Council To Sell Off Assets To Reduce Shocking Debt
Nottingham City Council will sell off some of its assets including land in order to claw back nearly £1bn of debt it owes.
Councillor Sam Webster (Lab), lead for finance at the local authority, said the money has not been spent frivolously but spent on making the city more than just “a big town.”
He said: “People think we have borrowed a billion pounds and are spending it on stuff around the city. It is not a credit card debt. It’s like a mortgage debt.
“It is an investment in things like the Broadmarsh car park, it is an investment in council houses and the tram network. The council will own the network after around 30 years.
“Biocity is our building, it is a good investment. Whether every investment is good, we hope they will pay off and provide public services.
“If we did not have these large scale investments we would be a big town and not a core city.”
It is a testing time for the local authority as the council is under the watchful eye of the Secretary of State for Housing, Communities and Local Government, MP Robert Jenrick.
It has been warned Government commissioners could take control of the Labour-run authority if it does not make satisfactory progress on reducing its debt.
The Labour-run authority has three years to get its house in order on the back of a string of financial issues including setting up a failed energy company, Robin Hood Energy.
When asked if he thought the council could be taken over by Westminster in the future, Cllr Webster said: “No I don’t.”
He added: “I think our situation is different and we are working extremely well with the improvement board and have a recovery improvement plan in place.
“We have made changes to the senior management team and there is a huge shift in culture in the organisation.
“But there has been a chronic lack of funding from government over a significant period. Look at the councils that are really struggling. They are all extremely poor places.
“Covid has knocked on their resilience. Covid, for some councils, can tip you over. But that has not been the case for us.”
The pandemic has cost the authority £66.5 million due to lost income from leisure centres, parking income and the Theatre Royal and Concert Hall being closed at the height of restrictions.
It has also needed to use extra cash to support care providers with PPE.
Despite Government grants and compensation of £50.1 million, it has left the local authority with “an unfunded Covid-19 gap” which now stands at £19.4 million.
This is coupled with the high amount of external loan debt it has acquired of £932.7m, from which it has managed to shave off £141.8m over the last year.
Cllr Webster said the council has around £1bn worth of assets but not all of them are suitable for sale, such as parks and open spaces.
But they are looking to ‘sell off land’ to claw back the debt.
Cllr Webster also added: “Long-term reductions in council funding have resulted in budgets being increasingly difficult to achieve and has led to consistent budget overspends.”
In 2012/13 he said the Government provided the council with around £127m a year. This has now fallen to £25m.
The council can still apply for capital investment grants and has been successful on a number of occasions, including public realm work around the new car park, bus station and former Broadmarsh.
It also secures money from business rates, Council Tax, fees and charges.
The council says it is currently in the process of understanding what its ‘financial gap’ will be next year in funding and ‘what we can do with services to reduce them or cut them.’
He said 70 percent of the day-to-day spending of the council goes on adult social care ,including carers to support the elderly and children’s services.
“A lot of people are relying on these services and that is what is driving council tax up.
“The demand for these services goes up and up but the funding does not match it so it is less for things like libraries, street cleaning and leisure centres.
“Nottingham is one of the most deprived areas in the country. A lot our services have additional demands.
“£100m less each year. It is not a political thing. It is a fact. It dwarves all the other financial issues that the council and the city has.
“We will have to make significant savings because of the impact of Covid. We have utilised a lot of reserves and had voluntary redundancies.
“We also don’t know how the city will change or behave in terms of commuters, spending, travel into the city and parking income.
“It is not just that, it is the National Ice Arena; when will they have a full audience? The Theatre Royal, parks and museums and Nottingham City Homes.
“The situation is more volatile than ever.”