Nottingham City Council says it has managed to reduce its £1.2bn debt by more than £200m. The Labour-run authority can no longer willingly borrow money following the collapse of Robin Hood Energy and must instead seek to get cash by other means such as the selling of valuable assets.
Back in 2018 the city council was reported to have been in 'record levels' of debt, at £791m, and this would go on to pass the £1bn mark. At the time councillor Graham Chapman, then deputy leader of the council who represents Aspley, said the authority would be irresponsible to not invest and, as such, it had been borrowing in a bid to make a cash return on its investments.
However this came to a head upon the administration of its failed energy company, in which millions in taxpayer cash had been irresponsibly invested, and by law the council must now reduce these debt levels and has been stopped from borrowing any more. Such progress to balance its books and reduce debt by selling assets and landing Government grants is being closely scrutinised by an independent improvement board.
Read more: Concerns raised as council plans £93m of asset sales
This board reports to the Government on the council's progress. And, during a scrutiny committee meeting on Wednesday, June 8, the council said its debt had been significantly reduced.
David Mellen, Labour leader of the council and Dales ward councillor, said: "We are in an unusual situation compared with other councils because we are in a situation where, due to the advice of our improvement and assurances board, we are not in a position where we can borrow money and we are in a situation where we want to reduce the amount of borrowing that we have done.
"And we have done that successfully in the last couple of years. We have reduced the debt that the council has by more than £250m. That means the cost of servicing that debt is less."
Because it cannot now readily borrow to fulfil expectations the council must now apply for grants from the Government, and by selling property and land assets. It is hoping to rake in more than £93m from asset sales, but some of these include valued community assets and the selling of these has prompted significant concern.
Despite these fears councillor Mellen said servicing the debt levels has also, positively, been reduced by around £200m per year. According to the council the improvement board has so far been 'content' with its progress, meaning commissioner intervention is not as present likely.
