Agenda item

Commercialisation of Beach Hut Assets through Special Purpose Vehicle (SPV) Wholly or Majority Owned by the Council


A Committee member highlighted that there was no report available for consideration.  There was therefore little which could be discussed around this issue. The Committee member moved that the meeting be adjourned. The motion was duly seconded.


The motion was debated, and a number of points were raised including:


·     The proposed date to reconvene the meeting was 2 September. This was prior to the September Cabinet meeting which was expected to consider this matter.

·     Concerns were raised that no report had been made available for this meeting and the reasons for this had not been made clear.

·     There had been confusing communications regarding the meeting taking place both for Councillors and the general public.

·     Councillors sought assurance that the advice received on this issue including the reports from KPMG would be made available to the Committee and also that this information be made available for beach hut owners.

·     The suggestion that the meeting should be cancelled or should be made inquorate were not appropriate.

·     Committee members also sought assurance that a report would be available in time for the 2 September meeting including meeting the timeline for publication of the agenda with reports.

·     A Committee members suggested that they would like to put a proposal to ask the leader to prepare an emergency budget.

·     There were concerns raised regarding the cost implications of the proposal if it would not be going ahead.


Following discussions, the motion was voted on and it was:


RESOLVED: That the meeting be adjourned until the report is available.


Voting: For 6, Against 5


Cllr G Farquhar, Cllr M Iyengar, Cllr S Moore, Cllr V Slade requested to be recorded as voting against the motion.


The meeting adjourned at 6.53pm on 20 July 2022 and reconvened on 2 September 2022 at 6.00pm.


The Chairman welcomed everyone to the reconvened meeting. An apology for absence for the reconvened meeting had been received from Cllr J Edwards. The Chairman explained that he would invite questions and comments from committee members first followed by other councillors. He asked that members avoid repeating points previously raised at the July meeting.


The Leader and Portfolio Holder for Finance and Transformation presented a report, a copy of which had been circulated to the Committee and which appears as Appendix A to these minutes in the Minute Book. The Leader explained that following clarification from the new Secretary of State on guidance on the Flexible Use of Capital Receipts (FUCR) the Council was no longer pursuing the use of the SPV. The change in guidance prevented the capital received from the sale of beach hut assets to the SPV to be used for transformation purposes.  As a consequence, a Finance Update report was being brought forward to Cabinet on 7 September and to this Committee, setting out new plans to fund transformation.


The Leeder and officers responded to questions and comments, including:


  • Questions about 20 July meeting, including why the Leader had not attended, why the latest updates could not have been communicated, whether scrutiny was being disregarded and why officers could not have provided information.


The Leader explained that at that time discussions with the Government were still fluid (at the point between the letters from Kemi Badenoch MP on 16 June 2022 and Greg Clark MP on 1 August 2022). In his view it was the wrong time for the Committee to be considering the item. Although the Committee was required to convene, he anticipated that the discussion would not proceed as there was nothing to scrutinise and did not feel there was value in his attendance. He did not consider there had been a disregard for scrutiny and pointed to the special meetings which had now been arranged.


The Chief Executive assured members that officers were open and honest if asked questions and that he did not recall any direct questions being asked in the manner suggested.


  • Questions on the lack of evidence that the Government supported the SPV proposal when the Council had been told it did and that the Budget had been predicated on this support.


The Section 151 Officer referred to paragraphs 78 and 79 of the Budget and MTFP report to Council in February 2022 which had clearly set out the position. The Government had been clear that the proposal was not prohibited by the FUCR direction but having considered it further it was not felt to be within the spirit of the direction. The Leader reported on earlier ‘without prejudice’ feedback from KPMG, CIPFA and the External Auditor that the proposal was in accordance with the regulations. He referred to the new borrowing solution offered by the letter received today from Paul Scully MP. The Chief Executive clarified that although earlier discussions with Government on options to fund transformation had included borrowing, informally this was not supported and no formal application to borrow had ever been made.


  • Questions on the letter from Kemi Badenoch MP and the timeline of discussions between the Leader and the Secretary of State on the need to be ambitious/flexible in mechanisms to fund transformation.


The Leader reported that he had held an initial discussion with Robert Jendrick MP prior to Michael Gove MP taking office in September 2021. Following the receipt of the letter from Kemi Badenoch on 16 June 2022, which was shared with informal Cabinet and officers, the Leader had spoken to Michael Gove on the matter in July 2022. The matter had ‘stalled’ between Michael Gove leaving office in July and Greg Clark MP’s succession.  The Government’s position was confirmed in the correspondence from Greg Clark and Paul Scully MP and they were now working with the Council to allow the Council to borrow.


  • Questions on how the Beach Huts SPV was developed


It was noted that the first KPMG report dated September 2021 did not include the beach huts proposal. The proposal was discussed at a subsequent workshop with Council officers, KPMG and a representative of BCP Future Places Ltd.


  • Questions on the timeline of the KPMG reports including concerns about their status and lack of availability until now


There were concerns about the length of time the KPMG reports had not been made available to members despite repeated requests and the reasons given for this, at various points members being told there was no report and that the Leader could exercise discretion not to disclose a draft report. It was noted that there appeared to be little difference between the draft and final versions. Councillors had also received an email from a local resident challenging the legality of not disclosing the reports.


The Monitoring Officer explained that there were a number of factors to consider when providing advice on such matters, including Freedom of Information, data protection in terms of requiring report author consent, statutory and common law rights, access to information procedure rules and there being some circumstances where the Leader can decide not to release a draft report at the time. The Chief Executive referred to the Constitution as setting out how and when reports are made available. The Leader said this was not in his gift, that he did not deny access to the report, that he was not able to do so and in any event the report was not finished.


  • Questions on the costs of transformation, how this had been / was being was funded and further staff reductions.


During the meeting there was a robust exchange of views around the approaches of the current and previous Administrations to the costs of transformation and how this had been/was now being funded. The Section 151 Officer clarified that the investment programme now extended to £68 million included £20.09 million in staff costs apportioned to working on transformation over the next three years, this being the most significant reason for the increase. The Budget report explained the intention to invest in adult and children’s service layers which, although not approved as part of the report, included an assumption of £7.2m for 2025/26 following transformation which the Section 151 Officer confirmed was through further Full Time Equivalent reductions.


  • Questions on the need to reflect in light of the clear messages from Central Government – on the need for clear and explicit agreements from the outset; transparency/earlier disclosure and engagement with members, stakeholders and residents, including challenge through the overview and scrutiny; and recognition of the risks to our relationship with Government in testing the rules by acting outside the spirit of them.


The Leader acknowledged the need to reflect on process and disclosure in terms of how the Council got to this point. He did not feel the budget report was ambiguous, the early indications were that the proposal was acceptable before the rules were changed and in terms of relationships the Government was now working directly with the Council to progress a positive outcome. He rejected a call to resign, referring to the Council’s record of delivery. He referred to constitutional and cultural issues around the conducting of political debate which he felt all councillors needed to reflect on.


Questions were also raised about the reference to Christchurch Civic Centre, which the Leader confirmed was being looked at for community use, and the procurement process in relation to KPMG, which was not deemed relevant.



RESOLVED that the Overview and Scrutiny Committee notes the Council is no longer pursuing the commercialisation of beach huts via an SPV.”


Voting: 5 For, 0 Against, 5 Abstentions


Cllrs S Bartlett, G Farquhar, M Iyengar, S Moore, V Slade asked for their abstentions to be recorded.



Supporting documents: