Agenda item

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

 

Nick Quinn

 

My questions concern a financial transaction which was part of the close-down of 3 Rivers which is reported in the Asset Revaluations table shown in Appendix 4 of the 2023/24 Revenue and Capital Outturn Report. That is on page 309 of the papers presented to Cabinet today.

 

Question 1:

Why did the Council pay £3.662 million for the land at Knowle Lane, Cullompton that is shown as having a value of only £1.665 million?

 

Response from the Cabinet Member for Finance:

By the Council purchasing this land, as opposed to selling it now, there was time for the wider strategic infrastructure delays to be resolved, for the land to be reincorporated into the local plan and for planning permission to be re-obtained. All of which would increase the value of the land, thereby minimising any potential loss.

 

The national land valuation given by the District Valuer was not a value that the Council believes the land was worth. Selling it in the current market, without the aforementioned resolutions, would have crystallised a loss that potentially may never arise.

 

Question 2:

Who authorised this transaction?

 

Response from the Cabinet Member for Finance:

Cabinet / Full Council in August / September – through the unanimous decision to soft close the company over a sensible short term period in order to minimise any potential financial exposure and maximise returns from company assets.

At the time of the purchase, this was ratified through an additional delegated decision by Cllr J Buczkowski and the S151 Officer.

 

Question 3:

How does this transaction demonstrate the proper financial probity in handling public money at Mid Devon District Council?

 

Response from the Cabinet Member for Finance:

For the reasons outlined in answer to Q1, this decision had protected public funding from crystallising a loss that may never arise.

 

Mrs Kearns-Hannah

 

The 2023/24 Revenue and Capital Outturn Report reveals that the Shapland Place Tiverton ZED POD modular construction development has an overspend of £717,000.

 

 

 

 

Question 1:

What is the total cost of the Shapland Place Development including not just the modular build cost but the grounds work, utilities installation, planning and legal and S106 cost etc.

 

Response from the Cabinet Member for Finance:

The cost incurred to date for Shapland Place was £2,217k, some £717k above the original budget.

 

This had been fully funded through the following:

·         £692k Homes England Grant Funding, some £354k above original budget.

·         £376k Capital Receipts – on budget.

·         £103k Affordable Rents surplus reserve – on budget.

·         £886k Housing Maintenance Fund reserve - £274k above original budget.

·         £160k One Public Estate Grant Funding – not originally included within the budget.

 

Therefore, £514k of the over spend had been funded through additional external grant funding. The remaining £203k had been funded from reserves. No borrowing had been incurred to fund this project, despite £71k being originally budgeted. Therefore, this project had a net £132k variance.

 

The project was due to complete shortly.

 

Question 2:

The same report reveals that the St Andrews Cullompton ZED POD modular construction development has an overspend of £400,000.

What is the total cost of this development including not just the modular build cost but the ground works, utilities installation, planning and legal and S106 cost etc?

 

Response from the Cabinet Member for Finance:

The total cost incurred for St Andrews was £1,400k, some £400k above the original budget. 

 

This had been fully funded through the following:

·         £560k Right to Buy Receipts, some £298k above the original budget. 

·         £236k Capital Receipts – on budget.

·         £117k Affordable Rents surplus reserve – on budget.

·         £346k Housing Maintenance Fund reserve - £3k above budget.

·         £120k One Public Estate Grant Funding – not originally included within the budget.

·         £21k New Homes Bonus reserve – on budget.

 

Therefore, the £400k had been more than funded from additional external funding sources, meaning that planned borrowing had not been required.

 

The project was complete and the units were occupied.

 

Question 3:

The same report says Paragraph 1.4 “in addition to the above budgetary challenge, the Council also incurred exceptional one-off cost totalling £1, 483,000 in order to deliver the soft closure of 3Rivers Developments Ltd”.

What precisely were these “one- off cost”?

 

Response from the Cabinet Member for Finance:

This detail was clearly provided in Appendix 4 to this report.

 

Question 4:

The total value of the 3Rivers Development recharges is shown as £398,447 Can you please provide an itemised list showing what these recharge cost fully relate to?

