Further details have revealed an extra £4.42m of council housing money was wrongly spent on top of an original £40m estimate, according to Nottingham City Council. During a Scrutiny Committee meeting at Loxley House on January 4, councillors were told wrongful spending of the Housing Revenue Account (HRA) had cost up to £51m.
The original estimate of the “inappropriate use” of HRA money had been in the region of £40m. On Wednesday the Labour-run authority said most of the added £11m had been the result of inflationary costs on repayments.
On Friday (January 6) the council told the Local Democracy Reporting Service £4.42m of the total was newly-uncovered misspending. This brings the total amount of money misspent to around £44.42m. An independent report released last year said investigators had to rely on an estimation and “experienced view” of what had been inappropriate use of HRA monies because of the “poor quality of record keeping” and “lack of an audit trail”.
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Towards the end of 2021 the council was issued a legal notice after it was first revealed up to £16m of Housing Revenue Account funds were unlawfully spent. Further investigations then uncovered more payments totalling £40m. Funds meant to go on council housing repairs and improvements had instead been transferred to the council’s general fund, over a series of years between 2014 and 2021.
A council spokesman said: “We have been carrying out a thorough investigation of the Housing Revenue Account since the end of 2021 as part of our commitment to being open and transparent about the way the council manages its finances. Our original investigation flagged an additional area of activity that we have since been validating.
“We have now confirmed that £4.42m was incorrectly recharged to HRA and will need to be repaid. We have corrected this in our budget for future years.”
The council faces a £32m black hole in the 2023/24 financial year and it has consequently proposed savings totalling £29m, which include a council tax hike by five per cent and the axing of 110 jobs. A number of other factors have also led to what the council describes as “one of the most difficult budgets in a number of years”, including soaring energy bills and inflation.
A significant portion of the HRA funds must now be paid back using council reserves. During Wednesday’s meeting Clive Heaphy, the outgoing director of finance, added: “Some of that is coming directly back from Nottingham City Homes and some from our reserves, and to date we have repaid around £27m from our reserves back into the HRA with another £4m to go.”
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