Agenda and draft minutes

Finance, Commercial Revenue and Contracts Policy & Accountability Committee - Monday, 5th October, 2020 6.30 pm

Venue: Online - Virtual Meeting. View directions

Contact: Kayode Adewumi  Email: kayode.adewumi@lbhf.gov.uk

Link: Watch a live stream of the meeting on YouTube

Items
No. Item

1.

Apologies for absence

Minutes:

NOTE: This meeting was held remotely. A recording of the meeting can be found at:

https://www.youtube.com/watch?v=a4vjES3zWzA

 

 

Apologies for absence were submitted by Chris Littmoden and Judith Worthy.

2.

Roll call and declarations of interest

The Chair will carry out a roll call to confirm attendance and members will have the opportunity to declare any interests.

 

If a Councillor has a disclosable pecuniary interest in a particular item, whether or not it is entered in the Authority’s register of interests, or any other significant interest which they consider should be declared in the public interest, they should declare the existence and, unless it is a sensitive interest as defined in the Member Code of Conduct, the nature of the interest at the commencement of the consideration of that item or as soon as it becomes apparent.

 

At meetings where members of the public are allowed to be in attendance and speak, any Councillor with a disclosable pecuniary interest or other significant interest may also make representations, give evidence or answer questions about the matter.  The Councillor must then withdraw immediately from the meeting before the matter is discussed and any vote taken.

 

Where Members of the public are not allowed to be in attendance and speak, then the Councillor with a disclosable pecuniary interest should withdraw from the meeting whilst the matter is under consideration. Councillors who have declared other significant interests should also withdraw from the meeting if they consider their continued participation in the matter would not be reasonable in the circumstances and may give rise to a perception of a conflict of interest.

 

Councillors are not obliged to withdraw from the meeting where a dispensation to that effect has been obtained from the Standards Committee.

Minutes:

The Chair carried out a roll call to confirm attendance. There were no declarations of interest.

3.

Minutes of the previous meeting pdf icon PDF 510 KB

To approve the minutes of the meeting held on 23 July 2020.

Minutes:

The minutes of the meeting held on 23 July 2020 were approved and signed by the Chair.

4.

Public Participation

This meeting is being held remotely via Microsoft Teams. If you would like to ask a question about any of the items on the agenda, either via Teams or in writing, please contact: Kayode.Adewumi@lbhf.gov.uk

 

You can watch the meeting live on YouTube: youtu.be/a4vjES3zWzA

Minutes:

The Chair noted the absence of Lord Stephen Greenhalgh and Nicholas Botterill, both former Leaders of the Council, who had been invited to participate in the discussions on item 6 - Review of Termination of the Conditional Land Sale Agreement.

5.

Financial Impact of Covid-19 on the Council pdf icon PDF 332 KB

This report provides an update of the Council’s financial position as it supports residents, communities and businesses through the Covid-19 pandemic.

Minutes:

Emily Hill gave an update on the council’s financial position as it supports our residents, communities and businesses through the Covid-19 pandemic.  A net adverse impact of £18.3 million is currently forecast based on the best estimate of costs, revenue losses and government funding. £7.1 million of the adverse impact is a potential charge against the current year general fund budget with the balance a charge against future years and the Housing Revenue Account. The forecast continues to be updated as the government and council response to the pandemic evolves.  If the government does not fully fund the Covid-19 pandemic it will pose a significant financial risk.

 

In response to a question from Councillor Johnson on the difference between general and specific grants figures, it was reported that the specific grants are not accounted for until eligible expenditure had been committed in line with the grant conditions.  He commended local government’s speed of response to Covid-19 and hoped that this behaviour will translate into BAU.  He asked for clarification on items of expenditure that had been saved or delayed as a result of the pandemic.  Emily noted that the government issued a procurement note requiring local authorities to continue paying some suppliers despite services being interrupted by Covid-19 to ensure their financial resilience.  General guidance to local authorities was not to furlough staff. Therefore, there were limited reductions in costs as a result of Covid-19. Where possible, some of our contractors were able to deploy their staff to our Covid-19 response.

 

Tony Boys asked what the long-term changes would be.  Although the specific changes were difficult to forecast, flexible accommodation would be a key change.  The council has an opportunity to consolidate accommodation by occupying a smaller footprint.  Until a proper business case and analysis has been undertaken, savings will not translate into budget forecast.  The Committee noted the council is submitting monthly CCG funding claims. Agreement in principle for the 1st 3 months claims had been received.

 

In response to a question about the sufficiency of funds for test and trace, it was report that the current forecasted spend for this specific grant was within the allocated funds.  H&F has a good partnership with the local NHS and other partners resulting a strong local test and trace response.  Regarding mitigations, all SLT members look at their departmental overspends and have an action plan as part of the budget monitoring process.  In addition, directors are exploring proposals to bring forward some of next year’s savings plans.

 

A £6.8 million deficit was reported in the 2019/20 accounts which was funded from reserves.  As to the Council’s response to Covid-19 in supporting the recovery of the local economy, some S106 funding will be used as a one-off source of funding for economic recovery and regeneration.  Regarding CAN, it was acknowledged that there was a phenomenal response from the community.  The Council acted as an enabler to support vulnerable residents.  The financial value of the volunteers’ time had not been costed.  ...  view the full minutes text for item 5.

6.

Review of Termination of the Conditional Land Sale Agreement pdf icon PDF 263 KB

This report reviews the Leader's decision of 15 November 2019 approving the termination of the Conditional Land Sale Agreement which the council entered into with Capital & Counties Properties PLC in January 2013. The report explains the terms of the CLSA and the potential implications for the council and the residents of the West Kensington and Gibbs Green Estates had the agreement not been terminated.

