336
Councillor Smith, Chair of the Committee,
indicated that it was his intention to deal with this item first, and not in
the order published in the agenda, to the unanimous agreement of the Committee.
Accordingly, the Committee considered a report setting out the performance
summary and activities of the Council’s wholly owned commercial companies
during the fiscal year for 2021/22.
Pam Donnelly, Chief Executive of Colchester
Borough Council (the Council), attended the meeting and addressed the
Committee. She wished to make sure that the Committee was aware that Paul
Smith, the Managing Director of Colchester Commercial Holdings Limited (CCHL), had
decided to retire, and would be leaving his role towards the end of February
2023. There were potential risks associated with any senior member of staff leaving
a commercial organisation and, with the support of Cabinet, a risk assessment
would accordingly be prepared to identify any areas which needed to be
addressed. Additionally, the recent Peer Review had recommended that a full independent
and external review of the operation of the Council’s wholly owned commercial
companies be undertaken, and accordingly an external company had been appointed
to carry out this work. It was anticipated that further a further update would
be able to be provided to the Committee after January 2023.
Councillor Warnes, Chair of the Board of Colchester
Commercial Holdings Limited (CCHL) attended the meeting and addressed the
Committee. The Committee was invited to review the performance of CCHL and its
subsidiaries as shown in the annual report which was presented to it. The
Committee was also invited to make any recommendations to Cabinet in respect of
CCHL for the financial year 2022/2023 or beyond. Over the past year, the
dividend figure achieved by CCHL had been £172,000, although the continued
impact of the Coronavirus pandemic, and issues with construction industry
supply chains and the war in Ukraine had also affected this figure. In addition
to this dividend, CCHL generated other income for the Council in the form of
rents for office space and other services as defined by the various Service
Level Agreements (SLA)s in place. CCHL was able to access funding streams which
were not available to public sector organisations, and work in partnership with
the Council on projects which benefited from combined funding streams. Risk
assessments for CCHL and its subsidiary companies were maintained and regularly
reviewed by the Board, and it was considered that a key risk was that attached
to the delivery of income targets, both capital and revenue, and management
costs. These risks would be actively managed through monitoring and reporting
through the governance arrangements which were in place.
It was considered that CCHL had delivered many successes
over the past 12 months, including:
-
completed delivery of a full fibre broadband
network in support of the Council’s 2017/2022 Digital Strategy, together with
the establishment of Colchester Fibre to provide and operate an ambitious
commercial broadband programme across the borough
-
Support for the Council’s green agenda,
including the appointment of a contractor for the design and build of the proposed
low carbon district heat network. Additionally, feasibility work had been
completed for development of a microgrid to provide electricity generated from
a proposed 4.5 megawatt PV solar farm, and the Helpline service had taken
delivery of a new fleet of hybrid electric vehicles
-
there had been a full upgrade and extension of
the town’s high definition digital closed circuit television (CCTV) system,
increasing the coverage and clarity of footage
-
improvements to the public realm, including the
new Stanway Community Centre, and the creation of a new and accessible public
square at Balkerne Gate
-
Amphora Events had put on over 500 events,
attracting over 125,000 visitors, and Colchester Weddings had seen increased
demand for its services, buoyed by the relaxation of lockdown restrictions
-
The Estates Team had continued to identify and
secure assets management initiatives and negotiate land and property disposals
and acquisitions to bring in substantial total capital receipts to the Council.
The team was also advising on Turnstone Estates new £65m commercial leisure
development on the Northern Gateway site, the largest leisure development of
its kind currently being built in the country.
The Committee was assured that
CCHL would participate fully in the forthcoming independent review of its services,
to help the Council assess whether the companies were realising the benefits
they were established to deliver.
Alistair Wilson, Senior Commercial Manager Colchester
Commercial Holdings Ltd, attended the meeting and provided the Committee with a
presentation containing a review of the activities of CCHL for the financial
year 2021/2022, together with an overview of the current financial year
2022/2023. Future business plans were being finalised, but would be subject to
the outcome of the external review of CCHL which was to be carried out.
The key achievements of the Amphora Group were highlighted
in the Annual Report which had been presented to the Committee, and the
Committees attention was drawn to the wider benefits of the Amphora Group which
were not necessarily reflected in the dividend which had been provided, but
could be seen, for example, in the large number of people from outside the
borough who had been drawn to events that had been provided. Additionally, there
had been a 65% uplift in arrets made due to the increased quality of the CCTV
footage now available to the police, together with 23% more incidents detected
in the town centre, serving to make the town centre a safer place to visit.
Michael Woods, Energy Manager, Colchester Amphora Energy,
attended the meeting and addressed the Committee. The Committee heard that
Colchester Amphora Energy company was set up to develop the heat network as
part of the Northern Gateway development. A long tender process to appoint a
company to deliver this project had been completed, and additional work was
being undertaken to develop a microgrid with battery and solar storage.
