Council leader denies authority is facing bankruptcy

Nottingham City Council’s leader says it has “fully accepted” the findings of a rapid review carried out on behalf of the Ministry of Housing, Communities and Local Government (MHCLG) – but says he has made clear that the authority is not on the verge of bankruptcy.

Councillor David Mellen was responding to a leaked report on behalf of the MHCLG that painted a grim picture of the Council;s finances and outlined swift actions it needed to take to try and plug a £64m black hole in its finances by 2023.

The report has not yet been formally published and is currently with the Local Government Secretary for consideration.

Leader of the council, Councillor David Mellen, said: “The report does not use the word ‘bankruptcy’. It does highlight that the Council needs to make savings in order resolve our very difficult budget situation and we are currently developing budget proposals in order to meet that challenge.”

“We have been working closely with Max Caller and his team over the last few weeks as they have carried out the review. We fully accept the findings and remain committed to making the improvements needed to ensure we are the best we possibly can be as a council.

“The review clearly raises serious issues around financial management and governance that need to be addressed urgently.

“It highlights that we have been slow to act on warnings about the risk of relying on one-off savings and income through commercialisation and that we should have been managing budgets on a longer term basis to reduce core expenditure and transform services.

“The council’s capital expenditure and high levels of debt compared to other cities is also flagged up as a major concern with the cost of borrowing restricting our flexibility on day-to-day spending.”

The damning report outlines several findings that will dismay council leaders, including: the Government being able to legally limit how much the council is allowed to borrow; the council having submit a recovery plan by next month to plug a financial black hole of between £52m and £64m by the 2023 financial year; that the council is set to lose £38m from the failed Robin Hood Energy project; and that the authority must conduct an in-depth review of all its companies.

Despite this, Mel Barrett, the council’s chief executive who joined the authority in September, remained upbeat. He said: “The review team said it was impressed with the determination of the council’s leadership to stabilise the current situation and take the necessary decisions to bring about improvement.

“We hope and believe this demonstrates confidence that we can deliver the changes needed, building on the work we have already begun following the publication of the Public Interest Report in the summer.”

Indeed, the Caller review outlines how impressed it had been with the co-operation of the Council.

It said: “Throughout our engagement with the council the team has been impressed by the commitment of the leader and his executive colleagues to bringing sound management and leadership back to the council and taking the decisions necessary to stabilise the position.

“The team concluded that, with support, it was possible to proceed to a position where the council could take their decisions and be held to account for their delivery.”