By Joe Locker, Local Democracy Reporter
Nottingham City Council says a £5 million Government grant identified to have not turned up at the right department was in fact used correctly.
Concern over the location of the grant was revealed when an independent assessment of how the Labour-run authority managed money was made public on Monday.
Accounting firm Ernst and Young was commissioned to look into the handling of ring-fenced money, after unlawful spending of council rent payers’ money in from the Housing Revenue Account was uncovered in 2021.
The full report, a series of documents totalling 100 pages, specifically identified issues with a £5m grant from Central Government for lost car parking income during the pandemic.
The report noted the enforcement team “did not receive any of this money and it is not clear how it was used”.
However in a statement on Wednesday, February 7, a council spokesman said: “A further review of the use of the grant for lost parking revenue during the Covid pandemic has confirmed that this was used correctly.
“The parking income budget gross shortfall during Covid was £6.3m, of which £4.7m (75 per cent) was funded from un-ringfenced Covid-19 grant and the remaining £1.6m (25 per cent) by the council.
“The use of 75 per cent of the Covid-19 grant was in line with the level of reimbursement from Government.”
The report from EY also raised concerns over the use of money from the Bridge Estate, a charity set up to maintain Trent Bridge by letting out around 100 properties across Nottingham.
The council is the sole trustee of the charity.
When surplus money is made by the charity, it may be transferred to the council’s own account, but the EY report said money transferred to the council “does not appear to correlate” with the generated surplus.
For example, in 2021/22 a total of £1m was transferred, but it was said this was £519,584 more than the surplus made in the year.
EY said the transfer of endowment funds appears to have contributed.
Endowment is property held by a charity, such as cash and land, and this must be kept in a fund rather than spent.
However, according to Government guidance, spending, borrowing from, or transferring it can be allowed in some cases.
The right rules must be followed and it must always be done in the best interests of a charity, guidance says.
In its report EY had noted “the restrictions around these endowments would need to be explored to understand whether these are compliant or not.”
The council says in the statement on February 7 the endowment fund has not contributed to grant payment to the council, as per further review of the issue.
“The Charity made a surplus of £520,000 in 2021/22 and a deficit of £543,000 the previous year, however this was planned as part of the regular maintenance of Trent Bridge,” the spokesman added.
“The charity sets aside money each financial year for the maintenance of the bridge.
“During 2020/21 it spent £666,000 on this work which was funded from £612,000 brought forward from reserves and £54,000 of in-year income.”
Speaking to the Local Democracy Reporting Service after the report was released, council leader David Mellen said further questions must be asked of officers.
“Clearly there are questions to be asked and questions to be answered,” he said.
“I think the report is available for all to see and as a result of that openness there will be questions that need answering. It is right councillors are not involved in individual financial transactions, it is not our role.
“But of course it is our role to ask questions when things have been pointed out when they are not as they should be.
“Now that I have seen the report I will have questions to ask of officers.
“I think EY gave these areas a good going over and I would accept the conclusion.”
