Commissioners are to oversee strategic decisions at Nottingham City Council amid fears of ‘further serious issues’ on the scale that led to a section 114.

The council issued a s114 notice in December after finding ‘an accounting error’ led to £15.9m being unlawfully diverted from its housing revenue account (HRA) to general funds.

Sir Tony Redmond, who has been chairing an independent improvement board working with the council for the last 18 months, is expected to be lead commissioner.

Mr Redmond and his colleagues will oversee the governance and scrutiny of strategic decision-making, strategic financial management, and the appointment and dismissal of statutory officers.

Deputy director for local government stewardship at the Department for Levelling Up, Housing and Communities, Max Soule, praised progress by council chief executive Mel Barrett and his team in working with the improvement board.

However, Mr Soule said levelling up secretary Michael Gove had decided to act following the HRA revelations and reports by external investigator Richard Penn published in April.

Mr Soule wrote: ‘While the independent reports conclude the authority is now on an improvement journey they evidence failings of the utmost seriousness and provide considerable evidence of significant and systemic best value failure.’

The department is particularly concerned about serious governance and cultural issues within the council that ‘will take time to resolve’ and the authority’s ‘overall strategic approach to risk and financial management’.

Labour council leader David Mellen voiced disappointment at the decision.

He said: ‘We brought the [HRA] matter to light ourselves as part of our work to tighten up our financial and governance arrangements, and have already taken swift and direct action to address the issue.’