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…

EDDC “Council decision to sell HQ for £7.5M is worst deal ever, activists”

Activists have branded a council decision to sell its HQ “the worst deal ever” for taxpayers.

East Devon District Council is selling its offices at Knowle in Sidmouth to Pegasus Life Ltd, one of Britain’s largest retirement housing developers, for £7.5 million.

The developable value of the site – divulged in a response to a Freedom of Information request in January-has been set at £50 million, with Pegasus Life Ltd set to make a £10 million profit.

Pegasus is owned by an American firm listed in the so-called Paradise Papers, 13.4 million confidential electronic documents relating to offshore investments that were leaked to German reporters last year. Offshore investments enable companies and individuals to shelter their wealth and avoid tax. They are legal.

Paul Arnott, chairman of the East Devon Alliance campaign group, said: “Why were councillors never told that our last great piece of family silver the Knowle – would be worth a massive £50 million after development?

“If any individual person in East Devon was told their prime location property could be developed and sold on for £50 million they’d never accept £7 million.”

In December 2016, the council’s planning committee rejected Pegasus Life’s planning application for 113 extra care units, but following a four-day inquiry into the developer’s appeal in November, a planning inspector gave the firm approval for the scheme which includes a café and swimming pool. Sidmouth has been allocated only 50 extra care homes in the council’s Local Plan.

The Alliance said it was an “exceptionally bad” deal, because, in accordance with the old land buyer’s rule of thumb, the landowner of a site should expect around a third of its developable value – in this case £16.5 million.
A council spokesperson said the deal was based on the site’s land value – in its current state. The site includes the buildings, terraces and top car parks.

Moving council operations to Honiton, with a satellite office at Exmouth Town Hall, has a budget of £10 million and is being funded out of the council’s coffers and a Public Works Loan Board loan.

The council spokesperson said that “from day one”, council running costs would reduce significantly when it leaves the Knowle and during its first full year of operations at Honiton it will save £135,000, with savings increasing year-on-year.

The Alliance pointed out that because the proposed complex is considered to be a residential/care home development, as opposed to a general residential development, the developer is not required to pay Section 106 money towards providing community services. The developer is only contributing £12,000 to improve access/footpaths to the site from adjacent parkland.

However, the developer could have to comply with what is known as an overage clause: If more than a 20% profit is made from the development, the council will be entitled to 50% of any profit made over and above the 20%, to a maximum of £3.5 million.

A council spokesperson, said: “We have carried out due diligence on Pegasus Life Ltd and are satisfied that they are an established and successful company suitably financed, capable of delivering the promised development and able satisfy their contract with the council.

“Selling the Knowle and moving offices is key to continuing to serve our communities. Services to our communities are what matter, not the vanity of paying to stay in an outdated and expensive building.

Pegasus Life Ltd bosses did not comment when asked whether any of the profit of its Sidmouth development could end up in tax havens. However, Howard Phillips, its chief executive, said: “We pride ourselves on the quality of our developments and the sensitivity of our designs to ensure they fit in with the area’s achitectural vernacular.

“The UK is in the middle of housing crisis and local authorities need to make cohesive eve plans that meet the needs their local towns. This includes provision for people over 60.”

Source: Western Morning Newz

New Knowle owners will benefit from £750,000 taxpayer-funded flood prevention scheme

“The first phase of the project will include drainage improvements, followed by the installation of a massive water storage tank at Knowle.

Funding to the tune of £750,000 has now been secured after a 2013 report found that Sidmouth has a history of flooding, both from rivers and surface water. …

Mr Hughes added: “It is hoped that the surface water drainage improvements can 
be delivered during 2018/19 and storage at the Knowle – which will be subject to landowner agreement and planning approval – to be created in the latter stages of 2019/20. …”

http://www.sidmouthherald.co.uk/news/750k-secured-to-protect-sidmouth-properties-from-flooding-1-5418416

So, how is EDDC’s office relocation going? Update and some odd figures

With the new barn-like EDDC HQ taking shape in Honiton, how is the project going? How much has it cost so far? What is the current projected cost?

Hard to say. Owl searched for news of the “Office Relocation Project Executive Group” and was directed to its website:

http://eastdevon.gov.uk/council-and-democracy/committees-and-meetings/other-panels-and-forums/office-relocation-project-executive-group/

where readers are told to consult the project archive:

http://eastdevon.gov.uk/access-to-information/historical-information/relocation-project-documentation-archive/project-document-archive/

Alas, the last document posted there was on 20 February 2013 (in response to the requirement of the Information Tribunal which EDDC lost) and Owl’s attempt to find anything more up-to-date (including current costings and financing arrangements) has so far failed.

Perhaps an EDDC councillor or officer can let Owl know where the latest information is – and who is in charge of the project these days?

Well, officers and councillors must read this blog! I have been pointed to ANOTHER website (thanks):

http://eastdevon.gov.uk/access-to-information/historical-information/relocation-project-documentation-archive/

and here is the latest update:

http://eastdevon.gov.uk/access-to-information/historical-information/relocation-project-documentation-archive/

Archive 8 states on 18 October 2017:

“Progress – going well. Costs remain within budget allowances. Spend to date is £3.745,000 leaving a balance of £6,840,148m.”

and on 15 November 2017:

“Progress – going well. Costs remain within budget allowances. Spend
to date is £1.403m leaving a balance of £6.482m with a contingency of £245,000. Completion date is scheduled for 15 October 2018 with a relocation date of 21 December.”

http://eastdevon.gov.uk/media/2373382/joint-project-exec-and-officer-wkg-group-minutes-151117.pdf

Now – Can anyone explain the discrepancy? £3,745,000 spent to date in October 2017 and £1,403,000 to date a month later?

Oh no! EDDC pledges to become “more commercial” – HELP!

“East Devon District Council say they are taking a ‘more commercial approach to generate income’ as they tackle a predicted budget deficit of £735,000.

A Council Tax increase of £5 a year, giving a Band D council tax of £136.78 a year for 2018/19, is recommended for approval by the council’s cabinet committee when they meet on Wednesday night.

But Cllr Ian Thomas, the council’s portfolio holder for finance, said that as only 25 per cent of income is generated through council tax, they need to find alternative ways of raising money.

Cllr Paul Diviani, Leader of East Devon District Council, said: “The council is developing a more commercial approach to generate income for key council services but as we take our various ideas forward, consultation will be key – for example, consultations about various car parks and public toilets and consultations about other initiatives including how we can make our assets more commercial and income generating.” …

… Future reductions combined with other budgetary pressures mean that the Council’s Medium Term Financial Plan (MTFP) is currently predicting a budget deficit of £0.735m in 2018/19, rising to £3m by 2020/21 and potentially to £5.4m by 2027/28. …”

https://www.devonlive.com/news/devon-news/east-devon-become-more-commercial-1170128