Agenda item

To note the Scrutiny Review recommendations and agree the Cabinet response to the  recommendations set out in appendix 2.

The Chair of the Housing and Regeneration Scrutiny Panel, introduced the review of the Haringey Development Vehicle governance arrangements by setting out the context, origins and scope of the review which had been tasked with adding value to the organisation by providing recommendations on the Haringey Development Vehicle governance arrangement.

During the process, the Scrutiny Panel had felt that they could not make recommendations about the governance structure of the proposal without addressing the overarching question marks which were coming forward on the risks of embarking on the development vehicle scheme which was of a significant scale with uncertainties around the financial arrangements.

The Panel felt that to ignore the potential risks of a scheme that the governance arrangements were intended to mitigate, felt eventually to be counter intuitive.

This was particularly pertinent for a Panel whose role was primarily to carry out oversight and to present critical thorough constructive challenge to decision makers.

The Panel felt that tight governance could mitigate against risks for the public sector, however in a partnership which was equal, such as the Haringey Development Vehicle, there were concerns about how to enforce these, simply because the Council would be in a position of negotiation rather than having an ultimate decision making role.

The overarching questions that remained did not deter the panel making recommendations on the governance of the Haringey Development Vehicle.

The Panel Chair strongly believed that the critique of the proposed Haringey Development Vehicle rests largely on risk and mitigation, and it would have been irresponsible of the Panel not to recommend protections, if the proposal went ahead.

The Panel would be continuing their work on the Haringey Development Vehicle, and had agreed the parameters both at the Panel meeting and the main Overview and Scrutiny meeting.

The Panel Chair felt that that many of the answers to the questions posed to officers and other authorities came back with answers that simply left the Council with more and new questions.

Questions had arisen around certainties, guarantees and commitments that the Council could deliver at this stage. Ultimately the Panel felt that what it needed to always consider the Council’s primary function and aim and purpose as a local authority. This was mainly about providing certainty and security to vulnerable families who had faced years of temporary accommodation and uncertainty.

The Panel and the main Scrutiny Committee were unanimous in its view that the prudent course of action was for the Haringey Development Vehicle process to be stopped allowing for further necessary scrutiny.

Councillor Strickland thanked the Scrutiny Panel for their work on Haringey Development Vehicle, governance process and addressed the issue of enforcement of the Haringey Development Vehicle objectives which was a cultural question and further provided assurance, that although this was an equal joint partnership, decisions by the Haringey Development Vehicle board would only be taken forward if reached by a consensus. The Council would have a powerful blocking vote if proposals were not acceptable to them.

The Cabinet were accepting 11 of the recommendations and part accepting 4 but could not accept delaying preparations for the establishment of the Haringey Development Vehicle which was expected to come forward, for decision by Cabinet, in the summer. During the intervening period of 5 months, there would be a good opportunity for Council with the preferred bidder resolve the details on governance and the function of the Board. Both Councillors and residents would be able to discuss and tackle the concerns regarding the governance process.

If the process was stopped then this would also prevent answers to the issues raised coming forward and it would then be difficult to restart the process in a time where new homes and affordable housing was greatly needed.

In terms of housing for existing tenants, the Council would be striving, with the development partner, to reach a good deal for tenants. The task for the next 5 months was to secure this as Cabinet recognised that Councillors and residents need to get assurances before a decision is made on the Haringey Development Vehicle.

In relation to the role of Councillors on the Haringey Development Vehicle Board and potential conflicts of interest, there were already examples of Councillors sitting on various Boards such as the Alexandra Park and Palace Board where they were acting as trustees and considering a range of complex issues.

It was emphasised that Council-nominated Members of the board would be acting within the parameters of the Cabinet agreed business plan so there was significant democratic control. If there was any change to the agreed business plan, then this would need to come back to the Cabinet for agreement.

Councillor Strickland thanked the Panel Chair and provided assurance that the 5 month delay in establishing the Haringey Development Vehicle would provide the opportunity address the concerns highlighted in the presentation.