 

Response from the Cabinet Member for Finance:

The £398k recharge over the life of the company could be split as follows:

 

·         £316,471.31. Staff Salary Recharges, prior to direct employment

·         £20,196.39. Direct recharges for items, such as design and consultancy, land registry charge, grass cutting, housing viability assessment and equipment.

·         £3,201.57. Telephony recharges.

·         £58,577.66. Support Service Recharges, such as Legal, Finance, ICT and office accommodation.

 

Question 5:

Have MDDC Officers been required to time write, this in respect of any work they undertook in relation to supporting the 3Rivers Development business?

 

If not why not?

 

Response from the Cabinet Member for Finance:

By “time write”, I interpret this as record their time? No, as the company’s operations and administrative support was fully independent from April 2021.

 

 

Question 6:

Where are all the various 3Rivers Audits and investigation cost recorded in MDDC accounts?

 

Response from the Cabinet Member for Finance:

Direct audit costs for the company were within the company’s accounts, not Mid Devon District Councils. Any investigation or additional audit fees incurred as part of the audit of Mid Devon District Council’s group accounts and Value for Money Assessment was included within the Corporate Management line in Appendix 1a and detailed in 1b.

 

 

Question 7:

What was the total cost of the various 3Rivers audits and investigations?

 

Response from the Cabinet Member for Finance:

The latest independent review carried out by Francis Clark cost £12,049.40. Grant Thornton charged an additional £22,000 as part of their 2022/23 Audit.

 

Question 8:

How will MDDC account for the loss of investment interest on the 3Rivers assets they are now holding, and which could go unsold for many months even years, interest payments it seems which stopped in September 2023?

 

Response from the Cabinet Member for Finance:

No interest income from 3Rivers was included within the budget, so no adverse variation would be created, therefore no accounting is required.

 

Question 9:

When all additional cost are factored in what is the true commercial loss to the MDDC taxpayer for the MDDC’s 3Rivers so called and failed Vanity Project?

 

Response from the Cabinet Member for Finance:

This detail was clearly stated within the report as £3.384m, with supporting detail provided in Appendix 4 to this report. This was significantly lower that the reports of £20m+ included within the local press and social media fuelled by uninformed assumptions rather than facts and figures.

 

Question 10:

Will this loss figure ever be published in the public domain?

 

Response from the Cabinet Member for Finance:

See response to Q9 – not sure how much more transparent we could make this.

 

Question 11:

In fact do MDDC have a mechanism or even a will, to fully understand the real value of this total loss?

 

Response from the Cabinet Member for Finance:

Yes, but perhaps there are some that did not.

 

 

Barry Warren

 

May I refer members to Agenda item 14 on page 265 of the papers. Recommendation 1 seeks approval for a transfer of £635k from the New Homes Bonus reserve. Paragraph 1.3 on page 266 sets out some history but a little more detail shows the fuller picture. Council in March 2023 had to set a budget and the original proposal from officers showed an income of about £900k in interest from 3 Rivers but most knew that this money would have to be borrowed before it could be paid. It was not acceptable to members. Members were told that to take this from reserves would take the agreed reserves to under £2m.

 

It now appears that in paragraph 1.5 £635k can be taken from reserves without a problem. In paragraph 1.6 it states: “Appendix 1a. The table below assumes this is offset by a transfer from the New Homes Bonus Earmarked Reserve.”

 

Question 1: 

Does this mean that using these Earmarked Reserves does not affect the £2m reserve figure?

 

Question 2:

In paragraph 1.5 it states: “This is a major corporate achievement and reflects the hard work and efforts of managers and services during the year.” This is good work but why was the Earmarked Reserves option not offered to Council in March 2023?

 

I refer to Agenda Item 7 starting on page 65. Section 10 of the Complaints and Feedback Policy page 77 has a section which states: The term complaint in this guidance also covers requests made under access to information law such as the Freedom of Information Act 2000.

 

Question 3:

Why does this Council policy regard requests for information as Complaints?

 

Question 4:

If the Council consider such requests: are time consuming and repetitive and can take up excessive officer and Member time that could be used on other council/landlord priorities; why are those seeking information not dealt with in a straight forward, open and honest manner rather than being denied information and then having to seek reviews?

