By Matt Jarram, Local Democracy Reporter
A Government minister is “disappointed” at part of the progress made by Nottingham City Council to get its financial house in order after the collapse of Robin Hood Energy.
Kemi Badenoch, Minister of State for Equalities and Levelling Up Communities, responded to an update on the council’s progress published on Tuesday (November 2).
She said she wanted to see the publication of the council’s medium term financial plan – which shows how the Labour-run authority will achieve financial stability.
But she also commended the council’s progress in rewriting its constitution, which defines the relationship between councillors and officers and how they should work and make decisions.
Her comments are the latest in a series of checks being made on how the council is run following Government concerns on the authority’s levels of debt.
The council has been warned Government commissioners could take control of the Labour-run authority if it does not make satisfactory progress on making changes.
The authority has been given three years by the Government to get its house in order on the back of a string of financial issues, including setting up a failed energy company, Robin Hood Energy (RHE), with anticipated losses of £38m.
Former Government Ombudsman, Sir Tony Redmond, was appointed by the Government to lead an improvement board after the council was accused of ‘institutional blindness’ following the collapse of RHE.
Concerns around the way the council makes decisions and manages risks were also identified, as well as the debt it has accumulated, which currently sits at nearly £1bn.
In Tuesday’s update to Government, made public online, Sir Tony notes the council is aware of the need to address the requirement to close the estimated funding gaps of £27 million in 2022/23 rising to £33 million in 2024/2025.
These are in addition to a projected revenue budget deficit of £12m in 2021/22.
The update added: “The Board has stressed that such budget shortfalls must be addressed as a matter of urgency if a credible and realistic financial plan is to emerge over the forecast period.”
Responding, Mrs Badenoch said: “It is encouraging that the council has sought to address many of the challenges you highlighted in your previous report on June 17.
“The reframed constitution, revised Council Plan, clear capital receipts programme and remodelled corporate management structure are key building blocks that will provide the foundation for the council’s recovery.
“I look forward to hearing the Board’s assessment of progress as these changes embed across the Council over the coming months.
“I share the Board’s concern regarding the council’s overall financial resilience, and it is disappointing that the council has yet to produce the three-year Medium-Term Financial Plan (MTFP).
“My expectation is that a robust and balanced MTFP will be brought before the Council’s Executive Board in November.
“I would also welcome the Board’s assessment of how the Council will seek to address the budget shortfall that has been identified in your next report.
“Finally, reducing the Council’s indebtedness is critically important to its long-term financial sustainability.
“I understand that the Council’s voluntary debt reduction plan is delivering the required changes in working towards an improved borrowing and debt position, and I continue to value the Board’s views on this matter.
“Progress in these areas will inform my decisions on our involvement with the Council and my final decision later in the year on any additional capitalisation support.
“It is imperative that the Council continues to engage constructively with the Board and that it makes rapid progress given the scale of the challenge.
“Failure to do so would be concerning and could lead to a reconsideration as to whether a more statutory approach might be appropriate to secure the improvements that are necessary.”
City Council Leader, Cllr David Mellen, said: “We are pleased the Minister recognises the good progress we are making in many of the areas we are working on with the Improvement and Assurance Board, including our voluntary debt reduction plan delivering the required changes.
“We can assure the Minister that the council is committed to achieving a sustainable medium term financial plan as a solid platform for the delivery of vital public services.”
