Agenda item

Report of the Director of Culture, Strategy, and Engagement. To be introduced by the Cabinet Member for Culture, Communities & Leisure.

This is a social value policy framework to determine how subsidies may be applied to leases held for council properties by voluntary and community sector organisations

Cllr das Neves and Cllr Chandwani left the meeting room.

The Cabinet Member for Culture, Communities & Leisure introduced the report which set out proposals to develop a new policy which will allow Council officers to determine subsidy levels on leases for Voluntary and Community Sector (VCS) organisations operating out of Council buildings.

In response to questions from Cllr Cawley- Harrison, the following information was noted.

• Regarding the engagement for the social value policy framework and particularly residents being involved in the development of this, in accordance with the Haringey Deal, the plan was to consult as widely as possible.
• An up-to-date list of leases for voluntary and community organisations operating out of Council buildings had been compiled and the details of that were contained in the exempt papers. The current listing situation was not ideal but the Council were working on compiling these up to dates lists which help manage the portfolio going forward in the future.

Following consideration of exempt information at item 27,

RESOLVED

1.    To approve a process of engagement with the Voluntary and Community Sector (VCS), as set out in paragraph 4.5, to co-produce a social value policy framework to guide determinations as to how and when subsidies may be applied to leases held for Council properties by Voluntary and Community Sector (VCS) organisations, as set out in paragraphs 6.7 and 6.8.

2.    To note and agree that Living Under One Sun and the Selby Centre should be treated separately in advance of a final policy, given the advanced status of these projects as set out in paragraph 4.7 of this report.

3.    To note that a further Cabinet report will be delivered in late 2024, which will present a full policy on community assets for Cabinet approval.

Reasons for Recommendations

The Council is proud of the support it provides to the Voluntary and Community Sector (VCS) to provide vital support to Haringey’s communities, particularly the most vulnerable. We do this in a variety of ways, whether by commissioning them directly to provide services, building their capacity and sustainability through the work of the capacity building partner and bringing external funding into the borough, or by providing them with affordable premises for offices or other spaces from which to carry out their activities. This report sets out the principles for a new approach to provide greater clarity around how we manage and deliver this last type of support.

At the time of writing, there are a diversity of leases in the Council’s VCS property portfolio. That includes leases from zero or peppercorn to something closer to market rent. Many of these leases have expired and there is no formal policy or framework for determining the basis on which VCS organisations should occupy Council-owned buildings, resulting in inconsistencies and a variety of historical arrangements and leading to the potential for accusations of unfairness of treatment, or at least a lack of transparency. This also leads to a lack of clarity regarding responsibilities for building maintenance, and a number of the properties are in a poor state of repair which needs to be addressed.

The Chris Buss authored Property Independent Review found, with respect to Voluntary and Community Sector leases, that the Council had failed to maintain ‘a proper landlord and tenant relationship that is ensuring that both parties (Landlord and tenant) had fulfilled their mutual obligations under the lease agreement.’ This report and its recommendations were accepted in full by Cabinet in April 2023. The recommendations, including recommendations related to the VCS sector, are being delivered through the Council’s Strategic Asset Management and Property Improvement Plan (SAMPIP). This was developed partly in response to the Chris Buss authored report.

The SAMPIP includes a Property Review Process. In accordance with this and our wider Property Governance procedures, all leases that have expired should go through this review process. 25 properties have been identified as Community Centres within the 88 VCS classified buildings. 23 of these Community Centres fall within the category of having expired leases, which are proposed to be prioritised through this policy when it is finalised.

Based on the experience of other Councils, we propose to develop a social value matrix which will enable VCS organisations to operate from our buildings with subsidised leases which will be determined by objective criteria. This matrix, the criteria it contains, and the way organisations will utilise it, will be developed in coming months through engagement with the VCS. We will undertake this engagement in collaboration with Public Voice and MIND in Haringey, our new VCS Strategic partner. The new policy will allow the VCS to continue to deliver socially impactful work in a way which also supports the Council’s corporate objectives as set out in the Haringey Deal and our Corporate Delivery Plan 2022-24 to build a fairer, greener Haringey.

The lease policy, once agreed, will additionally provide clarity to both VCS organisations and to the Council about where responsibility lies for building repairs and maintenance.

There are two organisations – The Selby Centre and Living Under One Sun – with whom the Council is at an advanced stage of entering into a long-term partnership based around area regeneration programmes with external funding streams and where there is a property lease arrangement involved. The Council will need to conclude agreements with these organisations in the next few months, and they are sufficiently unique as partnerships to warrant their own, bespoke, agreements that should not be considered as precedents for any subsequent leases.

The final policy will return to Cabinet in the autumn of 2024 for sign off when a full policy and approach has been developed alongside the VCS. That policy will also benefit from any learning achieved through early adopters of this process. The Council’s preferred approach is that an agreed subsidy will be subtracted from the rental invoice issued to organisations, and that this mechanism for the delivery of a subsidy will be worked up in detail with the VCS, working closely with Public Voice and MIND in Haringey, as the new capacity-building partner for the sector.

During engagement with the VCS Sector and Public Voice, the Council intends to identify an early adopter from the 23 organisations identified in the Council’s existing VCS portfolio as occupying community centres with currently expired leases, to identify practical lessons to inform the final policy.

Alternative options considered

Do nothing. If the Council asked its Property and VCS team to manage the portfolio without a new policy, this would mean there would be no policy basis other than renewing the many lapsed leases at market rent for these properties which would be unaffordable for many VCS organisations. There would also be no policy rationale for letting Council properties to new VCS groups and could potentially leave the Council vulnerable to allegations of arbitrary, inconsistent, or preferential treatment of its different VCS tenants. This is not a viable alternative.

Circular Grant. An alternative methodology to applying a rental discount is for the organisation to be charged full market rent and for the Council to provide a grant in arrears for the value of the agreed level of subsidy, subject to the organisation delivering agreed outcomes under an SLA. The same social value calculation can be used as in the discounted lease approach. The circular grant method requires another part of the Council to have their own budget lines for these grants, or for part of the rent received to be attributed to those budget lines.

The circular grant approach is rejected on the basis that many organisations in the VCS sector will have insufficient cashflow to cover initial payments of market rent. There is also an organisational ambition to move away from circular grants, and a recognition that while it may be ‘cleaner’ from a property management point of view to adopt this approach, it requires significantly more administration and complexity of management for both the VCS and Council, which we need to minimise at a time when all budgets are under pressure.