Agenda item

    Report by Corporate Director Alistair Cunningham.      

Cllr Richard Clewer presented a report seeking support for the establishment of a local housing company and a local development company.

Cllr Clewer explained that there are a range of strategic housing needs facing the Council that could not easily be addressed by the Council’s current approaches. These included, (i) The impact of the lack of key worker accommodation on the availability of services in parts of Wiltshire; (ii) Accommodation to meet the needs of specific vulnerable households in a timely manner from the existing housing stock in Wiltshire, is not a priority for the Council’s registered provider partners; and (iii) The Council procures accommodation for homeless households that is costly and the quality and cost could be improved by private rented sector accommodation provided by a local housing company.

The report highlighted that the Council has a successful programme of asset disposal. Over the next three years the Council estimates that it may be able to offer to the market, sites capable of residential development which, subject to planning permission could deliver over 500 units of accommodation. Cllr Clewer suggested that if the Council was to establish a local development company not only would it enable the strategic housing needs across the County to be better met it would also increase the potential return that could be generated from the developments. Cllr Whitehead confirmed that it was important to create a revenue stream for the future, and these proposals met this demand.

Cllr Thorn, Chairman of the Financial Planning Task Group, reported that the Task Group had scrutinised the proposals at its meeting held on 8^th January 2019, and had made the following comments:

1. The Board should include at least two independent directors (rather than one), one of whom should act as chairman, to provide the necessary independence and expertise.
2. Clarity is required regarding projected returns on investment. It is problematic to assume broad success having only modelled a few specific investments.
3. The council’s financial assumptions (outlined in the confidential figures received) were different to Saville’s with regard to construction costs. It should exercise caution if not heeding Saville’s greater expertise in this area.
4. No business plan being forthcoming to Cabinet etc (only to the Board) is a concern.
5. The social priority of meeting unmet keyworker housing need (addressing market failure) and the commercial priority of generating income may be in conflict to an extent.
6. Although there may be a small risk of disrupting markets at a very local level (e.g. where significant development is planned or in progress already) our focus should be on growing Wiltshire’s housing stock as much as possible.

In response to the points made above, Cllr Clewer commented that, (i) the number of Independent Directors initially would be set at 1, as recommended, although this figure may change as the companies are developed; (ii) The Business Plan could be reported to the Cabinet; (iii) the risk of disrupting local markets was a very real possibility, although this would be taken into account when deciding on the type of housing placed at a particular site.

Cllr Wheeler, Member of the Financial Planning Task Group, spoke about the professional experience in relation to setting up this type of business and urged the Cabinet Member to consider the suggestion of the Task Group in relation to the number of Company Directors as there was potential for putting the financial investment by the Council at risk. In addition, he suggested that the Council should also consider including Commercial development within the proposals. Cllr Clewer confirmed that the Cabinet would be considering a report on commercial assets at its next meeting and this could be an area for consideration in the future.

Cllr Mayes expressed support for the proposals and asked for the views of Care Leavers and their requirements to be considered during the development of the proposals.

In response to a question from Cllr Wickham about key worker accommodation, Cllr Clewer advised that the Council needed to be careful in how it interpreted key worker.

Cllr Sturgis welcomed the proposals but expressed caution about the timing of any future developments. He indicated that the lead in times, following the granting of planning permission, were normally longer than first anticipated and the building of homes would not be a solution for quick development.

Cllr Thorn, Liberal Democrat Group Leader, welcomed the initiative and indicated that the main areas of concern for the Group were market failure and challenges to mainstream developers bringing forward potential sites. However, the Group was pleased about the ability of the Council to influence the market in a positive way, and create a much more effective market place for agency staff in delivering the necessary housing.

In response to a question from Colin Gale about the impact of the proposals on community land trusts, Cllr Clewer agreed that there was a balance to be struck and potential conflicts would need to be addressed.

Cllr Thomson invited Cllr Clewer to present the proposals for the Local Housing Company and Local Development Company at a meeting of One Wiltshire Estate Partnership arranged for 19^th February 2019.

The Leader of the Council thanked the Cabinet Team and the Director of Housing and Commercial Development for their contributions in developing the proposals and welcomed the full political support.       

Resolved:

1.    The establishment of a local housing company as a company limited by shares initially set up as a wholly owned subsidiary of the Council be agreed.

2.    The establishment of a local development company as a company limited by shares initially set up as a wholly owned subsidiary of the Council be agreed.

3.    That the Council nominates the cabinet member for Corporate services, Housing, Heritage, Arts and Tourism and the cabinet member for Finance, procurement, ICT and operational assets, a member from the opposition party and the Corporate Director of Growth, investment and Place to the boards of both companies.

4.    That the Council recruits an independent nominee to each board who has the requisite skills for each company.

5.    That the Council provides short term loan start up funding or services for the companies.

6.    That the Council provides loan finance of up to £50 million from 2019/20 to 2023/24 to the local housing company.

7.    That the Council agrees a provision of up to £5 million to fund equity investment and loan finance to the local development company from 2019/20 to 20123/24.

8.    That the provision of loan finance to the Local Housing company is subject to a nominations agreement with the Council.

9.    That the Council will offer services to both companies.

10.That the detailed arrangements to establish the company and contracts for services provided by the Council is delegated to the Corporate Directors, other than Corporate Director Growth, investment and place, in consultation with the Director of Legal and Democratic services (Monitoring Officer) and the Director of Finance and Procurement (section 151 Officer).

Reason for Decision:

The proposal to establish a local housing company is aimed at providing residential accommodation in Wiltshire that can meet the wider strategic housing needs of the Council as well as generating a return for the Council.

The proposal to develop a local development company is aimed at enabling Council land assets to be developed to meet the strategic economic and social needs of Wiltshire whilst maximising the return for the Council.