Nottingham City Council’s ability to deliver key services to residents could still be adversely affected despite selling more than £56m worth of property it no longer needs.
The Labour-run authority started reviewing its property portfolio as part of its financial improvement work, which began after 2020 following the publication of a report into the collapse of Robin Hood Energy.
Money brought in from the selling of assets has been helping to reduce the council’s debt and fund its efforts to quickly improve the authority’s performance.
Some of these activities have strict deadlines set by a Government-appointed improvement board, and money is needed to make sure the work is done to a high standard and on time.
According to council documents, which will be discussed during a meeting of the Audit Committee on Friday, June 30, the authority has so far made £56.24m from asset sales.
“Following the establishment of a robust, risk adjusted forecast for capital receipts, which was based upon those assets that had already been identified for disposal and the time-scale expected until completion, the total capital receipts achieved to date is £56.24m,” documents say.
According to the council £12.9m was made in 2020/21 and £17.8m in 2021/22, surpassing its targets.
However, in 2022/23, only £25.1m was made, missing the target of £33.3m.
So far in 2023/24, the council has made £440,000.
Of the missed target, documents add: “The last financial year did see a reduction of the forecast in year due to delays in the sale of two high value assets following the economic shock experienced in the autumn.”
Some assets the authority is selling are of low value, including car parks and industrial estates and land once inhabited by community facilities, such as the Summerwood Day Centre in Clifton.
Others are of high value, such as the former central library in Angel Row and the Guildhall.
The council currently owns more than 3,600 property assets, including a number of farms across the country, which have a collective value of more than £1bn.
Documents show the total amount in the pipeline is an additional £69m-worth of property over the next three years up until 2026.
The council had planned to review its need of 150 assets by the end of last year.
It achieved 60, and decided to put further reviews on hold so staff could focus on maximising the receipts brought in from selling its current assets.
The reviews started up again in June, and the council now has a target of reviewing 400 more by December 2023.
Some of the reviews include its own office portfolio.
Documents say the reviewing of fewer assets than planned is intentional.
“Due to the pace required, focus to date has been on the identification and delivery of assets that can be sold quickly to achieve an immediate capital receipt, rather than increasing the pipeline for future years,” the council says.
In order to now develop the pipeline for future years, a number of actions are being taken forward, and these include reviewing smaller income generating assets, as well as reviewing future operating models of services to see if any more surplus assets can be found.
An initial review of more high value assets, and the recommendations from the review, are expected in July.
A number of risks remain, despite the significant amount of money brought in.
Some of the key risks identified include the council’s generation of money from asset sales “not reaching the levels or time-scales required”.
This would mean the authority “is unable to balance its financial needs and this may impact on the ability of the council to deliver services,” documents say.
Other risks include staffing capacity due to significant turnover, as well as market conditions affecting potential sales.
This is a particular concern with office space due to it not being as sought after following the Covid pandemic, with more people now working from home.