The unlawful spending of money which should have been saved for Nottingham City Council's housing is now predicted to eventually cost up to £51 million. The authority has been under the supervision of a Government board since January 2021 following issues including the collapse of Robin Hood Energy.
Another issue then came about at the end of 2021 when it emerged money from the council's ring-fenced Housing Revenue Account had been incorrectly credited to its general fund since 2014/15, with more than £40 million being misspent overall. The HRA is supposed to be used for the management and maintenance of the council's housing stock.
The council has therefore been having to repay the misspent money back into its HRA. The authority's outgoing finance director now says the cost of these repayments will eventually be up to £51 million.
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Although around £40 million was misspent, rising inflation means the cost involved in paying this money back has risen. The matter was discussed at a meeting of the authority's overview and scrutiny committee on January 4, when councillors were discussing Nottingham City Council's plan to plug a £32 million financial gap next year.
Although mentioning factors including reduced Government funding and rising inflation, one councillor asked what the impact of the Robin Hood Energy and HRA issues had been. Councillor Andrew Rule, leader of the Conservative Group at Nottingham City Council, said: "That's money that could have been utlilised, if we still had it, to mitigate current inflationary pressures we're facing."
Clive Heaphy, the outgoing Corporate Director for Finance at Nottingham City Council, replied: "The amount set aside for Robin Hood Energy is pretty well-publicised already at £38m. The total cost of the HRA repayments is going to be in the order of £49 to £51m, that kind of order.
"Some of that is coming directly back from Nottingham City Homes but some is coming from our reserves, and to date we have repaid around £27m from our reserves back into the HRA with another £4m to go. So the direct impact on the reserves of those two things will be £69m combined, plus the element that will need to come back from Nottingham City Homes as well.
"You are absolutely right, undoubtedly if those weren't there then we would not have had the same pressure on the reserves, equally arguably we would not have built those reserves in the first place." A Government decision is due by the end of this month over whether it will send commissioners in to run Nottingham City Council.
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