Issue - meetings

The Head of Housing and Health and the Head of Strategic Finance and Property submitted a joint report that covered the establishment of a housing company, wholly owned by East Herts Council, to provide revenue income to offset diminishing government support and grants and meet the Council’s objectives in terms of providing quality housing opportunities.

Councillor T Jackson made a number of contextual comments by way of an introduction to the report.  He explained that a number of Councils had set up a housing company as a vehicle for generating income.  The Head of Housing and Health confirmed that the housing company would act as an investment vehicle and he provided a detailed explanation of the cost modelling and cost estimates that had been carried out since Corporate Business Scrutiny Committee had met in November 2016.

Members were advised that the report included a 30 year business plan for this first stage of the proposed company’s operation drawing on advice provided by Trowers and Hamlins and PricewaterhouseCoopers (PwC).  The proposal did not cover housing development.  The Head of Housing and Health stressed that the principal aim was to generate an additional income stream for the Authority.

The Head of Housing and Health emphasised that it would be for Members to direct the use of the income stream.  Members were advised that the modelling had been stress tested and was sufficiently flexible to deliver income in a flexible housing market.  Members were invited to scrutinise the business case.

At this point, the joint meeting resolved to exclude the Press and Public on the grounds that open discussion of Essential Reference Paper ‘B’ would result in the disclosure of exempt Information as defined by paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972.

The Head of Housing and Health answered a number of queries regarding the exempt Essential Reference Paper ‘B’.  He made some explanatory points.

Officers responded to a number of other detailed questions and concerns from Members on a wide range of topics.  Members questioned whether Officers had access to the necessary skills set for the management of a housing company.  Councillor K Crofton expressed his disappointment that this was the only commercial option for Members to consider.  He felt that there might be better returns from entering the commercial property market.

Councillor G Cutting referred to the different start up positon of South Cambs in that he believed there was an existing portfolio of 200 properties.  Councillor M Casey stated that he would like to see more information regarding the financial return on the Council’s equity that was proposed to be deployed to the company.

The Director confirmed that the performance of the housing company would be reviewed yearly to ensure it delivered what was expected by Members and Officers.

Councillor G Cutting proposed and Councillor K Crofton seconded, a motion that the Executive be requested to give more consideration to the setting up of a housing company and alternatives to the proposed  ...  view the full minutes text for item 528

The Executive Member for Economic Development read out a statement relevant to the report on behalf of the Ambassador and Executive Member for Shared Services.

The Head of Housing and Health and the Head of Strategic Finance and Property submitted a report that covered the establishment of a housing company, wholly owned by East Herts Council, to provide revenue income to offset diminishing government support and grants and meet the Council’s objectives in terms of providing quality housing opportunities.

The report included a 30 year business plan for this first stage of the proposed company’s operation drawing on advice provided by Trowers and Hamlins and PricewaterhouseCoopers (PwC).  The proposal did not cover housing development and a principal aim was to generate an additional income stream for the Authority.

Members were advised of financial matters that were relevant to the proposed Housing Company.  Members were also provided with a number of property and rent assumptions.  Members were invited to scrutinise the business case and business plan.

Councillor M Casey stated that, he felt the assumptions in the report were optimistic and based on his reanalysis of the figures, the margins were not sufficient to justify the investment and future decision making on this issue.  Councillor M Pope stated that he was in favour of the concept and endorsed Councillor M Casey’s call to re-assess the business case.

The Head of Housing and Health advised that local data had been used for the figures detailed in the report.  He stressed that consideration had been given to the equity, debt and loan to value ratios that would be acceptable to the private market.

The Head of Strategic Finance and Property stated that the Housing Company would provide a cash flow that would avoid the need for savings elsewhere in the Council.  Following comments from Councillors D Oldridge and J Wyllie, the Head advised that the proposal was to provide private rental housing using local authorities’ ‘general power of competence’.  Use of this power required the activity to be conducted by a company, not directly by a council.  The Director (Adele Taylor) reminded Members that the Authority was restricted in terms of where and how it could invest.

The Leader commented on the possibility of arranging training for Members to be delivered by other Authorities, covering their experience of setting up a housing company.

Following other comments from Members, the Committee was advised that the income generated from this proposal would go towards mitigating the Council’s savings targets.  The Head of Housing and Health reminded Members that there was a further opportunity for scrutinising the proposals at the joint meeting of Scrutiny Committees in January 2017.

Councillor J Wyllie proposed and Councillor M Pope seconded, a motion that the recommendations from Scrutiny Members on the Housing Company Business Plan be deferred to the joint meeting of Scrutiny Committees scheduled for 17 January 2017.

After being put to the meeting and a vote taken, this motion was declared CARRIED.  The Committee supported the recommendations  ...  view the full minutes text for item 462