 

Question 5:

Would it not be better to provide the information rather than have enquirers complaining to the Information Commissioner and have that office direct the Council to release the information?

 

Question 6:

Where can a member of the public actually see the numbers of Freedom of Information requests made and the results?

 

Paul Elstone

 

Question 1:

This Administration has stated that it will manage Council Taxpayers funds and budgets prudently and will not repeat the failings of the 3Rivers debacle.

 

I contend this Administration is grossly failing in these aims by pursuing Modular Housing to provide social homes. Specifically, the Revenue and Capital Outturn report Agenda Item 14 states that there is an overspend of £717,000 for the Shapland Place modular development. 

 

In answer to a question, I asked at Cabinet Meeting of March 2023 I was told that the initial budget was £1.4 million that the ZED PODS quote for Shapland Place was £1.488 million. Therefore, with the overspend the total cost is now around £2.2 million.

As the gross internal floor area for the eight (8) Shapland Place dwellings is 438 square meters the £2.2million cost equates to an extortionate cost of £5,022 per square meter. Calculations show similar excessive cost for the St Andrews, Cullompton development.

 

I would refer you to the Haddon Heights Viability Assessment and a document which Council Officers did all they could to prevent me from seeing. It states the following.  The Building Cost Information Service (BCIS) data on building cost and rebased for Mid Devon is £1,396 per square meter.  Using the upper quartile rate it is £1,626 per square meter.  Incidentally the current sales price of £675,000 for a luxury Haddon Heights property of 228 square meters or £2,960 per square meter  - That is sale price not build cost.

                                                                  

Therefore, the Shapland Place modular home development has cost the MDDC taxpayers between two and three times as much as available data shows it reasonably should.

 

Will the Council Leader fully explain how he considers this is prudent spending or lessons have been learned? This when the data shows that MDDC could build over twice as many and much needed social homes and for the same capital spend?

 

 

Question 2:

In terms of the 3Rivers Final Impairments, agenda Item 14 many of the numbers provided deserve close scrutiny. As one example interest payments on St Georges Court. For year 2023/2024 shows an interest payment of £428,148 on an outstanding loan balance of £12.86 million.

It is understood that MDDC only purchased St Georges Court in March 2024. Therefore 12 months interest payments are due from 3 Rivers. At a very low loan interest rate of 5% or 0.5% base rate plus 4.5% agreed uplift, the loan interest payment due should be over £643,000 or £215,000 more. There are many other similar irregularities it seems.

 

Why do the interest payable numbers not reconcile, this amongst many other things?

 

Question 3:

Will the results of an external audit conducted on the 3Rivers numbers be made available to the public?

 

Goff Welchman

 

Question 1:

 I understand that there are moves afoot to reduce the size of the Grand Western Canal Conservation Area.

 

I therefore ask Cabinet to please note that, at a time when Tiverton’s green areas are being eroded every year, all conservation areas should be fully protected for future generations. Furthermore, many residents will view this as a devious plot to undermine objections to the wretched Tidcombe Hall Planning Application.

 

I hope you will unanimously vote to maintain full protection of this area, rejecting any attempt to diminish it.

 

Response from Cabinet Member for Planning and Economic Regeneration:

 

Thank you for the question. You were quite correct that there were proposed changes to the extent of the Canal Conservation Area which were proposed as a result of the recent Conservation Area Appraisal. Conservation Areas were designated for both their special architectural and historic interest. Local planning authorities must review their conservation areas from time to time, as directed by legislation.

 

It was best practice to update conservation area appraisals and their boundaries to reflect changing methodologies and any changes to the area since adoption. Importantly, these changes aimed to ensure that the Council had robust strategy towards the Conservation Area and to ensure the protection of the important and precious canal environment.

 

There was no relationship between these proposals and the externally-led Tidcombe Hall proposals. Furthermore, I would point out that no decision is before Cabinet tonight in terms of the adoption of the revised Conservation Area Appraisal and Management Plan, rather, the recommendation set before Cabinet tonight is that the revised document was approved for public consultation so that we might engage the public in discussion on these proposed changes before any final document can be put before Cabinet for approval. I would therefore encourage all people with an interest in the Canal to please provide us with your feedback and contribute to the completion of this important piece of work.