News, Politics

Nottingham City Council’s management of finances still ‘off-track’ despite progress in key areas

By Joe Locker, Local Democracy Reporter

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Nottingham City Council’s financial management remains “off-track” and is still an urgent priority despite improvements in some other areas, the authority’s leader has said.

The Labour-led council is looking to become financially sustainable by 2028, and progress towards the goal is being overseen by a team of government-appointed officials.

The three commissioners were appointed by the previous Conservative government in February last year, just months after the council declared itself effectively bankrupt in November 2023.

Exceptional Financial Support (EFS), an emergency accounting mechanism that allows for the use of property and land sales to fund day-to-day running costs, is now being used to help keep the council’s annual budgets balanced.

To achieve financial sustainability, the council has drawn up an Improvement Plan, which details how it is aiming to balance its books through typical means – and not by using emergency measures.

Progress was discussed at an Executive Board meeting on Tuesday (April 22).

Cllr Neghat Khan (Lab), the council’s leader, said: “We are beginning to see the impact of this work with stronger governance, clearer priorities, and better ways of working becoming embedded across the organisation.”

The council has been using a ‘Red, Amber, Green’ rating system to monitor the progress it is making in 11 key areas.

Six areas now have a green rating, which indicates good progress, while four have an amber rating, and one is red.

Areas that are rated ‘green’ include the creation of a “learning culture” across the council, making sure the authority is working to best practice.

‘Walkabout Wednesdays’, whereby department leaders talk to staff working in frontline services, have also been introduced to improve leadership visibility.

Strengthening financial management is the only area with a ‘red’ rating, which indicates poor progress.

The council’s management of its finances has been heavily criticised in the past.

It was ordered to publish a secret report into how it managed its finances last year, after the Information Commissioner’s Office (ICO) ruled in favour of an appeal calling for its release by the Local Democracy Reporting Service.

Accounting firm Ernst and Young (EY) had been asked to review the authority’s books after the unlawful spending of council rent payers’ money was uncovered in 2021.

The full report revealed a string of issues, including poor paper trails to show where funds had been spent – and if they had been spent correctly.

“The green-rated areas including governance, organisational culture, performance monitoring, and transformation planning are real evidence of progress, but we still remain clear-eyed about the work still ahead,” Cllr Khan said.

“The amber-rated programmes related to financial sustainability, asset management, council companies and internal control need sustained attention.

“Financial management continues to be our most significant challenge. While progress is being made, this remains off-track and strengthening this area is an urgent priority.”

The council says it is still expecting to spend £20.79m more than it has coming in during the current financial year, which began on April 1, 2025.

However, this is down from the reported £22.5m budget gap in February, meaning its financial stability has improved.

It also marks an improvement on the £41m gap the council had to fill in the previous financial year of 2024/25.

Cllr Linda Woodings (Lab), the council’s executive member for finance, added: “It is worthwhile recognising the level of effort that has gone to moving us in the right direction to completing our improvement plan.

“We’ve actually achieved a huge amount this year, but we know there is still a journey to go to become sustainable financially, rather than stable financially, which is the current assessment.

“None of us are taking our foot off the pedal.”