Nottingham City Council agrees to end deal over housing company

Councillors agreed to give their 12-month notice on the contract on Thursday

Nottingham City Council will terminate its contract with Nottingham City Homes after 17 years.

It comes after an investigation found up to £40m of ring-fenced cash from the Housing Revenue Account (HRA) was spent on the wrong services.

The Penn Report, published on Tuesday, said some money was used to prop up council services and to avoid job losses.

Ending the arrangement was agreed at a meeting on Thursday.

'Governance failures'

Papers prepared for the meeting said investigations commissioned by the council identified issues with "historical financial mismanagement, a lack of adequate record keeping and governance failures".

Nottingham City Homes says it has not misspent the money, adding £17.1m is available for council housing.

The Local Democracy Reporting Service said councillors decided to serve 12 months' notice to terminate the deal and take over management of its council housing, with the cost to bring it in-house estimated at £750,000.

David Mellen, leader of the local authority run by Labour since 1991, said mistakes that "originated some years ago" will be corrected, with tenants having "their housing management done by the same people".

"It is a lift-and-shift proposal, so the staff will be brought across," he said.

"We are determined to put right what has been wrong."

Andrew Rule, leader of the Conservative opposition on the council, called for HRA revenue to be backed up with electronic and physical documentation, and for external auditors to take extra measures "so irregularities are highlighted at an earlier stage".