The Leader invited questions from non Cabinet Members and there were issues raised in relation to:

• Consultation with tenants, businesses and leaseholders,
• The commercial portfolio handover, evidence of consultation with businesses
• Full Council vote on the Haringey Development Vehicle.
• Providing the Housing and Regeneration Scrutiny Panel with the comprehensive Haringey Development Vehicle risk assessment which works back from the worst eventualities as the Haringey Development Vehicle is the underpinning solution for housing and there would also be far reaching financial implications for the Council if this venture was not successful.
• Whether Cabinet can make a decision on the preferred bidder following the pre-action letter to the Monitoring Officer, calling for the Haringey Development Vehicle plans to be immediately halted.
• Halting the Haringey Development Vehicle process until risk assessments were considered.
• More of a capital risk to the Council finances than the developer.
• Position on negotiation.

In response to these questions, the following information was noted:

• The Cabinet Member for Housing, Regeneration and Planning confirmed that the tenants and business affected by phase 1 had been written to and the Council had been transparent about plans, but there had been few responses and no concerns raised by businesses. Notwithstanding this, businesses and tenants in Northumberland Park had further been informed by the Tottenham regeneration team, via literature provided to residents on the regeneration decisions coming forward, on how they would be affected.

• The Cabinet Member stressed nothing changes for Council commercial portfolio tenants apart from their landlord’s name.

• Housing rents would not be increased and any rent policy would need to be agreed by the Haringey Development Vehicle board which the Council would be a part of. Council rents would be reviewed in the normal way when up for renewal.

• The arrangement did not include community buildings which there was strong protection for with the Council involved in the Haringey Development Vehicle Board. Industrial estates would be included as their modernisation would provide more jobs.

• At this stage the Council were selecting a preferred bidder to enable the further discussion to set up the Haringey Development Vehicle so no full Council decision was required.

• The Cabinet Member emphasised that the Council were fully aware of the importance of this decision in respect of housing and the budget. This was a long and thorough process which would lead to the Council having, by the summer, considered 5 reports on the Haringey Development Vehicle. The business case, for the Haringey Development Vehicle, considered by Cabinet in November 2015, had 6 options for increasing housing and regeneration and had contained details of the assessments around financial legal and procurement risks, including detailed scenario planning for events such as dealing with property market changes and if there are issues with the partnership arrangements.

• The Assistant Director for Regeneration further explained that the risk assessments had formed the legal basis of the procurement and this was not available, currently, as it would jeopardise the procurement process but the Council had been open to discussing the risks with Scrutiny Panel and how they would be dealing with them. When the recommendation for the Haringey Development Vehicle comes forward, approval of the final legal agreements would be part of the decisions being made.

• The Monitoring Officer confirmed that a pre – action protocol letter had been received and would be responded to but there was no reason why the decision on the preferred bidder could not be taken at this evening’s meeting.

• Although the risk assessments were commercially confidential at this stage, a summary document on the risks would be published at the right time.

• Noted that the capital being added by the partner was equal to the value of commercial portfolio.

• In relation to the Housing estates, the Future Housing review sets out the negative financial value of the estates which is also the case across London. It was evident that the borough’s large estates needed work and regeneration and were not worth large amounts of money and so by not transferring other higher valued land, the developer would not be able to match the contribution to regeneration of the estates.

• The equity in the partnership, put forward from the developer, would be equal to that of the Council as this was a fundamental principle of the agreement.

• The valuations of the housing sites would be completed at the time of the transfer and it was not possible to predict their values at this stage

Further to considering the summary of the scrutiny review, the Cabinet Members response and responses to member questions, Cabinet

RESOLVED

1. To note the Overview and Scrutiny Report on Governance arrangements for Haringey Development Vehicle (attached as Appendix 1).

2. To agree the responses to the Overview and Scrutiny report recommendations (attached as Appendix 2).

Reasons for decision

On 17 January 2017, Overview and Scrutiny Committee approved the report of the Housing and Regeneration Scrutiny Panel (HRSP) on the governance arrangements for the proposed Haringey Development Vehicle (HDV), a joint venture between the Council and a private partner to support local housing and regeneration ambitions.

In developing its report, the HRSP held a number of evidence gathering sessions and taken evidence from local stakeholders including Council officers, community group representatives, other local authorities, Investment Partners in other joint ventures and expert independent opinion via the Chartered Institute of Housing. The HRSP then made a number of recommendations.

Alternative options considered

As set out in the HRSP’s report, in view of the Panel’s objection to the Haringey Development Vehicle it could have chosen not to make any recommendations about the governance arrangements for the Haringey Development Vehicle. If it was not to make any recommendations however, the Panel felt it may miss the opportunity to influence ongoing procurement discussions with the preferred bidder and so decided to make recommendations.