenue Account expenditure that came to light last December which resulted in the council issuing statutory notices highlights these difficulties.
“Whilst I note your assessment that the council are taking the necessary steps to rectify the situation, and that this issue relates to historic accounting practices, it is still of great concern.
“My expectation is that the review of governance arrangements and historic financial transactions between the council and Nottingham City Homes will be completed expediently and that the board continues to monitor this issue closely.
“The council should continue to work constructively with the Board to ensure progress does not stall.
“A failure to do so would be of extreme concern and could lead to a reconsideration of whether a statutory approach might be more suitable to ensure that the council operates on a sustainable financial footing moving forward.”
The council has created a medium-term financial plan which shows where £38m of savings will fall over the next four years.
Plans include closing five children’s centres and reducing its youth workers and community buildings across the city as part of plans to claw back £28m this year.
It has also adopted a transformation programme, which aims to save more than £30m, and includes changing the way the council runs its departments.
It was approved by councillors at a full council on Monday, March 7.
Cllr David Mellen, leader of the council, has previously expressed his frustration at the apparent delay in the Government’s response to Sir Tony’s latest report at a meeting this month.
He said on Wednesday, March 9: “It’s important to note that the latest report from the Improvement and Assurance Board covers the period before November last year and that a significant amount of progress has been made since then to improve the council’s financial position both in the short and longer term.
“As the Government has welcomed in its response to the report, the council will set a balanced budget for the coming year without the need for any further support or intervention and has now finalised a Medium Term Financial Plan covering the next four years, a key requirement which had previously been highlighted by the Improvement and Assurance Board.
“This has not been an easy process and has meant some extremely difficult decisions about funding for services. However we have delivered what we said we would do and made the necessary changes to put the council on a solid financial footing for future years.
“The minister’s response highlights that we are taking the steps needed to put right the unlawful use of funds in the Housing Revenue Account for General Fund purposes, to ensure that it can’t happen again and to ensure that lessons are learned through an independent investigation which is under way.”
