The Local Government Secretary has said the Government will appoint experts in governance and finance to a new Improvement and Assurance Board at Nottingham City Council.
Robert Jenrick said the board would help the council deliver on the recommendations on governance and company ownership contained in a non-statutory review carried out by Max Caller.
The council will be required to put forward its 3-year recovery plan by the end of January 2021, setting out how it will improve its financial position and review its investments.
The council must also submit progress reports to the Ministry of Housing, Communities and Local Government (MHCLG) on a quarterly basis.
Mr Caller was asked by the Ministry to undertake a rapid non-statutory review in November to examine serious governance and risk management issues, including those associated with the council’s private energy company Robin Hood Energy.
The subsequent report found that the council’s financial strategy and commercial investment decisions over the past four years had resulted in a very significant budget gap and low levels of reserves, the MHCLG said.
It also highlighted that the council “failed to understand the roles and responsibilities associated with managing their companies and, as a result, ended up with significant debts”.
Mr Jenrick said: “The rapid review into Nottingham City Council highlighted appalling financial and management issues within the council. Taxpayers and residents have been let down by years of disgraceful mismanagement and inept ventures such as Robin Hood Energy, that have wasted tens of millions of pounds that should be being spent on public services. These must end now. The council has a window in which to demonstrate that it is capable of running the city and turning the situation it has created around.
“I will be appointing an independent expert panel to help them urgently address this by producing and delivering a comprehensive recovery plan.
“Given the scale of the changes needed, it is vital that the council act quickly for the benefit of the communities they serve. I will be monitoring progress closely and do not rule out further action.”
The Ministry said it would continue to work with the council “to understand the range of financial issues they are experiencing” and would consider any request that the council submits for additional financial support from the government.
In the event of a failure by the council to demonstrate significant progress, a more formal statutory intervention will be considered, including the appointment of commissioners, the MHCLG added.
Amongst other things, the Caller review noted that one of the major causation factors for the position the council now found itself in was the inability to recognise, respect and take action on the advice the Section 151 officer (S151 officer) was providing.
“Over a period of years, the position she had correctly identified was delayed in reporting, not supported by other senior officers, and resulted in no effective action being taken. This was not aided by the structure of the council, which had established posts in spending and delivery areas which properly needed to come under the professional oversight of the S151 officer.”
The report said that “in a similar vein, the team also noted that it was possible for legal advice to be sought and proffered to the council without the clear oversight of the Monitoring Officer.”
Such an approach completely undermined the Statutory Officer roles that these officers were required by legislation to play and was “completely unacceptable”.