Nottingham City Homes (NCH) has issued a strong denial after an external review into its own finances found it may have wrongly spent £17 million. Nottingham City Council, which owns NCH, commissioned the review into its accounts after it was found £14.367m that should have been spent on council-owned homes was put into the wrong account.
That review has found an additional £8.503m may have been put into the wrong fund by Nottingham City Council, along with £17.158m by NCH from 2014/15 to 2020/21. But in an extraordinary turn of events, NCH has hit back against the review, saying the funding is indeed available for council housing.
NCH has also said "there has been full transparency and accountability to the council throughout". The company has also raised a "number of concerns in the reports", which will be discussed at the council's Executive Board on Thursday (April 28).
The investigation, by CIPFA (the Chartered Institute of Public Finance and Accountancy) and Richard Penn, a local government expert, states the amount of money may not have been used in the Housing Revenue Account (HRA), a ring-fenced Nottingham City Council fund that is specifically for use on council housing. But the company has said that £17.158m funding is available for HRA activity.
Read more: Nottingham murder update as police arrest 2 men after dad killed in city centre
A spokesperson for Nottingham City Homes said: "Nottingham City Homes is wholly owned by the City Council. We only undertake activity requested by or supported by the council.
"There has been full transparency and accountability to the council throughout. We report on performance and finance to the Council, and we have Council nominees on our Board.
"Nothing we do has been undertaken without the Council's full knowledge since we were established in 2005. We have noted a number of concerns in the reports being presented to the Council, the most concerning being the comment that NCH may have "potentially" spent £17m HRA funding on non-HRA activity.
"We would like to confirm that we haven’t and that this funding remains available for council housing. In addition to managing council housing, we also provide homes for homeless families and survivors of domestic violence - we fund these from the rental income received from those homes without using any funding earmarked for council housing.
"Since Nottingham City Homes was established we have delivered for council tenants, we brought over £200m investment into Nottingham to meet the Decent Homes standard, greatly increasing tenant satisfaction, and delivered the largest programme of new council house building for a generation. We have also managed and maintained council housing very cost effectively.
"Independent benchmarking shows we are nearly £8m a year most cost-effective than other councils and housing associations. This has enabled the Council to keep rents low for tenants - and tenant satisfaction with repairs has risen from 54 percent in 2005 to 80 percent in 2022.
"Delivering the repairs service has been a challenge throughout Covid, when our priority was to keep tenants and staff safe. This has been coupled with supply chain difficulties experienced throughout the sector.
"We now have a programme of catching up on repairs and only last week the NCH Board committed to release a further £500,000 to reduce the waiting time for tenants. We would prefer not to address individual cases of repairs concerns through the media, but rather to have direct dialogue with our tenants. If the people you have spoken to would like to contact us direct about the issues they mention, they can do so by getting in touch with us via the usual channels."
Addressing the misspend on Tuesday, April 26, Cllr David Mellen (Lab), leader of Nottingham City Council, said: "This is a clearly a setback, particularly as the council has been making significant progress on improving our financial governance over the last year. This issue demonstrates the importance of that work and how thorough it has been.
"Last year we took swift and firm action to issue a Section 114 Notice and commission two independent reports into the circumstances surrounding the HRA funding. The findings of these investigations show that the finance and governance arrangements around the ring-fencing of the HRA fell seriously short of acceptable standards, although we are disappointed that this wasn't flagged up at the time by the council's external auditors.
"It's important to make clear that the funding in question has been used for purposes that benefit local people but that are not an appropriate use of what is effectively tenants' money. It also needs to be recognised that in addition to achieving decent homes standards, Nottingham City Homes has worked to improve core housing services, empower tenants and bring about significant improvements to housing stocks, including the response to fire safety following Grenfell and home insulation works.
"Since these decisions were first taken, new leadership and senior management have shown determination to take the action necessary to address these issues and move forward positively. I would like to reassure our council tenants that we are committed to dealing with these past issues, ensuring that lessons are learnt so that these mistakes cannot be repeated in future."
Nottingham City Council has been contacted over NSH's statement.
