Agenda item

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 now detailed.

RESOLVED – that a decision on whether to endorse the full business case and 30 year business plan be deferred to the joint meeting of Scrutiny Committees on 17 January 2017.