Meeting Details

Ms. Carinna Cooper attended and addressed the Panel, pursuant to the provisions of Meetings General Procedure Rule 5(1), to ask if the Council-commissioned independent advice regarding 5G safety had been published on the Council’s website, as had been promised, and to ask for all 5G mast applications and installations to be re-examined. Ms. Cooper made a number of allegations concerning the Council’s governance and actions, and demanded the names of all who had granted approval to planning applications for 5G masts.

Councillors Smith and Rippingale declared an ‘Other registerable interest’, relating to their membership of the Colchester Borough Homes Board. It was confirmed that they could participate in this item, as it did not include any decisions relating to Colchester Borough Homes and would only involve making recommendations to Cabinet.

Councillor Julie Young, Deputy Leader of the Council and Portfolio Holder for Housing, introduced the proposed updates which aimed to ensure that the Plan remained sustainable. This would maintain the Housing Revenue Account [HRA] so that the Council could continue to provide services and the repairs upon which residents depended. The Portfolio Holder thanked all residents who had taken part in the consultation carried out on this review and update. All residential properties needed to hold an EPC [Energy Performance Certificate] of grade C or better by 2030 at the latest; all properties also had to meet the Decent Homes standard. There were currently more than 2,400 on the housing register and more than 500 in need of temporary accommodation.

The minimum level of reserves would be increased to 10% of turnover.

Philip Sullivan, Chief Executive of Colchester Borough Homes [CBH] presented an overview of the Business Plan update, picking out the key changes to the Plan which had last been presented to the Panel in July 2026. Investment had been increased to allow quicker acquisitions and a faster programme of making necessary improvements to EPC ratings. The data on interest rates were outlined and the interest rate cover and borrowing decision process were summarised.

Councillor Sunnucks attended and, with permission of the Chairman, addressed the Panel to outline his concerns with the Plan, including the increase in capital expenditure. The Panel was asked to look at the prudential aspect of this increase, with Councillor Sunnucks stating that the Council’s capital investment programme was bigger than those of neighbouring local authorities, then stating that the Council’s HRA borrowing was shown to be above the borrowing cap for the coming ten years. Councillor Sunnucks told the Panel that the Council was using a different definition of ‘interest cover’ than was used by the private sector or housing associations and accused this of being economically wrong, stating that Savills had warned about this. Concern was raised about the Council’s housing management costs, which were stated by Councillor Sunnucks to be rising and much out of line with comparative landlords.

A Panel member added concern that the report stated that the Heart of Greenstead project would not necessarily deliver value for money for the HRA in financial

Terms.

The Chief Executive of CBH described the approval of the coming year’s acquisitions as having been laid out in the Business Plan written in July 2025. This was proposed for acceleration due to the housing crisis and the benefit to the Council in reducing demand for temporary accommodation. It would also be more cost effective for the General Fund.

Assurance was given by the Chief Executive of CBH that the borrowing described in the Plan could be serviced, and that the graph provided in the report was based on a prudent interest cover ratio. The Council would need to continue to manage the associated risk. The Panel was told that the new debt projection was lower than had been projected in July 2025, and management costs were comparable or lower than at similar housing providers.

A Panel member welcomed the acceleration of the acquisitions mentioned in the report, stating that borrowing £4m at an early stage would save more money, by increasing the housing stock, than it would cost the Council in interest costs. It would also help families in temporary accommodation to gain stability. The Panel member agreed that Colchester Borough Homes’ management costs were lower than comparable providers, according to Savills, and praised the organisation’s work to protect PVs [photovoltaic panels] and to meet the Decent Homes Plus standard. Another member added that earlier acquisition would help to increase rent generation at an earlier stage, and that the Council must be mindful of human elements, such as cases where victims of domestic violence were currently having to live in temporary accommodation.

The point was raised that any increase in rent charges would have an impact on the work of the CBH FIT [Financial Inclusion Team] and the Chief Executive of CBH was asked if the Business Plan included the projected costs from bad debts, and from the need for FIT funding. The Chief Executive emphasised the value of the CBH FIT and gave assurance that the effects of any increase in rent levels would be tracked, possibly leading to increased funding for the FIT.

Julia Hovells, Associate Director, Affordable Housing Division, Savills, explained that the bad debt provision was linked to a percentage of rent income, currently at 0.75% of rent income. This would be reviewed regularly. The Portfolio argued that, in comparison with open market rents, it was very good value for money to live in a Council property. Geoff Beales, Strategic Housing and Assurance Manager, highlighted that the Council would be charging affordable rental rates on the housing that was built or acquired, rather than the social housing rental rates. The rent collection performance of CBH was always very good.

The Panel discussed the need for flexibility in the Plan, with one member making the point that a case could be made for investing, but that the Council would need to show the social good expected to result from doing so. The Panel member continued that the Council was not operated to be a ‘for profit’ business, and in their view the Plan therefore made sense as proposed.

