Agenda and minutes

To receive any apologies for absence and notices of appointment of substitute Members (if any).

Apologies were received from Cllr R. Roberts

Cllrs S. Clist, L. Cruwys, A. Glover, S. Keable, L. Knight and J. Lock attended by Teams

To record any interests on agenda matters.

Members were reminded of the need to make declarations where appropriate.

To receive any questions relating to items on the agenda from members of the public and replies thereto.

Note:   A maximum of 30 minutes is allowed for this item.

Three members of the public raised questions which were accepted.

Nick Quinn raised the following questions:

Question 1:

A “Part 2” report by the Deputy Chief Executive called “Creation of a Property Development Company” was discussed and approved by Cabinet on 30/03/2017.

It was subsequently released under FOI.

Would you please confirm that the development at the rear of the Town Hall,

St Georges Court, was put forward in this report as the first project for 3 Rivers?

Answer:

The Deputy Chief Executive (S.151) answered that it was a categorical yes.

Question 2:

Regarding the fees of the Architectural Practice that designed St George’s Court

and did the plans for it (Mikhail Riches). Was it the Council, or 3 Rivers, that ultimately paid for this work?

Answer:

The Deputy Chief Executive (S.151) answered that back in 2019, when that contract was awarded to Mikhail Riches, it was the Council who had contracted with Mikhail Riches for the scheme. However, when the scheme transferred to 3 Rivers all of the intellectual property, the plans and therefore the costs were fully transferred across to 3 Rivers, so ultimately 3 Rivers paid for that work.

Question 3:

The outcomes of external reviews into 3 Rivers were reported to Cabinet in June 2020. These showed there were problems with the company at that time - but the Company was allowed to continue in operation. Now, in 2023, another external review has resulted in the Cabinet recommending the wind-up of the Company.

Can it be publicly explained why the Cabinet decided not to wind-up 3 Rivers in 2020, when any loss is likely to have been less?

Answer:

The Deputy Chief Executive (S.151) answered; the two external reviews in 2020 did not show that there were problems with the company, they were commissioned by an incoming cabinet administration to confirm that the company had all the correct legal and financial controls and governance in place and that is exactly what those two external commissions came back to the cabinet with. They came up with 33 recommendations and all the recommendations in the two reports were adopted and recommended by cabinet and approved by Full Council.

At the same juncture the Council agreed to continue with the property development company investment. In 2023 the Council had asked the S151 officer to commission an external review into the financial viability of the company. That is what he did and that was part of the considerations made by cabinet at its recent meeting. As far as the explanation as to why the cabinet decided not to wind up 3 Rivers in 2020, the cabinet had asked for and received advice around governance of the company, it was happy with that advice and it decided to continue with its investment in the company, three years later the financial position along with things like Covid, cost of living crisis etc. had changed the economic outlook of many things in the world including  ...  view the full minutes text for item 29.

To consider any decisions made by the Cabinet at its last meeting that may be called-in.

A Decision made by the Cabinet on 16 August 2023 in respect of the following report was called in for consideration by Councillor R Gilmour.

3 Rivers Options Appraisal Report

1. Cabinet recommend to Full Council a “soft closure” of 3 Rivers Development Ltd. over a sensible short term period in order to minimise any potential financial exposure and maximise returns from company assets.

2. Delegated authority is given to the Deputy Chief Executive in conjunction with the Cabinet Member for Finance to deliver/instruct all necessary activities in order to deliver a “soft closure” and maintain timely decision making in order to protect the Council’s position during this process.

3. That the Deputy Chief Executive, in discussion with the Cabinet Member for Finance procure any additional professional advice required to protect the Council’s position and maximise the return to the Shareholder and minimise any potential further losses.

The reason for the call in was:

• The decisions are outside of the Budget & Policy Framework.

The Chairman read a statement which included the following:

• That this Extraordinary Scrutiny Committee Meeting had been called today to identify whether the decision of Cabinet to recommend “soft closure” of 3 Rivers Development Ltd, and any losses or costs that would be incurred by Mid Devon Council.

• That any decision of the Cabinet or of the Full Council around the future options for 3RDL was projected to carry a cost for Mid Devon residents.

• That the Committee’s objective was to learn any lessons that need to be learned to prevent a repeat of this scenario in the future. As those who do not remember the past, are condemned to repeat it.

• That the Committee was not here to assign blame, rather to ensure that the blameless – the residents – were not left to pick up the bill for similar failures in the future.

• That no matter how well-meaning, humans were fallible. This was why we build procedures and controls around decision making. One such role was the role of Scrutiny, with the defined role in our Constitution and, more widely, as Councillors of this Council to speak up and ask questions to ensure good decision making.

• The majority of the current Councillors had no part in the decision making process around 3 Rivers Development Ltd, until the future options decision be presented to Full Council lessons must be learnt from the past to ensure the Council does not repeat the mistakes of predecessors.

• Time should be set aside on the Committee’s Work Programme to talk to previous Cabinet members, senior officers and other relevant parties to learn lessons.

RESOLVED that:

1. Time be set aside in the Work Programme for a “3 Rivers lessons learned” exercise and that any recommendations that come out of that be reported back to cabinet.

2.  A “3 Rivers – Lessons to be learned” issue take place over one or two meetings in November and any recommendations sent back to Cabinet by the end of December 2023.

(Proposed by the Chairman, Cllr R Gilmour)