Retirement home builders feeling the pinch …

“” … Another profit warning at McCarthy & Stone (MCS.L) triggered a sharp share price fall for the UK’s biggest builder of homes for retirees a 18.8 percent decline. …”

Could this be part of the reason? There are no affordable properties being built at the PegasusLife Knowle site:

“The Mayor of London’s Office has today welcomed a judgment handed down by the High Court that has backed the Mayor’s ‘threshold’ approach to affordable housing.

Following a legal challenge by four retirement homes developers, the Hon Mr Justice Ouseley has ruled that the Mayor’s threshold approach, which allows developments to be fast tracked through the planning system where they provide at least 35 per cent affordable housing, is consistent with the adopted London Plan.

The judge rejected claims by McCarthy and Stone Retirement Lifestyles Ltd, Pegasus Life Ltd, Churchill Retirement Living and Renaissance Retirement Ltd that this policy, contained within the Mayor’s Supplementary Planning Guidance (SPG) on Affordable Housing and Viability, would fail to secure the maximum reasonable level of affordable housing.

Jules Pipe, Deputy Mayor for Planning, Skills and Regeneration, said; “Tackling the capital’s housing crisis is the Mayor’s top priority and this ruling is an important moment for thousands of Londoners who are desperate for genuinely affordable homes to rent and buy.

“Our guidance sets out a clear approach that makes the planning system in London clearer, quicker and more consistent. I am pleased that the Judge has backed this approach which will help us to turn around years of neglect when it comes to building the homes Londoners so desperately need.”

The Mayor’s Draft London Plan includes the same requirements on reviews as the SPG. The judgment confirms that this has weight as it is an emerging plan.

The judgment also rejected the claims of the retirement homes developers that the guidance should have been the subject of Strategic Environmental Assessment and found that the claims that the Mayor had failed to have due regard to his duties under the public sector equality duty of the Equality Act 2010 were unarguable.”

https://www.london.gov.uk/press-releases/mayoral/judge-rules-in-favour-of-mayors-housing-approach

It’s going to take more than a yew tree branch to ward off evil at EDDC new HQ!

And who at EDDC was responsible for this press release that gives the (totally erroneous) impression that the sale of Knowle is 100% financing the new HQ?

https://eastdevonwatch.org/2018/06/16/sums-on-knowle-relocation-not-adding-up-for-us-the-taxpayers/

“A yew tree branch has been placed on top of East Devon District Council’s new HQ to “ward off evil spirits”.

The topping out ceremony took place at Blackdown House in Honiton, which will be the council’s new home by January 2019.

As part of the ceremony, a yew tree branch was attached to the highest point of the building.

The ceremony was completed by council chairman Andrew Moulding and leader Ian Thomas. A council spokesman said it was “an age-old tradition”.

The authority plans to move from its current HQ in Sidmouth to Blackdown House in December 2018. The move will be financed by selling the property to Pegasus Life Ltd for £7.5m, which will turn it into a 113-apartment assisted-living community. …”

https://www.bbc.co.uk/news/live/uk-england-devon-44465408

Sums on Knowle relocation not adding up for us, the taxpayers

“Remaining at Knowle with essential and basic repairs undertaken would have cost the council £ 4.5m over 20 years. In contrast moving to the new HQ in Honiton will provide a cash saving of £ 1.4m over the same period. That’s a difference of £5.9m.’

The above quote is lifted from the EDDC web-site.

So even using their figures, it will take 20 years to recover half the cost of the new building. Only after 40 years will we get our money back.

So if we see a Devon unitary authority in the next 40 years we will lose money.

But, of course, it’s much worse, because the EDDC numbers assume that there will be no ‘essential and basic repairs’ to the new building over those 40 years. Impossible, of course.

Even worse, no-one wanted EDDC to remain in the whole of the Knowle building. Those opposed to the move recommended that EDDC retrench to the modern buildings that were built in the late 1970s and early 1980s. Half the size of the Knowle as it now stands. So, even using EDDC’s figures, half the size would mean half the ‘essential and basic repairs’, so only £2.25 million, and half the ‘cash saving’ of £1.4 million, so a trifling £700,000 over 20 years. Peanuts.