Alistair Wilson advised the Committee that the major achievement
of Colchester Amphora Homes during the financial year 2021/2022 had been the completion
of work at the Council’s Creffield Villa site, delivering 6 apartments,
including 2 which were affordable rent. Redevelopment of property at Military
Road had also been progressed to deliver 6, 1 and 2 bedroom apartments and 2
new 2 bedroom houses for social housing. The development of a number of garage
sites had also been progressed, and further sites had been proposed which would
yield a total of 16, 2 and 3 bedroom homes.
The key achievement of Colchester Amphora Trading had been
the beginning of the construction of a £65m leisure park at the Northern
Gateway development, which was due to be completed in September 2023, and this
was supported by additional significant infrastructure work on the development.
Of critical importance for the forthcoming year was the continuation of
infrastructure development, and the obtaining of outline planning approval for
all proposed uses of the Northern Gateway site.
Other achievements had included the management of the
overhaul of Rowan House, the completion of phase 1 of new public space at
Balkerne Gate to complement the redevelopment of the Mercury Theatre, and the
commencement of the construction of the Stanway Lakelands Community Centre.
Elizabeth Simpson, Head of Estates, Amphora Trading –
Estates, attended the meeting remotely and addressed the Committee. The
Committee heard that over the preceding year, the main focus of the Estates
Team had been to ensure that the Council had received rental income which was
owed to it via its property portfolio, together with identifying asset
management initiatives which had generated capital income for the Council. In
the forthcoming year, priorities would include continuing to limit the loss of
rental income as well as the delivery of expert lease and management advice on
Turnstone’s Colchester Northern Gateway Leisure Park. Work would continue to
secure asset management initiatives to increase Council income, to include
finalising the letting of office space at Rowan House.
With regard to Colchester Events, Alistair Wilson advised
the Committee that there had been a very strong recovery from the Coronavirus
pandemic which had limited its activities in previous years. A number of
developments had taken place including moving to cashless operations at events
and the launch of a digital magazine called ‘The Ticket’ which was aimed at
raising awareness of events and boosting ticket sales. Ticket sales for events
at Charter Hall now averaged 700 per event, as opposed to approximately 400 tickets
per event before the pandemic. Events had also been delivered for other local
authorities in Essex, and negotiations were ongoing to deliver more events in
the future.
The Helpline service had continued to offer 24 hour a day
support to its customers, and a full monitoring and response service had been
maintained. In addition to this, over 350 new customers had been attracted to
the service, with 1 in 7 customers now located outside Colchester. Work was
ongoing within the wider healthcare sector including the East of England
Ambulance service, and waiting times for a visit from helpline were currently
approximately 45 minutes. Priorities for the forthcoming year included the
digital upgrade of the Helpline operating system and the further development of
the partnership with healthcare services to assist customers who had fallen but
who were not injured. Additionally, joint ventures with other local authorities
were being considered to extend the reach of the service across north Essex.
A local full fibre broadband network, funded by a grant
from the Department of Culture Media and Sport, had been deployed and completed
by the Amphora Trading team. Colchester Fibre had then established as a trading
brand to be not only the wholesale provider of fibre broadband, but also the
service provider. Significant external investment had been attracted to the
scheme and as a result of the combined investment, full fibre broadband would
be available to 15,000 properties.
A Committee member was pleased to note the excellent
achievements of CCHL over the previous few years, despite the fact that they
had initial reservations about the formation of the companies. Although the
content of the report was appreciated, it was suggested that far more financial
detail was required in future to enable the Committee to properly consider the
activities of CCHL, and the statement of accounts should be provided in the
future. It was further noted that the people pictured in the annual report document
were not representative of the diverse population of Colchester, and this
should be addressed.
In response to questioning from the Committee, Alistair
Wilson confirmed that the fibre broadband network was owned by Colchester Borough
Council, and that Colchester Amphora Trading, operating as Colchester Fibre, had
been appointed to operate the network and to commercialise it on behalf of the
Council. Negotiations were ongoing as to the fee which would be paid to the
Council for the rights to commercialise the network, with the ongoing operating
costs being covered within the revenue of Colchester Fibre. A Committee member required
specific additional information in relation to the location of the capital
expenditure and operational expenditure budgets in relation to the required continued
maintenance of the fibre network, noting that such maintenance would not be
accounted for via revenue accounts but would be a capital cost. The Committee
heard that the cost of maintenance for the area of the network which the
Council owned had been provided for within the projected expenditure costs of
the company. The Committee remained concerned that a large sum of money had
been invested in the network, with a lack of clarity in relation to the income
to be generated over the life of the network, and who was responsible for its
maintenance, and the cost of such maintenance. It was suggested that a
recommendation be made to Cabinet that more information be provided in relation
to the issues which had been raised.
The Committee
queried the plans which had been referenced for a solar farm, considering that the
Council had not taken any decisions recently which would indicate a site large
enough to support a 4.5 megawatt solar farm had been identified. Michael Woods
indicated that feasibility work was in progress, and the appropriate land was
available to host the proposed solar farm. The feasibility report would be
circulated to the Committee once it had been received.
