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Clues to Whitehall plan in leaked report from Nottingham

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CROYDON IN CRISIS: Might there be clues into what Whitehall has planned for this borough from a ‘rapid review’ conducted on another cash-strapped local authority? By our Town Hall reporter, KEN LEE

Nottingham City Council is dealing with similar issues to those in Croydon

A “rapid review” by government inspectors into a cash-strapped local authority has been leaked and it includes the recommendation of the establishment of a board of commissioners to monitor the council’s progress as it tries to plug a black hole in its budget.

No, it is not the review conducted on behalf of the Ministry of Housing, Communities and Local Government into Croydon’s bankrupt council – that report was submitted to Robert Jenrick’s Whitehall department two weeks ago and has yet to be published.

The rapid review that has been leaked has looked at Nottingham City Council, which has encountered financial difficulties this year similar to those in Croydon, with extra spending on covid-19 measures compounding cash shortages caused in part, at least, by misadventures with public money into private business.

So the findings of the Nottingham review may offer some clues into the measures that could be coming Croydon’s way in due course.

There’s another reason why the fate of Croydon in some way mirrors the East Midlands city council: before she was parachuted in to deal with the crisis here in south London, interim chief executive Katherine Kerswell had been undertaking a spot of troubleshooting at Nottingham, and its controversial and loss-making company, Robin Hood Energy.

Katherine Kerswell: has direct experience of the Nottingham financial problems

Nottingham, with a population 330,000, so slightly smaller than Croydon’s, has a budget deficit predicted for next year of slightly less than Croydon’s: £54million compared to the £66million here this year. So far, Nottingham has managed to dodge the dreaded Section 114 notice.

In many other respects, the plights of Croydon and Nottingham are similar. The Nottingham review was also given a brief to examine governance, commercial and investment issues after that council’s auditors issued their own Report In The Public Interest after the costly collapse of Robin Hood Energy.

According to the Local Government Chronicle, like Croydon, Labour-controlled Nottingham is seeking a capitalisation directive – a loan – allowing it to capitalise some of its revenue costs. Croydon’s application for a capitalisation directive is expected to be submitted tomorrow.

One significant difference in the situation facing the two councils is that while Croydon has been unable to balance its books this year because its reserves had been run down to dangerously low levels – they stand at £7million – Nottingham is now grappling with the problems of balancing its 2021-2022 budget because they have dealt with this year’s shortfall thanks to reserves of £70million.

Clearly, dipping into the civic piggy bank has an impact, or as they say in a report to be considered by Nottingham this week, “significantly reduced future budget flexibility”.

The MHCLG review into Nottingham “clearly raises serious issues around financial management and governance that need to be addressed urgently”, according to David Mellen, the city council’s (relatively new) leader.

He told the LGC: “It highlights that we have been slow to act on warnings about the risk of relying on one-off savings and income through commercialisation and that we should have been managing budgets on a longer-term basis to reduce core expenditure and transform services.” Sound familiar?

Council staff in Loxley House, the Nottingham council offices, face similar uncertainties to their Croydon colleagues

“The council’s capital expenditure and high levels of debt compared to other cities is also flagged up as a major concern with the cost of borrowing restricting our flexibility on day-to-day spending.

“We fully accept the findings and remain committed to making the improvements needed to ensure we are the best we possibly can be as a council.”

Nottingham has already set up a governance improvement board to oversee the delivery of an action plan recommended in the public interest report. Croydon, too, has set up an improvement board.

But the LGC reported last week that “it is likely the new board will soon be dissolved and replaced by a new, more formal body which would regularly report back to the government on the council’s progress”. Effectively, the council’s management is to be overseen by government-appointed officials.

For their part, MHCLG is saying little more on the record about their Nottingham rapid review than they are saying about Croydon’s.

According to a ministry spokesperson, Jenrick has received the report and is “carefully considering it”.

“We will set out our next steps in due course,” they told the LGC, as they leave another Labour council to stew.

Read more: Council staff ‘are angry, upset and want answers’
Read more: Survey on cuts tries to pass the buck to residents
Read more: Council forced to declare itself bankrupt
Read more: Officials to investigate possible wrong-doing at council


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