Damning report exposes council’s mishandling of selective licensing fees

Damning report exposes council’s mishandling of selective licensing fees

9:59 AM, 7th February 2024, About 4 weeks ago 23

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A controversial council has found itself in hot water following a damning report that exposes its failure to ringfence its selective licensing fees.

Nottingham City Council finally published a report this week by accounting firm Ernst and Young (EY) who accused the council of “inappropriate financial activity”.

The review which was commissioned by the council has been kept under wraps for six months.

Despite calls for transparency, the council withheld the report saying it would have a “significant disruptive effect” and divert limited resources from its finance and legal teams.

Selective licensing fees have only just been ringfenced

The damning report reveals that selective licensing fees have only just been ringfenced in the last year.

The report said: “Whilst revised practices protect against the use of ringfenced accounts, the licensing team did share a view pressure has been placed on generating more licence fees with an eye to easing wider budgetary pressures. This would be contrary to the relevant legislation, and not the position of the Section 151.

“In responding, finance noted that the prior Resident Services Corporate Director had been highly commercial and did not promote effective ringfencing.

“However, finance confirmed licence fees in the last 12 months have been ringfenced, noted new leadership, and stated all trading account budgets have not contributed toward [budget] planning.”

One of the main sources of licensing income

The report reveals one of the main sources of licensing income for the council is selective licensing.

According to its annual expenditure report, the council spent a whopping £4.2 million on selective licensing between 2020/1 and another £2.8 million in 2021/22.

Previously Nottingham City Council told Property118 that the selective licensing scheme is not designed to make a profit and the fees solely cover the costs of setting up, operating, and delivering the scheme in the city.

Mick Roberts, one of Nottingham’s largest landlords to house benefit tenants, told Property118 that selective licensing fees have caused misery.

He said: “It appears selective licensing fees which have been paid for by vulnerable tenants through rent increases have only been ringfenced in the last year.

“This means that tenants’ money has been spent elsewhere by the council.”

The report warns that “reserves used for purposes other than those defined in the relevant legislation are illegal.”

‘Significant weaknesses that needed to be addressed’

In a statement, Nottingham City Council said: “The assessment identified significant weaknesses that needed to be addressed to provide the necessary level of assurance, including a weak control environment, ineffective systems and a culture which was not focused upon compliance.

“A report taken to the council’s Audit Committee provided a comprehensive summary of the issues raised by the assessment and the urgent action needed to make the necessary improvements.

“It is important to be clear there is nothing specifically identified within the samples tested in the assessment that suggests any allocated funds have been misspent or funding has not been used for its overall intended purpose.

“The council has been open about the nature and seriousness of the assessment’s findings. Good progress has been made to address the issues raised and through the council’s Finance Improvement Plan, reported at every Audit Committee, to ensure the necessary controls are in place.”

In response to the council’s statement, Mr Roberts told Property118: “Absolute codswallop by the council – they are in total denial again.

“Meanwhile, the council’s homeless bill exceeds £8 million a year and is increasing.”


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Comments

John MacAlevey

10:12 AM, 7th February 2024, About 4 weeks ago

Mick, I feel so sorry for your life`s work undermined by communist local authority. They have no interest in ordinary people & are blinded by their own self-importance & jobs-worth mentality. Your LA is fairly typical I fear, the British public deserve far better governance..but it never appears. ALL my clients have dis-invested in licensable areas becuase of the tax imposed thus exascerbating the already tragic lack of rental properties. I firmly believe there is a conspiracy to eradicate `small` landlord ownership in the PRS, HMG/pension co`s & banks want to take control of this form of tenure as it`s another grasp they have on peoples lives..

TheBiggerPicture

10:31 AM, 7th February 2024, About 4 weeks ago

So, landlords (the bad guys) need to be punished because they might not do things properly.

The people to do this punishing.are the council, because they are the good guys.

But the council have not done things properly. To make sure they do things properly, shouldn't they have to go under a licensing scheme too?

Which is it?

JB

10:42 AM, 7th February 2024, About 4 weeks ago

Poor tenants- often the people with the least spare cash have been subsidising everyone else. Disgraceful

Small Portfolio Landlord

10:49 AM, 7th February 2024, About 4 weeks ago

Reply to the comment left by John MacAlevey at 07/02/2024 - 10:12
John, I completely agree with you. I believe the real power in this country don't want to see a lot of landlords making a good living and want us kept down to a level where they can maintain their manipulative control.
Nothing will change until it gets to the point when one of them says, "Well, let them eat cake" if you follow the reference.

Raz

10:52 AM, 7th February 2024, About 4 weeks ago

Dylan Morris

11:00 AM, 7th February 2024, About 4 weeks ago

The Council should be forced to confirm the total amount of funds that were not ring fenced and spent elsewhere. These monies should then be refunded to every landlord who has paid for a licence as their fees were used illegally for other purposes. Essentially this has been fraud.

Crouchender

11:12 AM, 7th February 2024, About 4 weeks ago

Reply to the comment left by Dylan Morris at 07/02/2024 - 11:00
This Labour council is typical of all the London councils who operate SL. The fees for the licenses are going to be insignificant compared to when Labour is in power. The real killer blow is that Labour ( who believe homes should be a 'human right' so not traded as an asset) will cut off the exit route of small LLs to sell with at least 40% CGT and higher tax on unearned income ( rent) so smaller LLs will prisoned in PRS as well as being battered by Council inspection penalties for LLs. The omens do not look good.

howdidigethere

11:34 AM, 7th February 2024, About 4 weeks ago

It is well known that councils all over the UK are insolvent. It has been my view that this LL Licensing has only ever been about cashflow for these insolvent psuedo-corporations.

There is much work underhand to expose the unlawfulness of Local Council operations. It is at grass roots, but alas that is where we are in this debt-tax-slave system.

Mick Roberts

12:02 PM, 7th February 2024, About 4 weeks ago

the council spent a whopping £4.2 million on selective licensing between 2020/1 and another £2.8 million in 2021/22.
All from tenants rent increases-That didn't want it.
And still no communication from the Council to ask

Mick, we in a mess, we have homeless increasing at catastrophic rates-Can we we now work with Landlords?

Mick Roberts

12:03 PM, 7th February 2024, About 4 weeks ago

Reply to the comment left by John MacAlevey at 07/02/2024 - 10:12
I urge your clients to come invest in Nottingham's Licensed area's. U can charge the earth cause all other Landlords are getting out the Licensing area.

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