So even using EDDC’s own numbers, the new building cannot produce any savings for 80 years.

Even, even worse, EDDC has borrowed the money to build the new building. The cost of borrowing £11 million, the notional build cost of Blackdown House, is of the order of £400,000 per annum, dwarfing the expected savings.

Even, even, even worse, the costs of the new building do not include the fees charged by various advisers over many years, the cost of the move itself, compensation to staff forced to travel further, new equipment, officer and councillor time, and the cost in terms of disruption. Plus all the costs of disposing of the Knowle.

The true cost of relocation is almost certainly at least £20 million.

Even, even, even, even worse, those EDDC numbers do not take into account the ‘essential and basic’ repairs conducted at their new Exmouth office, which came in at a whopping £1.7 million. Nor the running costs of Exmouth, which will surely be at least £1.4 million over that 20 year period. Almost certainly much more: Exmouth is, of course, an old building from the 1920s, far older than the modern brick buildings at Knowle.

Blackdown House will be a tremendous drain upon the finances of EDDC from the day it opens, and the expected cost savings thereafter will be microscopic compared to the huge borrowing costs.

But the biggest problem of all is that EDDC’s own consultants informed them that the building constructed at a cost of £20 million would only have an open market value on its completion of £3 million. That included the value of the land on which it sits.

So, if Devon goes unitary any time in the next few years, we will have lost £17 million.

The only good news for residents of East Devon is that the whole of Devon will then have to pay the bill and the borrowing costs.

“Elderly and disabled at risk in inadequate housing, human rights watchdog finds”

Owl says: Not to worry – those at the luxurious PegasusLife development at Knowle will be just fine!

“Britain’s planning rules are fueling a housing “crisis” for the elderly and disabled which is forcing the frail to live in dangerous conditions, a leaked report by the Equality and Human Rights Commission seen by the Telegraph has found.

The Commission’s report, due to be released next month, found a “severe shortage of accessible and adaptable housing” with only seven per cent of homes in England offering minimal accessibility features.

It warns that local councils are failing to build enough accessible homes to meet demand and were not taking action against developers who failed to comply with regulations.

The Commission, a human rights watchdog, said that at least ten per cent of all future housing should be built with a growing elderly and disabled population in mind and that local authorities must reduce the bureaucratic hurdles for adapting homes.

The report comes at a time of a growing social care crisis in Britain with many elderly and frail people stuck in hospitals, unable to be discharged due to inadequate housing.

At the same time, younger Britons are struggling to get on to the housing ladder with older people unable to downsize due to a lack of suitable properties.

Following an inquiry into the state of housing for disabled people in Britain, the Commission reported that the “acute housing crisis“ was leaving elderly and disabled people in unsafe homes and leading to accidents and hospital admissions.

The report’s executive summary, seen by the Telegraph, said that some people were forced into “eating, sleeping and bathing in one room” and to rely on family members to carry them between rooms and up stairs.

Local authorities told the Commission that developers are “reluctant to build accessible houses, as they see them as less profitable”, and often failed to comply with accessibility standards.

Disabled older people are being let down and this is a stark reminder that urgent action is needed, which is the least they deserve in a compassionate society.

Despite this, just three per cent of councils took enforcement action against developers who failed to meet these standards, the Commission found.

The report also said that people were forced to wait an average of 22 weeks between application and the installation of home adaptations necessary to live safely and independently, with some waiting for more than a year.

The Commission’s report said that better housing would help ease the health and social care crisis as it found that poor housing led to an “increased need for social care” and “avoidable hospital admissions”.

Responding to the report, charities warned that the lack of suitable housing was exacerbating the NHS crisis as elderly and disabled people were forced to stay in hospital for longer due to a lack of safe accommodation.

Caroline Abrahams, charity director at Age UK said: “Providing accessible homes must be seen as core to reducing pressure on social care and the NHS.

“If these recommendations are implemented they will help many more older and disabled people to receive care and support at home.”

