Agenda item - New Homes for Neighbourhoods – Scheme and Appropriation Approval - Lynchet Close

Extract from the proceedings of the Housing & New Homes Committee meeting held on the 28th June, 2017; together with a report of the Executive Director, Economy, Environment & Culture

1)        That Policy, Resources and Growth Committee note and approve the recommendations as set out below, as recommended for approval by Housing and New Homes Committee:

i.       Approve that the Environmental Services land marked with hatching in Appendix 1 be appropriated to the Housing Revenue Account for a nil capital receipt for planning purposes to enable the whole vacant Lynchet Close site to be developed for new council housing;

ii.      Approve a budget of £2.532m for the Lynchet Close scheme in the HRA Capital Programme which will be financed through a mixture of HRA borrowing and retained Right to Buy capital receipts.

17.1      The Committee considered a report of the Executive Director, Economy, Environment and Culture which included the findings of the business case for eight new council homes for rent at a primarily HRA owned, grassed site at Lynchet Close, Hollingdean and sought scheme and budget approval to develop them and requested approval to appropriate a small strip of land from the council’s Environmental Services department to the HRA in order to let the development proceed. The report had been referred from the Housing & New Homes Committee recommended for approval.

17.2      Councillor Sykes enquired as to nil valuation of the strip of land situated alongside the site.

17.3      The Project Manager clarified that this was a small, oddly shaped piece of land that was unlikely to be put to any other purpose and therefore had nil value.

17.4      On behalf of the Conservative Group, Councillor Bell moved a motion to add a recommendation 2.2 as shown in bold italics below:

2.2    That Policy, Resources & Growth Committee instructs the Executive Director, Finance & Resources to carry out a thorough audit and value for money exercise into the base build costs of the Council’s house building programme with the results to be reported to the Audit & Standards Committee and any recommendations therein referred to the Housing & New Homes Committee as soon as possible

17.5      Introducing the motion, Councillor Bell explained that there had been several meetings on the issue that had failed to provide a breakdown of costs and had not provided sufficient detail that had facilitated uncertainty. Councillor Bell noted that there was a build cost of sixty years matched against a budget cost of forty years that had also prompted uncertainty. Councillor Bell surmised that the motion was an attempt to ensure a thorough audit and value for money exercise was conducted for the entirety of the council’s house building programme.

17.6      Councillor Janio formally seconded the motion.

17.7      Councillor Yates asked for clarification on the motion as it did not identify where the cost of conducting an audit would be found.

17.8      The Executive Director, Finance & Resources answered that extra work was not currently budgeted for so would be charged against the overall HRA programme cost.

17.9      Councillor Yates enquired as to whether the extra work and increased cost of the programme would therefore lead to an increase in rents.

17.10   The Executive Director, Finance & Resources stated that the extra work would require the appointment of an external audit firm to ensure it was an independent review. The extra cost would reduce the HRA surplus or lead to an increase in service charges.

17.11   Councillor Sykes noted that the programme had used independent cost consultants and that was something the council was now doing widely as a developer. Councillor Sykes added that he had been sufficiently assured by the detail of the report and so would not be supporting the motion as it would likely lead to a duplication of work and was not a sensible use of money.

17.12   Councillor Janio stated that the intention of the motion was to give clarity on consistent, reliable build costs for the council as a developer.

17.13   The Chair asked whether that all projects under the New Homes for Neighbourhoods scheme were externally costed and audited.

17.14   The Executive Director, Economy, Environment and Culture answered that the council used independent quantity surveying consultants to scrutinise costs throughout the design and development process and they had a duty of care to the council in doing so. The Executive Director, Economy, Environment and Culture added that at the end of the project, the consultants would provide a best value review to confirm that the council had achieved value for money. The Executive Director, Economy, Environment and Culture noted that the estimated costs compared favourably with the closest comparator costs for builds of the kind. The Executive Director, Economy, Environment and Culture noted that there had been an internal audit review of the New Homes for Neighbourhoods programme that gave substantial assurance that each project delivered value for money, excellent project management was in place and each had comprehensive budget management arrangements.

17.15   Councillor Bell stated that he had found it very difficult to obtain financial information of any assurance on the project. Councillor Bell stated that he could not understand why the council did not engage architects and engineers on fixed-term contracts and only engaged an open ended book. Councillor Bell stated that the intention of the motion was to review processes.

17.16   The Executive Director, Economy, Environment and Culture stated that it was usual practice to provide estimated costs rather than actual cost at this stage in the project process. Then, as with any capital project, there would be further reports on any variations. Furthermore, there was a cross-party Board who would be reviewing the project as it progressed and there would be a report on costs to the Housing & New Homes Committee as well as a dedicated workshop for all Members.

17.17   Councillor Janio stated that he had been comprehensively assured by the update and therefore, the motion would be withdrawn.

17.18   RESOLVED- That Policy, Resources and Growth Committee note and approve the recommendations as set out below, as recommended for approval by Housing and New Homes Committee:

i.       Approve that the Environmental Services land marked with hatching in Appendix 1 be appropriated to the Housing Revenue Account for a nil capital receipt for planning purposes to enable the whole vacant Lynchet Close site to be developed for new council housing;

ii.      Approve a budget of £2.532m for the Lynchet Close scheme in the HRA Capital Programme which will be financed through a mixture of HRA borrowing and retained Right to Buy capital receipts.

The meeting was adjourned at 6:15pm and reconvened at 6:28pm