Agenda item

To consider the BCP Future Places Report scheduled for Cabinet consideration on 22 June 2022.

The Committee is asked to scrutinise and comment on the report and if required to make recommendations or observations as appropriate.

Cabinet members invited to attend for this item: Councillor Phil Broadhead, Portfolio holder for Development, Growth and Regeneration

Please note that this report contains an appendix with exempt information ‘as defined in Paragraph 3 in Part I of Schedule 12A of the Local Government Act 1972. If the Committee wish to discuss information in relation to this appendix it may wish to make a decision to exclude the press and public.

(Paragraph 3 - Information relating to the financial or business affairs of any particular person (including the authority holding that information)

The Portfolio Holder for Development, Growth and Regeneration and the Director for Regeneration presented a report, a copy of which had been circulated to each member and a copy of which appears as Appendix 'A' to these minutes in the Minute Book. The Director of Regeneration and representatives from FuturePlaces were also in attendance and provided responses to a number of enquiries. A number of points were raised and responded to in the ensuing discussion including:

·     Clarification was sought on how the loan would be financed, through the Public Works Loan Board or by other means. It was confirmed that a working capital loan of £8million would be financed by borrowing which would be lent at a commercial rate to the company through the PWLB.

·     It was noted that the anticipated 30 percent profit margin was reflective of the industry norm. The Council procured other services on a cost-plus basis and in order to demonstrate best value these were compared against day rates. There was relative confidence that this had been benchmarked and fell within industry ranges.

·     In response to a question, it was confirmed that the company was 100 percent owned by BCP Council. There was scope for dividends, but these would flow straight back to the Council.

·     Concern was raised regarding the lost £3 million in the first year of operation for a company formed by a London Borough. A point was raised regarding potential loses by the company if the Council did not subsequently agree the individual business cases brought forward by the company. The Portfolio Holder advised that this was why Councillors were members of the Board to ensure that there was follow through on a collective vision. The Gateway process followed a full process of several stages from concept to final approval.

·     In response to an enquiry the Committee was advised that there was a benefit of having a division with a singular focus and expertise.

·     It was noted that Seascape’s purpose was to purchase homes to house homeless persons and other direct purposes, but it was also able to make a profit. A Councillor Commented that they were confident in the Portfolio Holder and Officers to deliver development.

·     This was the first time using a specific funding methodology which would be reviewed annually. It was suggested that this needed to be more frequent, perhaps quarterly. It was explained that this was in line with other Council companies where an annual update was received through Cabinet. Regular updates on individual projects would come forward through the gateway process.

·     In response to a line in the report a query was raised regarding when it would it not be appropriate for Futureplaces to repay borrowed monies. Payment to the company would allow this to be repaid and it was confirmed that it was always appropriate for debt to be repaid.

·     There were a number of headline projects within the business plan. It was noted that some of these were comprised of sub-projects which would be deployed over a number of different phases. Such as Boscombe Regeneration and the Holes Bay site. Futureplaces would work on the greater overall masterplan visioning, with sub projects coming forward for Council approval.

·     The intent to raise the capital threshold to £1.3 billion and whether some of this would come from Council borrowing, it was suggested that it would still require considerable third-party financing because the gross sum of all of the projects would be considerably greater than this amount. Assurance was sought that there would be financing available. The Portfolio Holder advised that they were continually investing in the future rather than disposing of assets. However, although the schemes were principle investing and acquiring assets there was only a certain amount which the local authority should be doing. Developers were needed and it was not good if it was felt that the Council would do everything itself. Part of the reason for creating Futureplaces was to ensure that fully developed project plans including arrangements for financing were both credible and deliverable.

·     The number of full-time employees of the company and whether there was a dependency on consultants and sub-contractors. It was suggested that the company wanted to be almost completely separate from the Council, in terms of location, communication, HR, etc.. It was noted that the company did procure a number of support services from the Council. Once the company were fully staffed it was expected that there would be 24 full time equivalent members of staff, comprising two core teams. One enabling team and one delivering project management. However, from time to time there would be a need to buy-in additional resources and expertise which would be more costly to hire on a permanent basis.

·     In response to an enquiry, it was confirmed that it was hoped to bring together the core team in a traditional way in its own premises

·     Concerns were addressed regarding some of the allegations made on social media regarding members of staff. The company would seek to protect staff from this type of social commentary, but they would always want to be transparent and open and would respond to any direct questions on these issues.

·     With reference to the sustainability impact summary, there was an emphasis on low carbon, energy efficient buildings but there was no mention of active travel measures, it was suggested that this should be added to the report. It was also recognised that throughout the document there was little emphasis on social value. The Portfolio Holder agreed with the comments on active travel and wanted to encourage people to use different means to travel. The Portfolio Holder advised that he was happy that this be included. It was noted that the social value mix would become apparent the core vision of Futureplaces was using it was using development as a catalyst for the place we wanted to live in. High end developments would provide the opportunity for more affordable properties within the same site. It was noted that it was a 360-degree process to ascertain what the societal value of a project was.

·     The staffing level to deliver the number of projects outlined was queried. It was confirmed that some of the projects were quite modest with short timeframes. Whilst there were a range of skills needed these were not necessarily required for the life if a project and there would be a degree of buy-in to fulfil skill needs.

·     Clarity was sought on the situation regarding VAT and payment of corporation tax on profits. It was confirmed that this would need to be paid on profits and whilst some development services were exempt VAT would be charged as appropriate.

·     Queries were raised regarding the overall strategy in terms of what was important and why even seemingly very modest projects were being filtered through the company. One of the reasons given for the company was to reduce the list of consultants but it seemed to be employing them through different means. It was noted that some of the projects has been around for a long time within the Council. It was clarified that Barclays House was not a Futureplaces project. Any profit margin received would be fed back to the council through dividend or through liquidation if no longer required.

Further clarity was sought on the use of the PWLB for projects and a definitive opinion on this was required. The Portfolio Holder advised that the government wanted local authorities to take a leading role in regeneration. The use of the PWLB was discouraged for projects on a purely yield basis rather than for mixed use schemes. The section 151 officer would also input into this and specific guidance on what constitutes regeneration was being sought. The Managing Director of Futureplaces offered to discuss this further with anyone who wished to.

The Chairman thanked everyone for their attendance and welcomed the opportunity to discuss Futureplaces and address openly some of the issues previously raised.

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