She added: “It’s vital that we build safe, accessible, high quality homes that work for all generations and that don’t undermine our ability to stay independent as we get older.”

George McNamara, director of policy and public affairs at Independent Age, the older people’s charity, said: “These are some of the most vulnerable people but they’re forgotten when it comes to housing policy. They are being discriminated against by a system that doesn’t work for them.

“This issue is only going to become more important as our population ages and people have a greater need for specialist housing that addresses all their health and care needs.

“Disabled older people are being let down and this is a stark reminder that urgent action is needed, which is the least they deserve in a compassionate society.”

Rob Wilson, former Government minister for civil society, said: “This isn’t a new problem, but this is a timely report and reminder that disabled people face enormous challenges with getting appropriate housing.

“Almost every local authority area faces the same difficulty in getting enough wheelchair accessible houses built.

“The Government’s drive to increase house building is very welcome, but clearly there is much more to do for those with these special requirements.”

Cllr Izzi Seccombe, chairman of the Local Government Association’s Community Wellbeing Board, said councils needed “greater planning powers and resources to hold developers to account”.

“Housing is too often unavailable, unaffordable, and not appropriate for everyone that needs it. This includes the availability of homes suitable for older people and people in vulnerable circumstances,” she said.

A spokesman for the Ministry of Housing, Communities and Local Government said: “Our new planning rules make clear that councils must take the needs of elderly and disabled people into account when planning new homes in their area.

“We’re also providing councils with almost £1 billion over the next two years to adapt properties for disabled and older people so they can live independently and safely.”

https://www.telegraph.co.uk/news/2018/04/22/elderly-disabled-risk-inadequate-housing-human-rights-watchdog/

When Northampton County Council went “bankrupt” – Inspectors’ comments on scrutiny an “how others see you”

…”The way that NCC went about its scrutiny function brought very strong words from the inspectors. They noted that a number of councillors told them that they had been refused information. They cite a specific example which I extract below:

Perhaps the clearest demonstration of this unnecessary secrecy during the inspection took place at the Cabinet meeting on 13th February 2018.

3.80 Agenda item 11 was titled Capital Asset Exploitation. This was in fact a proposal to sell and lease back the recently completed HQ building at One Angel Square. This disposal is a potential £50m in value so it would be reasonable to expect a full options appraisal and some clear professional valuation advice as to the likely quantum of proceeds and the ways in which a disposal might be handled to best achieve a best value result. It is likely that much of this information would be exempt information so that there would be a confidential paper appended to the agenda. If that information was not available then it could only be on the basis that it was not being relied on in taking a decision.

3.81 At the meeting a number of questions were raised on these very matters and Cabinet members stated that they were privy to confidential information which supported their recommendation but that it was not available to other members.

3.82 Even if there was a concern about the publishing of confidential information most authorities have protocols and practices which make it possible for key information to be shared and protect the authority. To refuse it outright is just wrong.

Again, during an inspection, it appears that a decision for members to take was incorrectly presented without the necessary evidence.

Lesson 6 – How others see you

A key measure of governance is how well does an authority deal with complaints. During the Inspection the Inspectors commented that most unusually the Local Government and Social Care Ombudsman contacted them. He said that NCC was one of the most difficult authorities to engage with both in time to respond and also in terms of approach to complaints handling learning from mistakes and remedying injustice [32].

Here again the point emerges that services may well be worse than they superficially appear, but there could come a time when the council is on the ropes and at that point others come forward and say what they really think. It is always sensible to treat concerns by the Ombudsman as meriting a chief statutory officers’ agenda spot.”

http://localgovernmentlawyer.co.uk/index.php?option=com_content&view=article&id=34806%3Alocalism-best-value-inspections-and-northamptonshire-county-council&catid=59&Itemid=27

Note: this puts Owl in mind of this what judge said when the Information Commissioner v East Devon District Council Knowle confidential information case was decided in court:

“Correspondence on behalf of the council, rather than ensuring the tribunal was assisted in its function, was at times discourteous and unhelpful, including the statement that we had the most legible copies [of the disputed information] possible. A statement which was clearly inaccurate as, subsequently, we have been provided with perfectly legible documents.”

http://www.midweekherald.co.uk/news/election/heads-should-roll-as-judge-criticises-eddc-1-4075293

EDDC HQ builder in trouble – “problems emerged two years ago”

Owl says: due diligence?

