Call-in - Local Housing Company
The Cabinet Member for Housing and the Head of Housing, Economy and Communities, Chief Financial Officer and Monitoring Officer have been invited to attend.
To-follow report added 19.11.20.
The Chairman advised that at its meeting on 28 October 2020, Cabinet resolved to set up a Local Housing Company (LHC), Swale Rainbow Housing Ltd. He listed the recommendations agreed at Cabinet.
The Chairman explained that, in his position as Scrutiny Committee Chairman, he called the decision in for the following reasons:
· The decision was outside the Policy Budget Framework; and
· there was inadequate consultation relating to the decision.
In confirming the call-in was valid on 13 November 2020, the Monitoring Officer advised that the decision was not outside the Policy Budget Framework.
The Chairman welcomed the Cabinet Member for Housing, Head of Economy and Communities, the Affordable Housing Enablement Manager, the Chief Financial Officer and Head of Policy, Communications and Customer Services/Monitoring Officer, and external visitors Simon Smith and Steve Partridge from Savills to the meeting.
The Cabinet Member for Housing thanked the Scrutiny Committee for calling in the decision and said that as it was the second largest investment made by Swale Borough Council (SBC), it was correct to do so. He referred to the administration’s key priorities which included the delivery of affordable homes in the Borough and said that there was not enough housing in some areas. The Cabinet Member for Housing said several methods for addressing the shortfall had been explored and whilst currently unsuitable, the Council would continue to work with registered providers. He concluded by saying that the setting up of the housing company would increase and accelerate housing whilst maintaining control and would be self-financing. Referring to comments made about loss of income and parking facilities on the call-in form, the Leader and Cabinet Member for Finance said this was negligible.
In the debate that followed Members raised points which included:
· Clarification on whether the decision to sell the company or its shareholding as outlined at paragraph 2.95 of the report would be by Cabinet or Full Council;
· questioned the reference to 199 social dwellings at paragraph 2.4 as the Council did not own any social housing; and
· questioned whether the partners were equal when officers had a day job to serve and there were two Cabinet Members.
In response, the Monitoring Officer said the agreement to sell the company would be dependent on the details of the decision at the time, but it was likely to be a Cabinet decision in consultation with others. The Leader said that the Business Plan included a 50 year plan with social housing being provided.
The Cabinet Member for Housing said that each officer and Cabinet Member brought different skills and were only looking at the interests of the company. He said that training had been provided and a Chairman would be appointed. The Head of Economy and Community Services added that board structures with a range of mixed directorships had been reviewed and officers felt comfortable as an equal as they had a personal responsibility. The Leader and Cabinet Member for Finance added that, on the advice from Savills, the board should not be too big, and the skills of the current Members suited but this might not always be the case. He reminded Members that the Directors would not remain in place if they were no longer Councillors or there was a change in administration. The Cabinet Member for Economy and Property said that Directors had a full legal responsibility, were a subsidiary of the Council and there were strict criteria of what could and could not be done. In response to a Member’s comments on the details and responsibilities of Directors and shareholders of the company, the Cabinet Member for Housing referred to the details held within the Articles of Association.
A Member questioned whether there would be conflict between an officer and Member in the company as officers took their steer from Cabinet? The Cabinet Member for Housing said it would not be an issue as there were positive working relationships and he reminded Members that the new Chief Executive would carry out performance reviews with officers.
Referring to paragraph 2.9.4, a Member raised concern over the use of Section 21 as he said that it provided no security of tenancy. In response, the Cabinet Member for Housing said it was a requirement and was in the best interests of the company. The Leader and Cabinet Member for Finance said that Section 21 might be misused by private landlords, but concerns were exaggerated. The Cabinet Member for Economy and Propery added that the company had to manage its assets and would act appropriately as a landlord for the benefit of SBC and the benefit of the wider community.
A Member sought clarity on benefits paid to tenants and the Cabinet Member for Housing said that the tenant paid their landlord but there were some situations where the landlord was paid directly, and there was a provision to allow for unpaid rents.
There was a discussion on the lack of information being shared with the public and a Member said that the proposal was being progressed too quickly and was lacking details. The Cabinet Member for Housing referred to commercially sensitive information on the project, and the Leader and Cabinet Member for Finance said it would be difficult to consult publically, but he had encouraged the decision to be called into Scrutiny. He added that the administration had always indicated their intention and were now 18months into their term, and the proposal had been through a vigorous process which needed to proceed quickly. The Head of Housing, Economy and Community Services reminded Members of the report that went to Cabinet in March 2020 with options put forward.
In response to a Member’s question, the Chief Financial Officer clarified the funding for the long term project and said it was a complicated financial transaction, and there were many steps before the estimated costs of £23million were given to the company. He said the company needed to show it could deliver.
Referring to paragraph 2.29 the Leader and Cabinet Member for Finance clarified that that £1.7million was not just for the set up of the company but might be spent on investments for other sites. A Member sought reassurance that before any land and money were given, SBC were in State Aid rules.
The Cabinet Member for Housing confirmed that there were 3 sites identified to transfer to the LHC for housing and that an additional site had previously been considered but was now unlikely to be transferred.
There was a discussion of the valuation of the old bus depot at East Street, Sittingbourne and whether there was any social value in regenerating the area rather than using it for housing. In the debate that followed, the Cabinet Member for Housing said that other options were considered, but the land did not have planning permission and had minimal land value. The Head of Housing, Economy and Community Services said that Harrisons undertook a valuation based on residential uses and the true value of the land would be assessed at the point of transfer. The Leader and Cabinet Member for Finance reminded Members that the site was bought by the previous administration and left to do nothing, housing was the current administration’s priority and the project was the best use of the land in relation to the administration’s objectives. The Cabinet Member for Housing said it was important that people lived near high streets to sustain the area.
A Member questioned whether there was enough staff resource to operate the company and the impact it might have on their day job. In the discussion that followed, the Cabinet Member for Housing said this had been considered and after the initial set up, the office time required would lessen. The Head of Housing, Economy and Community Services said that any time would be charged back to the company, there would be a client side management of the operation which was factored into the process and would not necessarily be the Directors. She agreed to provide more of the confidential information on this outside of the meeting.
- Call in Form -local housing company LHC Nov 20, item 267. PDF 71 KB
- Cabinet Report LHC 1020 Draft for IC, item 267. PDF 109 KB
- Scrutiny Report LHC 1120 Final, item 267. PDF 67 KB