Agenda item

To receive any questions from members of the public and replies thereto.

The following questions were received from members of the public:

 

Mr Nick Quinn

 

Addressing the Draft Statement of Accounts and the 3 Rivers closure:

 

Q1. On page 79 of the accounts, there is a list of the assets bought from 3 Rivers and the amounts paid for each - but the Halberton Car Parking spaces and the Architectural drawings for the failed Park Nursery development, both bought from 3 Rivers, are not on the list. Why are these purchases and amounts not listed?

 

Response from the Cabinet Member for Governance, Finance & Risk:

 

Q2. How much was paid for the Park Nursery Architectural drawings? and on what date?

 

Response from the Cabinet Member for Governance, Finance & Risk:

 

 

Q3.  The Council paid £3.66M for the Knowle Lane land, which was valued at only £1.66M. It was already known that this land was not worth £3.66M - so this purchase breached the Council’s Financial Regulations on the Acquisition of Assets, which state that: “All purchases or leasing of land and buildings shall be on the best financial terms that can be obtained for the Council”. Will Audit Committee please look into this breach?

 

Response from the Cabinet Member for Governance, Finance & Risk:

 

Q4. On page 62 of the accounts, it says that the loss on 3 Rivers loans was £6.8M but also “the revaluation of assets purchased... resulted in a ‘notional’ loss of £2M”. This is not a ‘notional’ loss – it is real. This Council overpayment for assets, allowed 3 Rivers to repay loans which it would not otherwise have been able to do.  Will Audit Committee agree that if this £2M overpayment had not been made, the total loss of loans to 3 Rivers would have been £8.8M?

 

Response from the Cabinet Member for Governance, Finance & Risk:

 

Q5. A Revenue and Capital Outturn report went to Cabinet on 4 June 2024. In that report, the loan loss figure, shown as £6.8M, was ‘reduced’ to ‘only’ £3.384M by subtracting all the Interest and Recharge payments ever received from 3 Rivers during the whole of the previous six years. I understand that this declared income was spent in each of those years, therefore it cannot be ‘resurrected and reused’ to discount a very real monetary loss in this year. Will Audit Committee confirm that this attempt to ‘reduce’ these real losses in this year, is not acceptable?

 

Response from the Cabinet Member for Governance, Finance & Risk:

 

Barry Warren

 

My observations and questions are stimulated by Item 10 on your agenda – in particular the Annual Governance Statement and the principles listed in paragraph 1.5 [pages 209/210] covering Codes of Practice and Ethical Aims.

 

At the Annual General Meeting of the Council on the 22^nd May 2024 the Leader gave a report, which is minuted, and the relevant point stated: “The 2024/25 budget was set without any use of reserves, was fully balanced and was unanimously supported across the political spectrum.”

 

In a report to Cabinet on 6^th February 2024 headed 2024/25 Budget at paragraph 4.2. the Cabinet Member for Finance states: “Appendix 1 (p39) shows in detail which amounts are being contributed to, or drawn down from, various earmarked reserves in 2024/25. This totals a net reduction in Earmarked Reserves of £840k.”

 

Paragraphs 4.3 and 4.4 describe in detail how this net reduction in Earmarked reserves of £840k is arrived at.

 

Paragraph 4.7 states “No draw on General Reserves is required to support the 2024/25 Budget”.

 

Having previously been accused by the Leader of using “reserves” to balance the budget, I felt that the I should question his unqualified statement to the Council AGM.

 

At the Cabinet meeting on 4^th June 2024 I asked public questions regarding the use of reserves.  The answer I received differentiated between “Reserves” and “Earmarked Reserves” and was further complicated by referring to their use being dependent on specific one-off situations or on-going expenditure nature, etc.

 

Question 1.             

In the interests of openness and honesty; will the Audit Committee please look into the preparation of the 2024/25 budget and make a statement on whether ‘Reserves’, of any description, have been used in setting it?

 

Response from the Cabinet Member for Governance, Finance & Risk:

 

Question 2.             

In the interests of openness and honesty; if the Audit Committee find that ‘Reserves’, of any type, have been used in the setting of the 2024/25 budget, will they ask the Leader to make a public correction to his statement to the Council AGM on the 22^nd May 2024?

 

Response from the Cabinet Member for Governance, Finance & Risk:  

 

Paul Elstone

 

My questions relate to Agenda Item 9 Corporate Risk

Specifically CR 7 Financial Sustainability and CR 12.5 and 12.6 Housing Crisis

 

QUESTION 1

 

Industry Data published in April 2024 reveals that the relative mid-range building cost for the South West of England is £1,860 per square metre.

