Agenda item

Report No: OAS/SE/18/004

Prior to the report being presented to the Committee, the Chairman, Councillor Diane Hind’ welcomed Councillor Sara Mildmay-White, Cabinet Member for Housing, who was also a representative for St Edmundsbury Borough Council on the Barley Homes Shareholder Advisory Group (SAG) and three of the Directors from Barley Homes, Davina Howes and Simon Phelan for the West Suffolk Councils and Duncan Johnson, Chairman of the Board of Directors for Suffolk County Council, who was accompanied by Aidan Dunn, Assistant Director (Strategic Finance) and Head of Procurement at Suffolk County Council (SCC) who supported SCC in operating Barley Homes.  

Councillor Sara Mildmay-White then presented Report No: OAS/SE/18/004 to the Committee, which provided the opportunity for Members to note the Barley Homes’ Annual Report 2018 and the SAG’s view and recommendations, and to provide any additional comments to inform the preparation of Barley Homes next Business Plan, which would be brought to the Overview and Scrutiny Committee in the summer.

Attached at Appendix A to the report was the Annual Report of Barley Homes (Group) Limited, the company established jointly with Forest Heath District Council (FHDC), St Edmundsbury Borough Council (SEBC) and Suffolk County Council (SCC) to build open market housing for sale, housing for private rent and affordable housing.  The Annual Report (Appendix A) presented the position from a Barley Homes perspective, and the covering report provided the perspective from both FHDC and SEBC’s viewpoint, as joint owners (shareholders) of Barley Homes. 

The covering report also included information on the current progress made against the agreed Barley Homes Business Plan; key challenges and achievements; and a number of recommendations on the way forward, which the Overview and Scrutiny were asked to consider, such as:

·      SAG welcomed any feedback from the Scrutiny Committee on how to improve communications so as to keep all members better informed moving forward.

The Committee strongly expressed their concerns regarding deliverability of the Barley Homes five-year business plan, given one of the four initial development sites had been removed from the business plan, (Wamil Court, Mildenhall), because Suffolk County Council (SCC), a shareholder in Barley Homes took the decision to sell the site on the open market, securing a higher price.  Although the property had been offered to Barley Homes, the offer they were able to make based on the assessed future development was not acceptable to SCC.  It was concerned that if SCC had done this once, what was stopping them from doing it again? 

Some members also felt that the cost of the preparatory work carried out by Barley Homes (approximately £6,500) in assessing and progressing Wamil Court, Mildenhall should be paid back by SCC from the sale proceeds it achieved on the sale of the land.

Aidan Dunn, Assistant Director (Strategic Finance) and Head of Procurement, explained in detail the history behind Wamil Court, Mildenhall, which went back to the original business plan and the Care UK’s contract for the renewal of the care home, and the need for SCC to maximise the cash receipt for the site when Care UK returned it back to SCC in 2014.  Barley Homes was asked to provide their best market value price for the site, however SCC found a buyer who were prepared to pay three times more than what Barley Homes could offer.  Following concerns being raised about this sale by the West Suffolk partners, SCC had taken stock of the situation and was now looking at what it wanted as a partner of Barley Homes and stated that SCC was now much more open minded to the bigger picture and not just focused on maximising profits and land receipt sales.  All partners were now looking at the original assumption in the original business plane when Barley Homes was established, as these were considered to be too restrictive, and it had become apparent that further work was required with Barley Homes to establish new assumptions and greater flexibilities.

In response, the Assistant Director (Resources and Performance) noted that there was a lot of emotion around the sale of the Mildenhall site, which was understandable and officers would progress the principle question of the £6,500 being recouped.  She explained that market valuation was a subjective issue, depending on the intentions of the purchaser.  Members raised concerns that the price for Wamil Court could ultimately result in a housing application coming forward that could not achieve development management policy compliance

The Committee questioned whether St Edmundsbury Borough Council would have gone ahead with the Joint Venture in the first place with just three sites, instead of the four; and whether Barley Homes would still be able to deliver the homes it had originally set out to achieve in the first business plan, and sought reassurances from SCC that they would not sell their other two sites on the open market, without first giving Barley Homes the opportunity to buy the sites first.

In response, Aidan Dunn informed members that SCC wanted houses to be built on the two sites it owned as set out in the Business Plan and it would offer the sites to Barley Homes in the first instance.  However, if the sites were not viable for Barley Homes, then SCC would consider selling those sites to another buyer.

Some members accepted that there would be teething problems, but questioned whether this was a joint venture that the council should realistically be pursuing.  If the councils involved had differing perspectives, then there should be a point set when Barley Homes was fully reviewed and a decision made as to whether it was still viable to continue or to dissolve Barley Homes and simply sell potential development sites on the open market, as members did not want to have the same problem in 12 months. 

The Committee was informed that Barley Homes was currently working hard to progress the three remaining sites set out in the current business plan to ensure that they worked and delivered against the timeline set out in Appendix A.  Officers reiterated that all council leaders were fully committed and wanted Barley Homes to be a success.  Conditions in the housing market had changed since the original business plan was prepared, and given the desires to maintain schemes that were policy compliant, a revised business plan would need to be brought forward that still achieved a profitable outcome for the business.

In response to a question raised regarding how members were kept informed about Barley Homes, Councillor Mildmay-White identified that this had been raised within the Leaders Statement to Council, and it was always intended that Barley Homes annual reports would be presented to the Overview and Scrutiny Committee. 

In response to a question raised, the Committee was informed that the figures set out in Appendix 2 of the Annual Report were a snapshot in time up to the end of January 2018, and the full set of accounts would be available at the end of the financial year.

Discussions were also held on the appointment of non-executive directors; the Westfield site in Haverhill and parking issues at Castle Hill, Haverhill; to which responses were provided.

Aidan Dunn reiterated that SCC wanted the joint venture to work and the SCC Leader was committed to Barley Homes. 

The Chairman of the Committee summed up by stating that the message coming out of the meeting was that members were concerned about Barley Homes and about the delivery of housing going forward and suggested that the revised Business Plan be brought back to the Committee in July/September 2018 to enable members to further assess progress.

Councillor Diane Hind moved the recommendations, these were duly seconded by Councillor Andrew Speed and with the vote being unanimous, it was:

          RESOLVED: That

1)   The Annual Report 2018 for Barley Homes (Group) Limited, attached as Appendix A to Report No: OAS/SE/18/04, and the progress made to date be noted.

2)   The Barley Homes Shareholder Advisory Group’s views and recommendations set out in Report No: OAS/SE/18/004, to address the current challenges, be noted.

3)   The Barley Homes Revised Business Plan be referred back to the Overview and Scrutiny Committee in July/September 2018, along with the full year-end set of accounts to enable the Committee to assess further progress being made.