Information Commissioner says city council must disclose financial report

The Information Commissioner's Office (ICO) has told Nottingham Council to publish a financial report commissioned from audting firm EY, after the watchdog concluded that "very unusual circumstances" created a need for transparency and accountability regarding the council's financial governance.

Nottingham commissioned the report in 2023 following reports in the media that the local authority wrongfully used £15m from the Housing Revenue Account intended for repairs for general council services.

The report has never been published, but according to further media reports, EY raised serious concerns in it.

The report's findings were summarised in a meeting of the council's Audit Committee on 30 June 2023.

In July, the council received a request from a member of the public for the full report and assessment from EY. This was denied in September 2023 under the exemption for prejudice to the effective conduct of public affairs set out section 36(2)(c) of the FOIA.

Section 36(2)(c) of the FOIA states:

"(2) Information to which this section applies is exempt information if, in the reasonable opinion of a qualified person, disclosure of the information under this Act—

(c) would otherwise prejudice, or would be likely to otherwise prejudice, the effective conduct of public affairs.".

The complainant subsequently submitted a complaint to the ICO, who found that while the council correctly engaged the exemption in section 36(2)(c), the report should be published on public interest grounds.

In a decision notice issued on Friday (5 January), the ICO acknowledged that the focus of the council's position was centred on the need to have a 'safe space' to develop ideas, debate live issues, and reach decisions away from external interference and distraction.

Having considered an opinion provided by Nottingham's Director of Legal & Governance, Malcolm Townroe, the Information Commissioner said: "[It was] satisfied that disclosure would be likely to result in interference to the safe space needed to consider and act on the Report and that this, in turn, would be likely to otherwise prejudice the effective conduct of public affairs."

The ICO said it followed that Townroe's opinion was a "reasonable" one and that the exemption in section 36(2)(c) was engaged.

In weighing the decision against the public interest, the Commissioner recognised that the purpose of the exemption was to allow the council to make effective decisions regarding its finances.

It also recognised arguments from the council regarding the distinction between the public interest and matters of interest to the public.

However, the ICO did not find it "plausible" to dismiss the interest in the council's financial governance as a purely private interest, "as if it were the equivalent of mischievous or salacious tabloid reporting".

It said that the publicly documented concerns about the council's management "provide legitimate" grounds for public concern and a valid public interest argument in favour of disclosure.

It also noted that public concerns about the council's financial management were not confined to matters associated with the report, highlighting the "considerable sums" of public money lost in the council's investment in its energy venture, Robin Hood Energy.

In addition, the Commissioner said the council's recent section 114 notice, which was issued after the ICO received the complaint about the report, retroactively legitimised, "to an extent", and added weight to the public interest concerns in favour of disclosure.

In concluding the decision, the ICO said: "Having considered the relevant evidence, whilst noting the council's legitimate concerns about disclosure, the commissioner considers that, in this case, the very unusual circumstances mean that there is an enhanced need for transparency and accountability regarding the council's financial governance.

"He considers that the public interest in disclosure, therefore, outweighs that in maintaining the exemption. The commissioner has concluded that, whilst the exemption in section 36(2)(c) was correctly engaged by the council, the public interest favours disclosing the information."

A spokesperson for Nottingham City Council said: “It’s important to make clear that key information included in the report had already been published in a public report to the council’s Audit Committee. The council took the view that the full report was of a technical nature designed to support the work of professional officers.

“The council has never shied away from the seriousness of the findings as explicitly set out in the report to Audit Committee and has been focused on addressing those weaknesses. Good progress is being made in all the areas where improvement was required.”

Nottingham confirmed it will fully comply with the ICO’s decision within the required timeframe of 35 calendar days.

Adam Carey