Agenda item

To receive a report of the Deputy Chief Executive (S151) considering the need for a Teckal vehicle in order to help facilitate a step change in the delivery of social housing.

The Group had before it a report * from the Deputy Chief Executive (S151) considering the need for a Teckal vehicle in order to help facilitate a step change in the delivery of social housing.

The officer outlined the contents of the report, highlighting the presentation attached to the agenda pack, which considered the legal framework for delivering houses through companies.  He stated that the Council needed to be clear with regard to how it wanted a Teckal Company to work and requested that Members provide a steer to the direction of travel for such a company.

The report had been considered by the Scrutiny Committee the previous day and the Chairman of the Scrutiny Committee had been invited to the meeting today to outline the thoughts of his Committee. These included the following:

·         Whether the aims of 3 Rivers Development Limited should be reviewed and rather than the aim to make money for the Council could it be set up to provide social housing

·         Why were the Council considering the setting up of a Teckal Company and what where the implications

·         The aspirations of 3 Rivers and the plans for its future

·         Did 3 Rivers have a role for the Teckal Company and had the Cabinet and 3 Rivers considered this?

·         The issue of Right to Buy and had the impact on the HRA been considered

·         The financial options had not been considered, there were affordability issues and implications from borrowing from the PWLB

·         The benefits of a Teckal Company for MDDC and what would be the desired outcomes to include any drawbacks

·         How would a Teckal Company work – how would it impact on the HRA, Right to Buy and 3 Rivers.  Would a Teckal Company dodge the Right to Buy – there was a need to see some modelling on all of these issues

·         Whether a Teckal Company would take over from the HRA with regard to replacement houses and would such a set up control the Right to Buy

·         The need to explore the issues with other councils utilising a Teckal Company and receive further information with regard to this.

The Group had listened to the questions raised by the Scrutiny Committee and were fully in support of needing additional information in order to address some of the issues raised.

Following further discussion the Group made the following additional comments:

·         The need for a cost / benefit analysis. Whilst it may be possible for a Council to retain 10% of a development profit there may also be substantial overheads incurred in the running of a Teckal company.

·         The need for clarity in terms of the aims and aspirations of a Teckal company of which there were many different types.

·         Whether there were any benefits to using a Teckal company to outsource some services. It was felt that this was fraught with complications.

·         A need to focus on practical possibilities rather than theoretical ones.

·         A request to consider various models and additional information regarding Teckal company’s set up by other local authorities. What had been the challenges, what had been the successes and why?

·         A need for the necessary skill sets and capabilities in order to take a possible Teckal company forwards.

·         A need to remember that the ultimate aim was to create more affordable social housing.

RECOMMENDED to the Cabinet that the questions raised by the Scrutiny Committee be endorsed and that it consider the following three options having reflected on the legal, financial and organisational implications of each one:

a)    The 3 Rivers Development company ‘morphing’ into a Teckal company to deliver affordable housing and lettings.

b)    Running a Teckal company as a subsidiary.

c)    The direct delivery of more affordable housing by Mid Devon District Council itself.

(Proposed by Cllr G Barnell and seconded by Cllr R F Radford)

Reason for the decision:

That comments made by the Scrutiny Committee and the Homes Policy Development Group can help to shape any recommendations made by the Cabinet to full Council.

Note: * Report previously circulated; copy attached to the signed minutes.