The Government has said that it is minded to appoint Commissioners to oversee Nottingham City Council following the latest progress reports from the Improvement and Assurance Board and the Section 114 Report issued by the authority’s Chief Finance Officer on 29 November. The Improvement and Assurance Board has been overseeing improvements at the council since 2021. The Board issued Instructions for specific areas of work which build on the council’s ‘Together for Nottingham’ improvement plan. In a letter to the council’s Chief Executive, Mel Barrett, the Government has said while the council has made efforts to address the Instructions issued by the Board in February this year, the Board’s latest assessment is that the authority is not acting at the required pace, particularly in addressing weaknesses in finance, transformation and the underlying culture of the organisation in respect to governance and the workforce. As a result, the Secretary of State is considering exercising the powers of direction in the 1999 Act in relation to securing the council’s compliance with the best value duty. He is proposing to implement a package of measures through appropriate Directions and is minded to appoint three Commissioners, including a Lead Commissioner, a Commissioner for finance and a Commissioner for transformation, subject to representations received. The council has been invited to make representations to the Secretary of State by 2 January 2024 before a final decision is made about the proposal. However, if it is confirmed, officers and Councillors will work alongside Commissioners in the areas designated by the Secretary of State. Council Leader, Cllr David Mellen, said: “Clearly the appointment of Commissioners would be very disappointing and not something that that we would want to happen. Any decision that reduces democratic accountability, however limited and temporary this may be, should not be taken lightly. “The council has already made progress on a number of the improvements expected of us by the Board and the Government. In particular, we had set a balanced budget and medium term financial plan in March prior to the soaring inflation, high energy costs and increased demand for services supporting vulnerable people that have severely affected the finances of councils up and down the country. “These pressures have meant our budget is overspent this year leading to a Section 114 Report being issued by our Chief Finance Officer, which has clearly been a factor along with recent reports from the Improvement & Assurance Board, in the Government’s announcement that it is minded to appoint Commissioners. “Although not the cause of the overspend in the current year, we know there have been specific issues in Nottingham due to decisions made in the past which have affected the council’s financial reserves and resilience. “The current situation for Nottingham and a great many other authorities is very challenging and in much part caused by underfunding. There will continue to be difficult decisions that have to be made. But we are committed and determined to do what it is right for the city and its residents.” Chief Executive, Mel Barrett, said: “Although we have previously said that our strong preference was to continue working with the Improvement and Assurance Board, we are committed to working effectively with whatever arrangements Government put in place, so that the intervention can be as successful as possible in as short a time as possible. “While a lot of progress has been made, we need to go further and faster to consistently demonstrate we are providing Best Value for local people and we will ensure we work effectively with the Commissioners.” On 29 November a Section 114 Report was issued by the council’s Chief Finance Officer as the council will be unable to meet the legal requirement to deliver a balanced budget this year. Major challenges affecting councils across the country, including an increased demand for children’s and adults’ social care, rising homelessness presentations and the impact of inflation, have caused a £23m overspend in the council’s budget for the current year. Past issues relating to financial governance which led to the appointment of an Improvement and Assurance Board, and an overspend in the last financial year have also impacted on the council’s financial resilience and ability to draw on reserves to cover the current financial pressures being experienced.

City Councillors will meet next week to consider what further steps need to be taken to tackle a £23m overspend in the authority’s budget caused by issues affecting councils across the country, including an increased demand for children’s and adults’ social care, rising homelessness presentations and the impact of inflation. The council’s Chief Finance Officer issued a Section 114 Report on 29 November due to the council being unable to meet the legal requirement to deliver a balanced budget for this year. Following the Section 114 Report, the council entered into a 21 day Prohibition Period where spending controls already in place have been further tightened with any spending not already contractually committed, or otherwise agreed by the Chief Finance Officer in his role as Section 151 Officer, immediately stopped. Within the 21 day period, the council is required to hold a meeting of all councillors to confirm whether or not it accepts the report and to agree what actions, if any, it proposes to implement. This meeting is due take place on 18 December when a recommendation will be considered to take immediate steps to mitigate the forecast overspend through the council’s Financial Recovery Plan and to continue the Spend Control Policy introduced by the Section 151 Officer until 31 March 2025 subject to further reviews. Under the Spend Control Policy, ‘allowable spending’ is being approved where it is essential to meet the council’s legal duties at the minimum level or to meet existing legal commitments; externally funded spending, where the council would lose external funding if approval were not given; and spend where there is a robust business case. Other steps proposed include a review of council’s capital programme to assess whether borrowing can be stopped or delayed and borrowing costs reduced including through the sale of assets currently owned by the authority. In addition, a request for Exceptional Financial Support for the current financial year 2023/24 is being discussed with the Government Department for Levelling Up Housing and Communities. In practical terms this will be to seek permission to ‘capitalise’ revenue expenditure so that it is treated as capital expenditure and can be met from the council’s capital resources. A Section 114 Report does not mean the council is “bankrupt” or insolvent, the council has stressed. It has sufficient financial resources to meet all of its current obligations, to continue to pay staff, suppliers and grant recipients in this year. Although not the cause of the overspend, past issues relating to financial governance which led to the appointment of an Improvement and Assurance Board, and an overspend in the last financial year have impacted on the council’s financial resilience and ability to draw on reserves.