In a damning report by Ernst & Young (EY), Nottingham City Council’s financial practices have come under scrutiny, revealing a concerning “perception” among staff that funds allocated for parking and licensing were potentially being utilised illegally. The comprehensive document, comprising approximately 100 pages, was initially kept from the public eye for over six months but was finally released by the council on Monday.
The investigation by EY was instigated after revelations in 2021 disclosed that the council had misused funds designated for housing stock, with the cumulative cost of the scandal now surpassing £50 million, accounting for inflation. EY was subsequently tasked with scrutinising the allocation of ringfenced money in six other areas.
A summary of the report, spanning 10 pages, was initially made public in June. However, Nottinghamshire Live successfully campaigned for the full version’s release, with the Information Commissioners Office (ICO) ruling in favour on January 5, citing public concern legitimised by an effective bankruptcy notice.
One pivotal aspect flagged in the EY report is the ambiguity surrounding a £5 million grant from the government intended for the council to compensate for lost car parking revenue during the COVID-19 pandemic. The report states, “The [parking] enforcement team did not receive any of this money, and it is not clear how it was used.” Nottingham City Council has been pressed for clarification on this matter.
The report delves into six areas, including funds generated by the council’s traffic enforcement and licensing teams. In both cases, there is a perceived misuse of surplus money, allegedly employed “as a means of meeting organisational budget pressures.” EY’s report explicitly warns against such actions, asserting that using reserves for purposes outside defined legislation is illegal.
Nottingham City Council’s traffic enforcement and licensing teams are described in the report as operating within a “commercially driven culture,” with parking enforcement historically treated as a “cash cow.” The report highlights the establishment of income targets, raising concerns that this approach risks deviating licence fees and traffic enforcement from their intended regulatory purposes.
The report underscores the need for a more robust approach to ring-fencing to prevent further financial impropriety. The initial summary had emphasised the urgency for immediate action “to avoid the risk of inappropriate financial activity,” stating that the council’s financial stewardship was impeded.
Responding to the report completed in April, Nottingham City Council has claimed “good progress” in addressing the identified issues. A council spokesperson stated, “As part of the council’s finance improvement plan, an external assessment was commissioned to look at historic compliance with accounting controls for ringfenced funding over three financial years from 2019/20 to 2021/22.”
The spokesperson continued, “The assessment identified significant weaknesses that needed to be addressed to provide the necessary level of assurance, including a weak control environment, ineffective systems, and a culture not focused on compliance.”
Emphasising that no evidence suggested allocated funds were misspent, the council defended its decision to withhold the full report initially. The Information Commissioner acknowledged the council’s legitimate concerns but ultimately determined that public interest outweighed the exemption.
Despite acknowledging the seriousness of the assessment’s findings, the council asserts that good progress has been made through its finance improvement plan. The ongoing commitment to address the issues raised is being reported at every audit committee meeting to ensure necessary controls are in place.
As Nottingham City Council grapples with the fallout from these revelations, public scrutiny intensifies, raising questions about financial transparency and accountability within local government bodies. The coming weeks will likely see further discussions and potential actions as stakeholders seek assurances and tangible improvements in the city’s financial practices.