A shortage of "competent" finance staff has been raised as a major concern remaining at Nottingham City Council in the latest report to the Government on the authority. The council has just avoided commissioners being sent in as Government oversight continues on the improvements being made after issues including the misspend of £40 million and the collapse of Robin Hood Energy.
An Improvement and Assurance Board (IAB) was appointed in January 2021 to closely monitor the decision-making processes and governance of Nottingham City Council, sending quarterly reports to the Government on the council's progress. The Government uses the quarterly reports to determine whether it needs to send commissioners in to run the council.
The Government said in its most recent decision that there had been a "step up in progress" at Nottingham City Council. But it added: "There is still much to do to deliver the level of service deserved by the residents of Nottingham."
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Although noting several improvements, the Government has said it will still consider whether the appointment of commissioners will be necessary when the IAB's next report is delivered by Sir Tony Redmond, who has been chairing the board. His most recent report acknowledges improvements made, but also says the pace of progress in some areas "falls short" of what the IAB expected.
When the IAB was established, Sir Tony Redmond highlighted seven key areas of weakness and shortcomings at Nottingham City Council. Below are the key points from Sir Redmond's latest report.
Business of the council can be "frustrated or compromised"
The latest IAB report says a new constitution adopted at Nottingham City Council has addressed the "principal shortcomings" in the way it is governed. It also highlights one particular policy change, which means that council officers can now make decisions worth up to £250,000, where previously this level was £50,000.
The report says there is evidence that the "speed of decision-making has improved in some areas" but also says that in other areas, council officers are unable to exercise their authority in a "timely and efficient way". The report says: "Pressure is sometimes brought to bear, directly or indirectly, so that decisions are delayed, deferred or resisted, meaning that the business of the Council can be frustrated or compromised."
The report says this problem is "by no means universal" but the constitution is "not being observed in all respects". The report says the solution is to have an "honest conversation between members and officers".
In terms of the audit and overview committees that scrutinise council business, the report says these have been strengthened. It adds: "Work is underway to ensure that risk awareness, management and good practice are embedded at all levels of the organisation.
"Risk is also a basic discipline in all decision-making. Given the recent history of Nottingham it is vital that there is no relaxation in this approach."
Few of council's planned savings have been risk assessed
The IAB's report says few of the proposed savings to close a budget gap of over £32 million next year have been "risk assessed as to their actual deliverability". The report says this was despite the council's Chief Executive imposing a task for senior managers to show what could be delivered.
The IAB says the "acceptance of the importance of the task... was worryingly mixed". It also says the cost of delivering the council's transformation plan is a cause for concern.
The report says: "The council estimates a shortfall in receipts to meet the costs of transformation of some £21m over the medium term planning period. Understandably, the council is seeking to bring more properties and sites onto the pipeline but at the current time, given that investment shortfall, the headline [financial plan], relying as it does on significant financial savings arising from transformation, cannot be considered as credible."
Amount of competent finance staff remains "major concern"
The IAB says ensuring the council has a "sound and competent cadre" of finance staff remains a "major concern". It says: "Mainly due to external conditions but also partly due to a pay policy that is not fit for purpose, the council has struggled to fill key finance posts with permanent staff."
The report does note the hiring of a permanent finance director and other key posts being filled by interims. The council itself has previously said that it will eventually have an "efficient system in place that provides the best value for local taxpayers".
But the report adds: "Notwithstanding external conditions, such reliance on 'interims' is a major weakness and clearly if contracts are extended after March 'interims' could still choose to leave the council. Taken as a whole, in terms of finance, some positive progress has been made and should be acknowledged but overall the extent of progress falls short of what the IAB would have expected."
Council housing work is "effective and timely"
Despite the concerns raised, the IAB's report does say that in terms of housing: "With the necessary expertise in local authority housing now operating within the council and good cooperation with new management at NCH this work is being achieved in an effective and timely way."
But addressing the council's plan to bring Nottingham City Homes (NCH) in-house, the report says "companies in the portfolio often create risk and complexity for the council that is far greater than their potential benefits". It therefore says a "robust plan" must be developed to complete the council's review into its companies.
Overall, the report concludes: "Efficiency and effectiveness must be explicit in fulfilling fundamental change through workforce planning, management and transformation in service provision to achieve best value. Sound risk management must underpin every decision, and governance practised in such a way that does not inhibit or impede timely progress.
"The capacity for the council to fulfil these objectives in the timescale set remains a significant challenge and although the progress made in recent months may, in part, be encouraging the ultimate test is deliverability."
Nottingham City Council Leader, Councillor David Mellen, previously responded to the Government's announcement by saying: "We very much welcome the Government’s decision which reflects that the current arrangements in place are working. The council has already made many of the improvements expected of us by the IAB and the Government.
"In particular, we had agreed a balanced budget and medium-term financial plan prior to the soaring inflation and energy costs that have affected the finances of households and councils up and down the country – and we are well on the way to balancing the budget for a second year. We recognise there is much more work to do to increase the pace of the changes and to put the council on a solid financial footing despite the huge budget pressures we and all councils are facing currently."
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