In response to a number of questions from a Committee
member, Alistair Wilson confirmed that the fibre network which had been
constructed had been terminated at strategic points, and at these points commercial
enterprises were able to connect to the network and build it onwards
themselves. No further information was available at this point as to which
commercial operators would be involved in the future. Limited printed copies of
‘The Ticket’ were still available and distributed through key partners, however,
this number would be reduced year on year. Information in respect of the
Council’s proposed continued development of its garage sites would be provided
to the Committee after the meeting.
The Committee requested further details of when the draft
accounts for CCHL would be available for inspection, considering that these
formed an essential part of the overview process of the Shareholder Committee,
and it was confirmed that draft accounts were with the Companies’ accountant
and were expected to be presented as final accounts in the coming weeks. The date
for this presentation would be confirmed to the Committee.
A Committee member voiced strong concern that with the larger
projects that were being managed by CCHL, where the council was potentially at
risk, there was a lack of clarity as to where the responsibility for these
projects lay. The capacity in which CCHL acted was questioned, and it was
considered that profits which had been realised from some very significant
investments had been very modest. It was noted that there were some very large
projects, and it was not clear on whose balance sheet they rested. It was not
possible to consider the operation of CCHL without this essential information,
and there was concern that the primary risk associated with larger projects
rested finally with the Council. The Committee needed to be able to consider
the risks and rewards associated specifically with the Turnstone development.
Councillor King, the Leader of the Council, attended the
meeting and, with the permission of the Chair, addressed the Committee. Thanks
was offered to the officers of CCHL for their hard work during the preceding difficult
years, and for following the remit set by the Council which was to be ambitious
and deliver income. He acknowledged the questions which had been raised by the
Committee, and considered that it was appropriate that full and considered
responses be given to these. Pam Donnelley explained to the Committee that the
initial risk assessment which had been commissioned would quickly give an
overall feel of the position in relation to issues which had been raised during
the meeting.
Summarising the debate that had taken place, the Chair of
the Committee identified the key areas on which the Committee would make
recommendations to Cabinet:
1. Greater
details be provided with regard to the maintenance of the fibre broadband network,
2. Detailed
projections be provided in relation to the proposed solar panel site at the
Northern Gateway development,
3. An
explanation be provided for the delays in the production of accounts, and
confirmation that the accounts would be referred back to the Committee to
review,
4. More
information be provided in respect of the potential risks and rewards associated
with the Turnstone development
5. Details
with regard to the level of investment and expected returns associated with the
fibre network itself be provided.
A Committee member suggested that greater attention should
be given to the use which was made of housing land, and questioned why the
Council was building housing itself, when a private developer could do this. Additionally,
appraisals were needed for each and every element of the Northern Gateway heat
network project, to provide assurance that it was understood what the
investment required was, and what the returns were likely to be. The Committee did
acknowledge that the role of the Amphora companies had a social element as well
as a commercial one, and that the levels of provision of social housing which
were required by the Council were unlikely to be met by a private developer.
The Committee indicated that it would be happy to scrutinise
the business cases of projects brought forward by CCHL and offer appropriate
advice, if this was the wish of Cabinet, although it would be careful not to
usurp the position of the CCHL Board, which also included elected Members.
Andrew Weavers, Monitoring Officer, confirmed to the
Committee that its Terms of Reference when acting as the Shareholder Committee
for CCHL and its subsidiary companies were:
1. Consider
and review the activities and financial performance of CCHL and its subsidiary
companies, Colchester Amphora Housing, Colchester Amphora Energy, and
Colchester Amphora Trading,
2. Receive,
review and recommend to cabinet CCHL business plans, including its subsidiary
companies, annually, and to review performance including the delivery of the
dividend,
3. Monitor,
challenge and make recommendations to Cabinet regarding CCHL and its subsidiary
companies,
4. Make
recommendations to cabinet on how it should exercise its functions flowing from
its ownership of shares in CCHL and its subsidiary companies.
RESOLVED that: The Governance and
Audit Committee had reviewed the performance of Colchester Commercial Holdings
Limited (CCHL) and its subsidiaries during 2021/22 as provided in the Annual
Report.
RECOMMENDED to CABINET:
1. Greater
details be provided to the Governance and Audit Committee with regard to the
maintenance of the fibre broadband network,
2. Detailed
projections be provided to the Governance and Audit Committee in relation to
the proposed solar panel site at the Northern Gateway development,
3. An
explanation be provided for the delays in the production of accounts, and
confirmation that the accounts would be referred back to the Governance and Audit Committee to review,
4. More
information be provided to the Governance and Audit Committee in respect of the
potential risks and rewards associated with the Turnstone development
5. Details
with regard to the level of investment and expected returns associated with the
fibre network itself be provided to the Governance and Audit Committee.