Nottingham City Council to change decision-making rules after financial problems

Loxley House, headquarters of Nottingham City Council.
By Matt Jarram, Local Democracy Reporter

Nottingham City Council is to approve a new constitution – which includes changes to how it makes some decisions – following a string of financial issues.

The Labour-run authority will also start developing an action plan after an independent report in June described the scrutiny of its council-run companies as “superficial and inadequate”.

The council has been given three years by the Government to improve its financial stability following a string of issues, which include setting up Robin Hood Energy, which caused an estimated £38m in losses when it went into administration.

The authority now has a Recovery and Improvement Plan, part of which is delivering a re-written constitution on how the authority is run and looking at how it scrutinises the decisions it makes.

If the overall plan fails to work, then the government could step in to control the authority’s spending. It has already told the council it wants to see “a credible strategy for long-term transformation.”

The council’s new constitution wants to increase officers’ responsibilities for some operational decisions.

Officers’ decision-making powers can now be up to the value of £149,999. Previously, councillors in portfolio roles took on most decisions with a value of £50,000 and above.

At the same time, the rules on key decisions made by the council’s executive team, which includes the leader of the council and portfolio holders, are also being changed.

Now, a decision  between the value of £150,000 to £749,999 can be made by them, compared with £1m previously.

But if a decision has a value above £750,000 it will be taken by the leader of the council, his executive board, who may delegate this to an officer or portfolio holder.  Before, it was £1m or above.

The council says the rewritten constitution is easier to understand and establishes “clear lines of accountability” when it comes to officers and councillors.

Council companies also form part of the constitution. The council governs companies which include Nottingham City Transport (NCT), Nottingham City Homes (NCH), EnviroEnergy, NET Trams, Nottingham Ice Arena, and Thomas Bow City Asphalt.

The rewritten constitution says these companies will have monthly performance and accounts reports as well as setting out how business objectives can be achieved.

The Centre for Governance and Scrutiny (CfGS) published a report in June which heavily criticised the way the local authority scrutinised itself.

The report found committees set up to hold the authority to account were failing.

It stated: “Scrutiny itself is essentially disconnected from the extraordinary challenge that the council now faces and has largely been absent in its duty to challenge the activities, decisions and events which have led it to the point of crisis.

“Scrutiny of the Executive and Council companies was superficial and inadequate, this is partially due to scrutiny having no clearly understood role and the lack of suitable information to base its scrutiny upon.”

The report added: “In exploring the reasons for this situation, the impact of a legacy culture of dominant party/group loyalty must be acknowledged.

“Although such loyalties are a familiar aspect of politics and democracy, the adherence to this code over time has resulted in any public challenge being seen as ‘disloyalty.’

“Finance and budgets receive only superficial scrutiny and there is little in-depth analytical challenge of the budget-making process or the council’s financial performance.

“Across all committees there was limited interest and involvement in budget performance or achieving outcomes with reduced resources.

“Perhaps more worryingly, committees do not seem sufficiently sighted on the implications that the corporate financial challenge may have upon the future design and delivery of services.

“Committee meetings should comprise mainly of holding Executive Members, or where appropriate, the Leader to account, supported by officers.”

Full council is set to consider and approve the re-written constitution on Monday, September 13. If agreed, it will come into force on October 1.

It is also expected to accept the independent report and start developing an action plan with the recommendations made.

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