Issue - meetings

Members will be provided with an update on the establishment of the Local Housing Company. The business case is attached for information.

The Scrutiny Commission received a copy of the authority’s business case for the Wholly Owned Company (WOC). It was noted that this was separate to the business case for the company itself, and any separate appraisals for key sites to be considered for development by the company.

It was requested that the full Ethical Statement proposed at the meeting of the Commission in March and subsequently agreed by Council be included in the business case.

Some members expressed concern that there was insufficient capacity within the authority’s establishment to take on the initial management of the company. In response, attention was drawn to section 4.1 in the report, and members were reassured that there were the skills and capacity to undertake the work in-house using a currently vacant position in Estates and Asset Management, but that eventually the company may need to establish its own management team.

In relation to the financial aspects, attention was drawn to the timeline in the report which showed the projected return on investment. It was noted that the company would borrow from the authority to fund the business until the return was realised, and this would be set out in each business case for the particular development.

It was requested that the wording used on page 14 be amended to remove reference to migrant workers and ensure language used was appropriate.

It was agreed that the Scrutiny Commission would receive a progress update during the first quarter of 2016/17.

Report of the Deputy Chief Executive (Corporate Direction).

Council was updated on the setting up of Hinckley and Bosworth Development – a company wholly owned by the Council for development of property for sale and rent. Members were reminded that the company would not be used for building council houses but that the Council could purchase houses from the company at market value.

Whilst acknowledging that the main objective of the company was to make a profit, members were presented with an ethical statement that had been requested by the Scrutiny Commission. An amendment was proposed to include an additional recommendation to adopt the ethical statement. This amendment was accepted without debate.

In relation to the proposed Board of Directors, it was noted that the exact officer representation was still under discussion, but in response to a member’s question it was noted that the officers appointed to the Board would be from the existing establishment and would receive no additional remuneration for this.

It was moved by Councillor Lynch, seconded by Councillor Bray and

RESOLVED –

(i)            A housing development company (the company), wholly owned by the Council, be created to build houses for sale and rent;

(ii)          The name of the company be Hinckley and Bosworth Development Limited;

(iii)         The company be incorporated and be limited by shares;

(iv)         Approval of the business plan be delegated to the Chief Executive in consultation with the Chief Officer (Finance, Customer Services and Compliance);

(v)          Any loan requirement, as set out in the business plan, be repaid to the Council at a market rate of interest;

(vi)         Agreement of the rate of interest for any loans be delegated to the Chief Executive in consultation with the Chief Officer (Finance, Customer Services and Compliance) depending on market conditions at the time of the transaction;

(vii)        The Articles of Association for the company as attached in appendix 2 to the report be approved;

(viii)      The in principal gift at nil value of the land at Middlefield Lane (the former depot site) to the company once incorporated be approved, subject to the prior approval of the Secretary of State being obtained to the disposal and confirmation that no State Aid issues arise as a result of the transfer and further report on the current leisure centre site be presented in due course;

(ix)         The Prudential Indicators for 2015/2016 be amended to take account of the gift of Middlefield Lane and the loan to the company (ie increase of the Authorised Borrowing Limit);

(x)          Delegated authority be granted to the Chief Executive to appoint up to four officers to the Board of Directors for the company;

(xi)         A supplementary budget of £100,000 to meet costs associated with the set up of the company, financed from the existing Transformation Reserve, be approved;

(xii)        The Ethical Statement be adopted in the form presented to the Council.

Report of the Deputy Chief Executive (Corporate Direction).

Further to the request at the previous meeting, a report on the setting up of Hinckley and Bosworth Development, a company wholly owned by the Council, was presented to members. It was noted that the council’s representation on the board was one of the matters still under discussion. The distinction between the properties purchased from the housing revenue account and those developed by the proposed company was clarified and it was noted that these would meet different housing needs.

Concern was expressed regarding the ethical grounds for creating the company and that it should not be set up solely for financial reasons. In response officers reported that the financial aspect was a key driver, but agreed it was important for clarity to be given around the ethical status of the company and therefore to revise the documentation to include an ethical statement.

RESOLVED –

(a)          An ethical statement be drafted and RECOMMENDED to Council;

(b)          Regular updates be provided to the Scrutiny Commission;

(c)          The recommendations be endorsed and RECOMMENDED to Council.