Another Panel member noted that the Council charged rental rates below the market rate, and argued that this was likely not the most cost-effective way to address housing needs, and that the Council was gambling with taxpayers’ money and increasing its debt, which the member believed could get even worse.

Suggestions of using modular housing were discussed; the Portfolio Holder drew the Panel’s attention to an in-depth analysis on the use of modular options which had been carried out, with findings that traditional housing approaches would be the better way to proceed. Modular housing would require looking at supply chains and gaining assurance that they could deliver. It was not considered appropriate at present, but could be re-examined in the future.

A concern was raised that there might be much that happened over the coming 30 years which could derail the Plan. The Chief Executive of CBH informed the Panel that all it was normal practice to set a plan for the coming 30 years, with all housing associations having such a business plan. These were live documents, kept under review and subject to updating. If there were not to be increases in permanent housing, then the Council would need to increase its use of temporary accommodation; expediting the acquisition of new housing would help those who needed permanent accommodation from the Council.

A Panel member detailed considerations about tenants, positing that they would be pleased at much of the content, but raised concerns regarding the long-term borrowing set out, and the rental increases of CPI [consumer price index] plus one percentage point. It was accepted that investment issues needed to be balanced, but the Panel member had concern that the proposals would make tenants poorer. A project plan was urged for the additional borrowing proposed. The Panel considered a member’s suggestion that the Panel recommend boundaries for Cabinet to draw. There was much investment planned for the first four years; a suggestion was made that extra reserves should be assigned for contingencies, should the Council’s assumptions turn out to be incorrect. The risk profile was described by a member as being uncertain for the first ten years.

The Chief Executive of CBH was questioned as to what would happen if there were an increase in applicants for housing by year five of the Plan, and whether there would be increased instability over time, with uncertainty that borrowing could be repaid over future years. A member of the Panel said that reassurance had been sought from Savills, but that this had not been obtained. The Chief Executive of CBH agreed that there would be benefits for tenants, with much content to benefit them and to ensure that CBH met its regulatory burdens. Further to that, the Panel were briefed as to how the investments would be accounted for. Benefits to the General Fund would be indirect, with long-term housing replacing some of the temporary accommodation use. The decision had been made to propose taking on additional risk, but with mitigations put in place. The Council took the view that the first four years were shown to be affordable and manageable, with regular review. Julia Hovells, Associate Director, Affordable Housing Division (Savills) expressed Savills’ support for the proposals, describing the affordability and the risk considerations. There was a reliance on other social housing providers, as there was across the UK. An announcement regarding rent convergence was awaited, but this programme was described as being set to increase capacity in the future.

Two Panel members raised their concerns about the 30 years of the Plan, and their view that housing demand would continue and that the investment proposed would not solve the issue. Another member gave the view that each potential acquisition should be viability tested, ensuring that they paid back within 25-30 years and would only proceed if this could be shown. Another comment from the Panel was that the 30-year plan was a mechanism for financial planning, and when looking at the investments planned for years one to four, these would be affordable if carried out properly and assuming that investment cases would be updated over time, to reflect changes in the wider situation.

The Portfolio Holder for Housing noted Government funding being made available, announced the previous Summer, and spoke of the expectation that stock loss would be turned around, with future lowering of ‘right to buy’ discounts and an increase in the time tenants have to be in a property before becoming eligible for ‘right to buy’ purchase. The Plan would be reviewed regularly and in a year’s time.

A Panel member gave their view that there would need to be an increase in rental income for the business case to work, with surpluses after year 10, to pay down debts. They went on to argue that there was not enough focus on management costs, or plans to reduce costs if rental income were to drop. The Chief Executive of CBH clarified that the increasing of stock was discretionary and that the Council had agreed that this was the right course to pursue, but that this did not have to be included in the Plan following Year Four. When the Council had approved the Business Plan in July 2025, the approach had moved from ‘just in time’ to the ‘Decent Homes Plus’ standard. CBH then moved to a management restructure to proactively reduce costs.

Concerns were addressed regarding the report content about the Heart of Greenstead project not necessarily delivering value for money for the HRA. The Portfolio Holder laid out the project being part of the Town Deal programme. There had not yet been a huge amount of work done on this project. It was known that more housing was needed and the viability work would be done on this. The Chief Executive of CBH added that this would be for the Business Plan’s purposes, showing provision, assumptions, prudence and affordability. Any residential redevelopment would need robust appraisal first, and there was expected to be wider regeneration benefits for the area, for those in temporary accommodation and for the General Fund. The financial appraisal stage had not yet been reached.