September 2017:

“Construction of East Devon District Council’s new headquarters in Honiton is progressing well with groundworks completed and the building foundations underway.

The council is expected to be working in the new premises by December 2018 and contractors, INTERSERVE Construction Ltd, are on schedule to complete on time. …”

http://eastdevon.gov.uk/news/2017/09/foundations-in-place-for-new-east-devon-district-council-hq-in-honitons-heathpark/

TODAY:

Outsourcer Interserve seeks vote for borrowing increase

INTERSERVE will call a meeting of shareholders to seek approval to increase its borrowing limits and prevent it breaching its banking covenants.

The construction and public services group says that it needs higher borrowing levels because of expected “significant balance sheet writedowns”, which it expects to report in full-year results delayed until the last day of this month, only two days after the meeting.

INTERSERVE is one of Britain’s biggest outsourcing companies, cleaning schools, hospitals, government offices and railway stations. It also operates facilities for the ministries of defence and justice. It has annual revenues of £3.2 billion and employs 80,000 people.

It has been feared that INTERSERVE could become another Carillion, a larger rival that went bust at the turn of the year after the failure of several building contracts. Interserve is on the government’s watch list, with Deloitte, the accounting firm, having been brought in to monitor the company. EY, another of the Big Four accountants, is advising Interserve and its lenders.

The business’s problems emerged two years ago after the failure of a venture to build energy-generating incinerators led to it having to pay out £195 million in compensation and penalties.

In a statement to the stock market, Interserve said that at its year-end, its net debt had risen to £513 million. …”

Source: Times (paywall)

A new council HQ? Oh, oh – this looks VERY familiar!

Owl has been doing some digging about how Northamptonshire County Council (NCC) tanked and has come up with some worrying information which resonates somewhat worryingly with our own area …

Remember that NCC built a new HQ and almost immediately had to attempt to buy its way out of debt by selling it and renting it back to themselves.

The new NCC HQ (One Angel Square) was originally going to cost £34 million, then £40 million, then £43 million, then £52 million, then £53 million. It was eventually delivered ‘under budget’!

But as costs rose, the size of the building was reduced by 20%. So effectively the cost doubled!

NCC built their new HQ to replace 12 existing buildings. Those 12 buildings were claimed to be costing £53,000 a week to run. It was later claimed that the new building would save £52,000 a week in running costs. Work that one out!

As soon as the new building opened, staff complained about the lack of space and the 20 minutes every morning sorting out their ‘hot desks’.

http://www.itv.com/news/anglia/2017-10-12/53m-project-combines-12-council-offices-into-one-building/

Some FAQs from the early consultations:

Q4: Isn’t this just building up debt for the county when it can ill afford it?

A4: This is a spend to save scheme. The county council will continue to take
opportunities like these to invest in new infrastructure which will ultimately reduce the debt. By doing nothing the debt position will get worse than undertaking the new build.

Q5: How can the council afford to build a huge new office block on the one
hand but on the other hand plead poverty and cut services or turn off street
lights? Couldn’t this money have been better used to protect services?

A5: It is by taking this step that will help us protect services. By maintaining the status quo and spending increasing amounts of money to maintain and operate old buildings that are no longer fit for purpose the council would be forced to redirect costs from front line services. By taking these proactive decisions now and saving building operating costs in the future it will allow those savings to either reduce debt or be spent on front line services.

Q6: Surely there’s a less expensive solution. Why don’t you convert one of
your buildings – like JDH – so it can take more people? That would be a far
cheaper solution.

A6: The other options have all been professionally evaluated. By looking at all the costs and benefits of the different options a new build at the Angel Street came out as the best option.”

https://www.northampton.gov.uk/download/downloads/id/7116/statement-of-community-involvement-pdf
(page 149)

Which all looks just a bit too familiar…