Record keeping was so bad that some spreadsheets had no explanation on where millions of pounds of council tenants’ cash was misspent, a council committee heard.
An independent investigation found that Nottingham City Council and Nottingham City Homes misspent up to £40m of ringfenced cash from its Housing Revenue Account.
The council housing tenants’ rent – which should have been pumped into council housing and repairs – was put into general council services instead.
The Penn Report, commissioned by the council and released last week, says the money was misspent, and in some cases was used to prop up other council services and to avoid job losses.
It found that the local authority has misspent up to around £22.8m since 2014/15 while Nottingham City Homes, which manages the council housing stock on behalf of the authority, misspent up to £17.1m.
The money must now be paid back into the Housing Revenue Account, but opposition council leaders are concerned there is not enough money in the bank to ensure that can happen.
The council says taking this cash from reserves “could well leave the council vulnerable to managing service demand and other inflationary pressures”.
Last week, the council decided to terminate its contract with Nottingham City Homes and bring the service in-house. This will cost around £750,000.
At an audit committee meeting on Friday, May 6, Clive Heaphy, the corporate director of finance since November 2020 explained the extent of the problem.
He told councillors there were “spreadsheets with no explanation” and no evidence to “back these transactions.”
He said he could reel off 20 to 30 examples of “poor evidence and record keeping” stressing: “It is not good enough for the accountancy of public money.”
Cllr Graham Chapman (Lab), who sits on the audit committee, said he didn’t agree with elements of the report.
He said: “The damage that has been done to the council’s reputation is enormous. I think there are areas where this bill can be knocked down.”
Cllr Jane Lakey (Lab) added: “To the public this is a massive number – the record keeping is terrible and I am not disputing that. We need to get this number right and get an accurate figure (on how much we need to pay back).”
Cllr David Mellen, leader of the council, said £15m would come out of reserves and £17m may be found within Nottingham City Homes accounts, which would leave a financial gap of £8m.
But Mr Heaphy said at this point it is not clear if Nottingham City Homes has the £17m in cash available following some investigation.
Cllr Mellen said the council needs to act swifty to ensure that government commissioners do not take over the running of the Labour-run authority.
He said: “There is huge pressure on us. We are not calling the shots. We are not setting our own timetable.
“You can’t tell civil servants or ministers ‘hang on a minute before you take action.’ I need to make sure we maintain democratic control.”