 

Also data available that shows the additional cost increment for Nett Zero builds is only around 4 percent and for the Passivhaus between 6 and 8 percent. A standard that ZED PODS modules do not meet.

 

Yet the total building cost for the ZED PODS modular homes for St Andrew Cullompton was £4,778 per square metre or put another way it cost £155,000 per bedroom. This for a simple to develop brownfield site with little ground works.

 

For Shapland Place the cost was a massive £170,000 per bedroom

 

For the avoidance of doubt the current per bedroom selling price of Commercial new builds are:

 

Persimmon, in Cullompton, is £95,000

 

Bellway, in Willand, is £103,000

 

David Wilson – upmarket- Homes in Tiverton are £110,000

 

Unlike the ZED PODS developments, these are Greenfield developments where the developer needs to purchase the land and build the infrastructure plus pay very substantial S106 and affordable home costs. 

 

The cost of each bedroom at St Andrews, Cullompton is £60,000 more than a Persimmon bedroom. 

 

Under no circumstances can the modular home developments being built for this Council be called “Best Value”.  In fact this Council could have nearly two (2) houses for every one (1) they are currently getting and to the same or higher energy and sustainable standards.

 

Will this Audit Committee urgently investigate the full circumstances involving the grossly excessive expenditure on modular homes - before this Council commits to further purchases? 

 

Response from the Cabinet Member for Governance, Finance & Risk:

 

QUESTION 2

 

Evidence available reveals the following potential modular build risk.

 

1.    It is widely reported that there is a suppressed UK Government Report which has identified potential fire and structural integrity risk with modular homes.

 

2.    The UK National Fire Chiefs Council  have raised fire risk concerns, referencing that they consider the current Building Regulations are not tight enough including a lack of modular home fire testing. 

This should be of particular concern with modular homes built over car parking - like Shapland Place.

 

3.    The life of modular homes estimated at 60 years, to 100 years maximum, against over 150 years for conventional builds. Impacting on insurance.

 

4.    Wind loading and snow loading risks have caused modular builds in Cornwall to be shut down.

 

5.    Overheating risk and with internal temperatures in excess of 36 Degrees C being reached in the ZED POD’S modules in Bristol.

 

6.    Mould risk. 

 

Given these modular home risks, coupled with excessively high expenditure,  Is this not a case of Double Jeopardy  for this Council.  Will this committee call for an expert and fully independent investigation? 

 

Response from the Cabinet Member for Governance, Finance & Risk:

 

Hannah Kearns

 

Question1

In theDraft Accounts,on page147, isan Earningstable. Iam interested inthe figuresfor the Managing Director of 3 Rivers for 2023/24.

 

Note 7 to that table says the Managing Director was made redundant on 31 March 2024 andreceived theredundancy packagecommensurate withthe lengthof service.Given itis known that the Managing Director was only directly employed by 3 Rivers from 1stApril 2021, that is only three years service with the Company before he resigned.

 

The Compensationand PensionContribution figuresseem excessivefor someonewith only three years of service and at £143,264

 

Wasthree yearsthe lengthof serviceused inthe calculationof theredundancy package?

 

Response from the Cabinet Member for Governance, Finance & Risk:

No

 

Question 2

 

If not, what was thelength ofservice used?

 

Response from the Cabinet Member for Governance, Finance & Risk:

The applicable length of service included the previous service at Mid Devon District Council in accordance with the Transfer of Undertakings (Protection of Employment) Regulations 2006.

 

 

Question 3

 

Was some other‘special arrangement’made toarrive atthese figures?

 

Response from the Cabinet Member for Governance, Finance & Risk:

No – This was the contractually due settlement and confirmed by external legal advice.

 

Question 4

 

What was thetotal costof the2023/24 Salaries,Compensation andPension Contributions for all the 3 Rivers Directors put together?

 

Response from the Cabinet Member for Governance, Finance & Risk:

From the company’s draft accounts, the Directors' remuneration for the year was £347k.

 

Question 5

 

Where any redundancypayments madeto theemployees of3 Rivers?

 

Response from the Cabinet Member for Governance, Finance & Risk:

Yes, three further employees were also made redundant in line with their contractual entitlement.

 

Question 6

 

Ifso what was the totalamount?

 

Response from the Cabinet Member for Governance, Finance & Risk:

The total cost was less than £10k.