Minutes:

The Committee received a report reviewing the Leader's decision of the 15th November 2019 approving the termination of the Conditional Land Sale Agreement (CLSA) which the council entered into with Capital & Counties Properties PLC (“CapCo”) in January 2013.  The report explained the terms of the CLSA and the potential implications for the council and the residents of the two estates, West Kensington and Gibbs Green Estates, affected had the CLSA not been terminated.

 

The principal reason for the termination of the CLSA was to stop the demolition and redevelopment of the West Kensington and Gibbs Green estates as part of the Earls Court master plan and, in doing so, end a decade of uncertainty for the residents of both estates. Termination required the council to write off £5.9m of historic projects costs against the Housing Revenue Account and £200,000 of historic General Fund costs.

 

Matt Rumble informed the committee that under the original deal, the Council was to receive up to 760 replacement homes and a fixed maximum cash payment of £90m (plus £15m for Gibbs Green School and Farm Lane).  This reduced to £89,500,000 if the Seagrave Road Houses were not included in the Option Land at the relevant time. The deal was not linked to changes in property values or inflation.

 

It was noted that the present value of the £105m cash payment was estimated in 2012 as only £84.9m (based on five, yearly instalments).   The true cost of vacant possession estimated between £150m and £174m would mean the council had to use the full £105m paid under the CLSA, borrow money to fulfil its contractual obligations and ultimately dispose of up to 88 replacement homes.  The impact of the council’s obligations to pay for vacant possession of the site would have meant it could not commit to rehousing all residents of West Kensington and Gibbs Green Estates within the regeneration’s masterplan area. 

 

Councillor Quigley noted that the CLSA required the council to cover adaptation costs of replacement homes with the developer’s liability for adaptation on the whole scheme limited to £100,000.  She was of the view that this was totally unacceptable and poor judgement of the parties who negotiated the deal.  Co-production was very important in the design of any large development like this.  She asked for a briefing on the Council’s Defend our Homes policy.

 

Briefing on the Council’s Defend our Homes policy.

 

Action by: - Matt Rumble (Head of Regeneration)

 

Tony Boys was surprised that the politicians who negotiated this deal had not responded to the Committee’s invitation to attend the meeting.  He was of the view that the deal should be referred to a Parliamentary Committee for review. Councillor Murphy asked officers whether it was common practice not to index link a deal like this, not to obtain an independent valuation of the land or move the cost of vacant possession on to the council. Officers noted that the lack of indexation was the most significant shortfall as the longer the  ...  view the full minutes text for item 6.

7.

Civic Campus Programme - October 2020 Update pdf icon PDF 533 KB

This report provides an update on the Civic Campus Programme.

Minutes:

David Burns reported that the programme was developing as planned.  The current budget was forecasting an underspend. The total budget for the Town Hall building refurbishment and fit out is £46.5m, and the revenue budget for decant is £35.9m. The decant is now complete and officers are finalising accounts with the contractors.

 

Covid-19 has caused some brief delays to activity but had not affected the overall programme delivery dates.  Risks are emerging in relation to third party diversions and service utilities. The project team continue to monitor both the direct construction impacts and the financial viability impacts on the project, and the LLP board also reviews this as part of its obligations.

 

Stage 4 design and contractor proposals for the fixed price contract were submitted at the end of July.  Final contract terms and price intended to be submitted for final approval by the Council and the JV, and for legal completion on 12th October.  Some elements in both contracts will remain as provisional sums, as Stage 5 design will need to be completed for example on interior design and category B fit out requirements.

 

The Council is completing its decision-making process for the acquisition of the commercial units from the joint venture.  Pre-lets have in principle been agreed for the cinema and the retail unit.  Lease agreements on these properties will soon be signed, once the formal decision-making process is completed.  Discussions continue on pre-lets and pre-sales for the other commercial elements of the scheme, although marketing advice from agents is to wait until later in 2021 before actively marketing further.   The detailed design of the Civic Campus is moving into detailed Stage 5 and Cat B fit out processes, which will provide further opportunity to refine the approach to the office spaces in response to Covid-19 where appropriate.

 

The Committee welcomed the report and were delighted that it was on track and on budget.  In response to a question from Councillor Vincent about the viability of the pre let cinema agreement in light of the current difficulties facing the film industry, it was noted that there were risks but step in arrangements are in place if the prospective occupier faces difficulty.  Officers explained that a mandatory lockdown will not trigger additional contractual costs for the Council, but the contractor would also not be penalised.  Either sides would be able to exit the contract if necessary, with appropriate legal protections and notices to do so if required.

 

The Committee was informed that David was leaving the council.  The Committee thanked him for all his hard work over the years on various regeneration projects and wished him all the best for the future.

8.

Section 106 Agreements - Update Report pdf icon PDF 268 KB

This report provides an update of the current position regarding Section 106 balances of funds received, pending, and proposed expenditure.

Minutes:

Joanne Woodward presented an update of the current position regarding Section 106 (S106) balances of funds received, pending, and proposed expenditure as outlined in table below. It was noted that the S106 funds are received from obligations negotiated on over 230 individual developments across the borough.

 

Overview of s106 balances at 1st September 2020

 

(£’000)

Available balance (cash in hand) at 1 September 2020

£52,906

Expected future receipts

£127,546

Total current and expected future funds

£180,452

Proposed expenditure

£32,961

 

Councillor Jones noted that S106 is supporting the green agenda, the huge challenges the Council is facing as a result of COVID 19 and the economy, and helping residents acquire new skills. Members welcomed the report particularly the support S106 funding is providing in this period of considerable change. 

 

The Committee thanked Jo and her team for keeping a tight grip on this area and all their hard work in producing the report.

9.

Date of next meeting

The next meeting is scheduled for 18 November 2020.

Minutes:

 

Wednesday 18th November 2020