Total housing funds misspent by East Midlands council rises to £51m
The amount of money Nottingham City Council misspent from its Housing Revenue Account (HRA) has continued to rise due to inflation and additional incorrect charges.
Following a meeting of the council’s overview and scrutiny committee last week, Inside Housing was told that the total figure for cash that was wrongly spent from the HRA account is now estimated to reach £51m.
The council said its investigation had found a new area of activity that resulted in £4.42m being incorrectly recharged to the HRA.
The council also stressed that the rest of the additional cost was inflationary.
A council spokesperson said: “We have been carrying out a thorough investigation of the Housing Revenue Account since the end of 2021 as part of our commitment to being open and transparent about the way the council manages its finances.
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“Our original investigation flagged an additional area of activity that we have since been validating. We have now confirmed that £4.42m was incorrectly recharged to HRA and will need to be repaid. We have corrected this in our budget for future years.”
A council’s HRA is the money collected from its housing stock, primarily through rents and service charges. This funding is strictly ringfenced for investment in housing and cannot be used to support other areas of a council’s business.
The discovery of the additional costs followed a number of reports of unlawful transactions from Nottingham Council’s HRA.
In May 2022, the council announced plans to scrap its ALMO, Nottingham City Homes (NCH), after an investigation found that an additional £25.7m ringfenced for housing was misspent.
The £25.7m misspend came on top of the more than £14m the council was found to have unlawfully transferred from its HRA to its general fund between 2014 and 2021.
The activity was discovered more than a year after the government launched a non-statutory review into the council’s financial affairs after it was found to be £1bn in debt.
Despite the council’s commitment to close NCH and start running its own housing services at some point this year, the government said in June 2022 that it was “minded” to send commissioners to Nottingham.
Local government minister Kemi Badenoch said the government had reached the decision following the publication of two independent reports that “paint a deeply concerning picture of serious historic financial and governance failings” within the local authority.
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