Nottingham City Council will bring its housing service back in-house after discovering that millions of pounds intended for tenants’ homes and services were spent on other council run activities and services.

Council leader David Mellen has written to council tenants and leaseholders advising them their services will be transferred back from the ALMO by May 2023. “We will ensure this is done with no negative impact on the services you receive and how you access them,” he wrote.

An investigation found that upto £40 million intended for services like housing repairs had been misused. The money was transferred from the Housing Revenue Account over a period of years from 2014 but will now need to be repaid.

The HRA is funded from council house rents and is meant to be ring-fenced, with money only spent on housing services. The investigation discovered money was regularly transferred to the council’s General Fund, which pays for all other services and expenditure.

An independent investigation resulted in eight recommendations, including bringing housing management back in house, paying back the £40m to the HRA, bringing in external support to guide the council’s finance team, and reviewing the council’s constitution. All recommendations were accepted by the council’s executive board.

Many councils which set up ALMOs in the period 2000 to 2010 did so to access funds to improve their housing stock and deliver the Decent Homes Standard. Most have since transferred management of the stock back to their host council.

Winding up the ALMO, Nottingham City Homes, and transferring the service back in-house will cost an estimated £750,000. Mr Mellen has promised to consult tenants and leaseholders on further steps and that housing management patchs and ways to access the housing service will be unaffected by the transfer.

Patrick Mooney, Editor