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Leaked meeting with improvement board chair reveals scale of financial challenge at city council

A former local government ombudsman tasked with ensuring Nottingham City Council transforms the way it works has given the authority until March to sort out its financial problems.

In a behind closed doors meeting on Monday, 8 November, Sir Tony Redmond also told the authority while progress had been made it was still “falling short in some areas” and “there is an awful lot of work to be done” to balance its budget.

The Local Democracy Reporting Service has been given a recording of the meeting, which was not open to the press or the public.

It was held at Nottingham Council House just before a full council meeting, which was then opened to the public.

The former ombudsman was appointed by the Government in January to lead an improvement board to examine the council following the collapse of failed council company Robin Hood Energy.

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The company went into administration in January 2020 and will cost taxpayers an anticipated £38m.

The authority, which has debts of around £1 billion, now has until March to show how it intends to balance its books over the next four years.

This includes achieving ‘financial resilience’ in terms of setting its budget and creating a ‘culture change’ across the whole of the authority.

If this can’t be achieved, then Sir Tony must report back to Government with his findings, which could see Westminster appointing commissioners to run the Labour-run authority.

Addressing the full council chamber, Sir Tony said a number of positive changes had been made as part of the transformation plan.

This includes a new constitution, and ‘a degree of progress’ in reviewing the council’s company portfolio and capital programme, asset sales and borrowing limits.

But he stressed that in the future the council can “only spend what you can afford.”

He said: “Despite the significant progress you have made in recent months, there has to be a challenge on what happens next.”

He added: “By the end of November there will be in the hands of the Secretary of State and ministers a report, which will identify how we see the progress has been made.

“That deficit over the next four years, if it is not fully addressed, we have to say ‘we cannot actually provide the assurance to the Secretary of State that all has been done in the appropriate timescale.’

“So, we are looking to you to try and move as quickly as possible to ensure that you have for your council meeting in March next year a balanced budget for four years, which illustrates in detail how you will seek to achieve service reductions, actual cuts to the workforce, to enable you to stay within available resources, and that will be after you have the opportunity to consult your citizen stakeholders.

“That is a big challenge. We are now in November and consultation should really start in December but there is a lot of work still needed to be done to transform the way you do things; the way you deliver services and the way you operate.

“Inevitably, we have to look very critically at how you plan to do that.”

The meeting was held just before the council identified £12.2m of savings for 2022/23, which includes controversial proposals to close six children’s centres, which are going out to consultation.

But there is still £15.7m it needs to find to balance its budget next year. Plans on how to close this gap have not been disclosed yet.

The council says in total £38m is needed to balance its books over the next four years.

Sir Redmond added:  “I hear ‘there is a way out of this. We will just use reserves to sort out the transformation.’ That will not suffice.

“In order for us to have assurance we need to see how you are going to finance your services over the next four years within available resources.

“I want you to succeed here but there is an awful lot of work to be done.”

He added: “At the end of the day I have the responsibility to provide assurance to the government that you have actually responded to the recommendations – and at the moment you are falling short in some areas.”

Talking about Robin Hood Energy, he said: “The authority has got much in mind about how to try and deal with the growth pressures – and I fully understand that.

“I fully understand that this is on the back of continuous reductions in grants over a number of years, which may be inconsistent with balancing these resources.

“But why I am here is not because Nottingham has been in itself spendthrift in the past – you had a thing called Robin Hood Energy last year where you lost £38m.

“That left you vulnerable. That left you in a position where most local authorities are not in. And that is why I am here.”

The council did not provide an answer when asked by the Local Democracy Reporting Service why the meeting was held behind closed doors.

A council spokesman said it is “on track” to present its full budget plan to a Full Council meeting in March 2022.

It said: “The council doesn’t receive its financial settlement from Government until next month (December), and we wouldn’t be in a position to finalise this work until that happens.

“We will await the report of the Improvement and Assurance Board and the response of the Secretary of State to the Board’s report, but the Board understand both the financial pressures on the council and the work being done to address those pressures.

“As well as the budget saving proposals of £12.2m for 2022/23, we have managed to reduce projected in-year overspends significantly and embarked on a widescale and far-reaching transformation programme which will help us to maintain long-term financial stability.

“We trust that all of this gives the Improvement and Assurance Board and the Government the confidence that we are serious about and capable of the change and pace that’s needed.”

Cllr Sam Webster (Lab), portfolio holder for finance, has previously said the authority is under pressure due to consistent reductions in government funding.

He also said the authority is dealing with a “social care crisis”, with adult social care and child social care taking up a combined £155m of the council’s £240m overall budget.

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