Government to intervene in running of Nottingham City Council

Nottingham City Council's HQ

The Government is set to appoint commissioners to take over certain decision-making functions at Nottingham City Council after over £40m was misspent by the authority.

The news comes after it emerged the council could have mis-spent a further £24m worth of money from its Housing Revenue Account. The cash, along with the misuse of £14.4m which was admitted by the council in December, had been wrongly re-directed into a general fund for all council services.

In response, Nottingham City Council has pledged that the “major improvements” it has been making to financial governance and management will continue in light of the Government’s decision to appoint Commissioners, who will handle strategic financial management, governance and strategic decision making and appointment of statutory officers.

In a letter published on Thursday (June 23) to Sir Tony Redmond, Kemi Badenoch MP, junior minister for levelling up communities, said: “I am writing to you as chair of the Nottingham City Council Improvement and Assurance Board (‘the Board’) following the Secretary of State’s decision that he is minded to intervene in Nottingham City Council.

“The Secretary of State has carefully considered the findings and recommendations of the independent reports from Richard Penn and the Chartered Institute of Public Finance and Accountancy (CIPFA) regarding the unlawful Housing Revenue Account (HRA) expenditure, alongside the evidence presented in the Board’s latest progress report and assessment of the council’s response to the HRA issue.

“He is satisfied on the basis of the evidence provided that Nottingham City Council is failing to comply with its Best Value duty.

“He is therefore minded to exercise his Best Value powers under the Local Government Act 1999 and appoint Commissioners.

“He is also minded to appoint you as Lead Commissioner, subject to representations received, given the constructive working relationship you have established with the Council and your understanding of the challenges facing the City.

“I would like to take this opportunity to formally recognise the hard work of the Board who have provided a valuable source of advice, expertise and challenge to the Authority since your appointment in January 2021.

“Under your chairmanship, the Board has played a critical role in helping the Council to lay the foundations for its recovery.

“The ‘minded to’ decision is not a reflection on the effectiveness of the Board in helping the Authority to drive forward the necessary improvements, indeed it is clear that the progress that has been made to date would not have been achieved without your support.

“Despite this progress, more difficult decisions will be required moving forward and the scale of the challenges facing the Council cannot be underestimated.

“All interested parties are now invited to make representations to the Secretary of State about the intervention he is proposing by July 7.

“Once received, all representations will be carefully considered by the Secretary of State and I in making a decision as to whether to appoint Commissioners.”

Council leader, councillor David Mellen said: “The Government’s decision to appoint Commissioners follows our discovery last December that Housing Revenue Account funds had been allocated unlawfully. This was a significant setback but it’s important to understand that we brought the matter to light ourselves as part of our work to tighten up our financial and governance arrangements and have already taken swift and direct action to address the issue, including seeking the necessary ministerial direction to pay the money back into the Housing Revenue Account.

“In light of the improvements we have been making, it’s clearly disappointing that the Housing Revenue Account issue has led to the Government taking the action it has. We understand that it will be a major concern for city residents, council staff, our partners and local businesses but we are committed to working with Commissioners on any further improvements we need to make.

“Our staff do a great job providing vital services to city residents and we will support them to continue to do that in the months and years ahead.”

Chief executive, Mel Barrett said: “We have been making good progress on our recovery and improvement plan over the last 18 months, working closely with the independent Improvement and Assurance Board appointed by the Government to oversee its implementation.

“We have had a positive relationship with the Board and its chair Sir Tony Redmond. Sir Tony’s appointment as the lead commissioner therefore provides reassurance and continuity. This, and the fact that commissioners have been appointed for two years rather than the normal three, is recognition of the progress we have already made over the last 18 months.”

“The council has agreed a balanced Medium Term Financial Plan covering the next four years, a key requirement of the previous Non Statutory Review, and within that a balanced budget for this year without the need for any other financial support or intervention.

“It is also continuing to bring down overall debt levels significantly and taking a strategic approach to disposing of property assets to bring an income to the council.

“A review of council-owned companies is continuing and all the recommendations of two independent reports into the Housing Revenue Account issue commissioned by the council are being implemented, including bringing housing management back in-house, to ensure problems are resolved, the money is returned to the HRA and the same mistakes can never happen again.”

In a statement on Thursday afternoon, trade union Unison said: “Nottingham City Branch of UNISON wholly opposes the decision by Central Government to impose Commissioners to oversee certain functions of Nottingham City Council.

“UNISON believes this decision is undemocratic and that all council services should be delivered by staff working alongside the city’s democratically elected representatives to deliver in the best interests of the citizens of Nottingham.”

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