An improvement board brought in to oversee critical changes at Nottingham City Council has concluded the authority “has still not fully accepted the gravity of the situation” and is disappointed in its progress.
The Improvement and Assurances Board (IAB) was appointed by the Government three years ago following the collapse of council-run Robin Hood Energy.
It is now leaving as commissioners are instead taking over to try to improve the authority’s stricken finances.
The IAB, headed by independent troubleshooter Sir Tony Redmond, had been working over the past few years to oversee, monitor, guide, advise and – more recently – instruct the council to make urgent changes.
However, owing to the significance of the financial challenge the authority is facing, with an anticipated budget gap of £172m over the next four years, the Government decided to appointed commissioners in February.
Lead commissioner Tony McArdle, finance commissioner Margaret Lee and transformation commissioner Sharon Kemp have now taken over from the IAB to see about rapid improvements.
Upon the IAB’s departure, its final report was published on Thursday, May 16.
While it acknowledges the sector-wide cost pressures in local government, which have been affecting adult social care, children’s services and homelessness in particular, the report says Nottingham’s position is “made much worse by its failure”.
“The IAB has been disappointed throughout its term of office at the pace of change in Nottingham,” the report ultimately concludes.
The report highlights some “encouraging advances”, including improving risk awareness, companies governance and its finances.
It commends the generation of a significant level of savings of £35m between 2023/24 and 2024/25 to help bridge budget gaps of £28m and £50m respectively through reviews of its spending practices.
Yet, the IAB says the council has still been forced to rely on Government Exceptional Financial Support, which has allowed it to apply £41m-worth of its own capital resources to set a “technically” balanced budget in 2024/25.
This still leaves the authority with a total gap of £172m over the next four years and, as a result, “the council will need to put in place, urgently, a revised financial planning methodology,” the report adds.
Upon the appointment of the IAB, the Labour-run council also adopted a ‘voluntary debt reduction policy’.
It was recognised debt was too high and the council decided to cease all borrowing for capital investments.
Its overall debt figure, known as its ‘Capital Financing Requirement’ (CFR), was £1,411,600,000 (billion) in 2020/21.
In March last year this had reduced to £1,316,200,000 (billion) and was forecast to decrease by £66.3 million to £1,249,900,000 (billion) by the end of March 2024.
The IAB says the decision to adopt the policy was the ‘right one’ and said it has been sensible in this area.
In other areas such as company governance the report notes there has been “a substantial de-risking of the portfolio of companies and improvement in their governance”.
The operations of Enviroenergy, Nottingham Revenues and Benefits and Nottingham City Homes have been brought back in-house and the sale of construction firm Thomas Bow has been completed.
“These were the companies where decisions were most pressing,” the report continues.
However, it adds: “The new companies’ governance processes are a major step forward.
“The council still faces a number of large and complex commercial issues. To get high quality decisions on these, it is essential that effective independent commercial assurance is sustained and there is disciplined governance process adherence.”
In transformation there has been “significant slippage in achieving fundamental change”, and the report highlights further issues in human resources, including the fact it says the workforce has more than 500 people more than comparable authorities.
“The council’s financial position remains a very serious one, with significant shortcomings in budgetary control and the underlying level of spend, despite progress with the financial improvement programme,” the IAB report concludes.
Nottingham City Council has been contacted for comment.
Robin Hood Energy’s demise ended up costing taxpayers an estimated £38m and left the council with fewer reserves and weak financial resilience.
In November last year the authority issued a Section 114 notice, effectively declaring itself bankrupt, amid significant financial challenges and Robin Hood Energy was cited as one reason for its problems.
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