Agenda and minutes

Executive Board
Friday, 12th March, 2021 1.15 pm

Venue: Remote - To be held remotely via Zoom - View directions

Contact: Kate Morris, Constitutional Services, Tel: 0115 8764353  Email:

No. Item


Apologies for absence


Councillor Dave Trimble  - Personal

Councillor Adele William  - Council Business

Councillor Linda Woodings   - Leave


Declarations of interests




Request to the Ministry for Housing Communities and Local Government (MHCLG) to capitalise revenue costs (capitalisation) - Key Decision pdf icon PDF 553 KB

Report of the Portfolio Holder for Finanace, Growth and the City Centre


The Chair of the Board agreed that this item could be considered as a matter of urgency in accordance with Section 100B(4)(b) of the Local Government Act 1972, because Council submitted a Capitalisation request to the Ministry of Housing, Communities and Local Government (MHCLG) on 23rd December 2020. On the 5th March 2021 the Council received a response from MHCLG to this request. The Council is required to respond to MHCLG by 12th March 2021 which is prior to the next scheduled Executive Board meeting


This decision is not subject to call in because the Chair of Overview and Scrutiny agreed that the decision is reasonable in all circumstances and should be treated as a matter of urgency because delay cause by a call in period would cause the deadline to be missed


The Board considered the report of the Portfolio Holder for Finance, Growth and the City Centre setting out the request to Ministry of Housing, Communities and Local Government (MHCLG) to capitalise revenue costs and the response received on 5th March 2021. He thanked Council Officers for the speedy work done in the last week and the following points were highlighted during discussion:


(a)  The request was submitted to MHCLG following an exceedingly challenging year financially for Nottingham City Council that had come about due to the impact of the Covid 19 pandemic, loss of income from a number of commercial services and the impact of writing of historic debt from Robin Hood Energy;


(b)  The Council meeting on 8 March 2021 agreed a balanced budget following an in year budget process in 20/21, non essential spending freeze, recruitment freeze and a voluntary redundancy scheme. However this has impacted on the level of reserves;


(c)  Authorities can usually only borrow on capital, and this deviation from the usual legislation has been requested to help establish a stable medium and long term financial footing for the Coucil. This will allow the Council to borrow an additional £20million in 2020/21 to spread the cost of revenue services over a longer period;


(d)  As set out in the Budget report at the meeting of Council on 8 March 2021 external debt is due to reduce by £150million by 2025. The additional flexibly this capitalisation will give will help the Council to protect the reserve levels, and properly resource the Change and Modernisation programme require to meet the expectation within the Recovery and Improvement Plan; 


(e)  A number of other Councils have agreed similar capitalisation directions, such as Peterborough, Luton, Eastbourne and Croydon;


(f)  Achieving and maintain financial stability is a priority to ensure that support and services are available for the citizens of Nottingham;


(g)  This capitalisation direction is not a grant, or additional funds, it is an ability to draw down additional borrowing and spread costs over a longer period of time;


The Leader of the Council paid tribute to the hard work of the Portfolio Holders and Council Officers through this process.


The report, and the recommendations made within it, was endorsed but the Chief Executive of Nottingham City Council.


Resolved to:

(1)  Note the Secretary of State’s current position on capitalisation and gree to accept a capitalisation package in the sum of £35million as requested on 23 December 2020, noting that £20million for 2020/21 in on terms that are certain, and that the balance of up to £15million will be subject to further confirmation from the Secretary of State, subject to demonstrating need and mutually agreeable terms;


(2)  Accept a Capitalisation Direction for 2020/21 for £20million on terms set out in appendix A of the report published with the agenda;


(3)  Note that the Secretary of State is minded to issue a Capitalisation Direction for 2021/22 later in the financial year subject to evidence of ongoing need and to certain conditions being met as set out in Appendix B and paragraph 2.6 of the published report;


(4)  Delegate authority to the Strategic Director of Finance in consultation with the Portfolio Holder for Finance, Growth and City Centre, to make the necessary accounting adjustments in 2020/21 and 21/22.


Reason for decision

In order to ensure financial resilience and deliver a major change programme to transform its services the Council needs access to additional financial resource. Capitalisation will allow the Council access to these funds, which in turn will allow the council increased financial stability.


Other options considered

Not accepting the Capitalisation Direction would leave the Council exposed to financial risks from Covid 19, service pressure and adverse trading conditions faced by its wholly owned companies. It would not be able to fund the Change programme and would negatively affect the ability to deliver statutory and non-statutory functions within a cost envelope that is affordable over the medium term. For these reasons this option was rejected.