Councillor Sunnucks, with consent of the Chairman, spoke to urge the Panel to make a recommendation to Cabinet that provided warnings and advice, and that the Council must respect its rules. Councillor Sunnucks gave his view that the Council could not service this debt, as he believed that the figures for major repairs were not accurate and the Council was only obeying the accounting rules applicable to it, rather than heeding the economic situation. Furthermore, Councillor Sunnucks gave the view that the debt capacity projected was overstated and not sustainable. Councillor Sunnucks argued that stock acquisition would only transfer housing from private to public ownership and would increase the Council’s debt. The Heart of Greenstead project would be hard to achieve, but Councillor Sunnucks stated that he would support it going outside of the bounds set.

Julia Hovells, Savills, emphasised that the Business plan showed sufficient resources to service the planned debt, with a strong 30-year revenue and capital forecast. It also showed that the investment in existing stock was affordable. The transfer of cash to do this, from appropriate budgets, was laid out. All borrowing would be in the context of each individual scheme. These would be fully funded in the Capital Programme.

The Panel discussed suggested content for a recommendation. This included advising Cabinet to be mindful of wider considerations not covered within the report, such as costs to the General Fund and the costs of homelessness. Another point raised was that the forecast borrowing on the HRA was higher than the prudent level set by the Council’s ‘golden rule’ for the first ten years but could be brought down by Year 10.

Another suggestion was to direct Cabinet’s attention to the passage stating that the Heart of Greenstead project would not necessarily deliver value for money for the HRA, and to urge Cabinet to quantify the additional benefits of the project that it was taking into account, and to explore if some of the funding should come from other appropriate sources. A Panel member described the project as being political rather than practical, criticised the lack of detail on this in the 30-Year Plan and argued that the health effects of the project needed to be given. Councillor King, Leader of the Council, distinguished the difference between the whole of the Heart of Greenstead project, and the later residential redevelopment phase. The content in the report underlined the case-by-case decisions to be taken on each element. The Panel discussed views on Heart of Greenstead. This included one member’s view that there had not been a sense of urgency in past discussions, and another raising surprise that the Council was intending to break its ‘golden rule’ each year, going on to advise that a whole new business case would be needed prior to any decision on Phase Two of the project.

Julia Hovells, Savills, explained that the level of borrowing proposed was not outside the prudential code. The 1.25% insurance cover ratio was quite high, in comparison. Whilst the Plan was outside of the ‘golden rule’, it did not breach the prudential code. There was a difference between the prudential code and the prudential levels of borrowing.

Councillor Rowe requested that it be formally recorded that he was in opposition to the 30 Year Business Plan presented.

RECOMMENDED to CABINET that Cabinet, in its consideration of the proposed update to the 30 Year Housing Revenue Account Business Plan, be mindful of and consider: -

1. Wider considerations not covered within the Business Plan, such as the cost impacts of homelessness on the General Fund, and whether these are relevant to the revenue account of the HRA

    

2. The penultimate paragraph on page five of the Business Plan document, which notes, ‘that forecast borrowing in the HRA is higher than might be considered ‘prudent’ when measured against a notional interest cover “golden rule” of 1.25 at the outset, but that the level of borrowing can be brought down to a ‘prudent’ level in risk management terms by year 10’

    

3. The stating that the Heart of Greenstead project ‘does not necessarily deliver value for money for the HRA in financial terms’, the stated non-financial value to the area and community, and whether Cabinet should explore the potential for the housing element to be provided elsewhere, and other appropriate sources of funding, such as from the General Fund, and seek assurances that the project will provide value for money before it proceeds

Councillor Moffat declared an ‘Other registerable interest’, relating to her being a director of Colchester Commercial Holdings. It was confirmed that she could participate in this item, as it did not include any decisions relating to Colchester Borough Homes and would only involve making recommendations to Cabinet.

Councillor Cory, Portfolio Holder for Resources, introduced the report and draft Budget for 2026-27, and confirmed that the Fairer Funding Review carried out by Government had now produced its findings. These had been moderately generous and the Council could now close the Budget gap without having to engage additional efficiencies on top of the savings and income increases identified within the ‘green’ category of the RAG-rated potential savings and increased charges. Another change was towards the potential increase in salary levels, moving from an assumption of a 2.5% pay award to a 3.5% pay award. There would also be a reduction in borrowing need on the Capital Programme.

Wayne Layton, Financial Planning and Budget Specialist, recapped that the earlier draft of the Budget had come to the Panel in December 2025, with the focus now being on the key updates. The Fairer Funding review allocation was now reflected in the Medium-Term Financial Strategy [MTFS], being more positive than originally expected. Savings were still needed and pressures needed to be addressed.

The Union’s position was not known yet, regarding the proposed pay offer, but all local authorities in the East of England were proposing increases of 3.2% or more, with the Council proposing an increase of 3.5%.

The Budget aimed to rebase financing charges, set out the impact of capital receipts and included a reflect the revised HRA Business Plan and Capital Programme. The 30-year HRA Business Plan projected the Council having £9.4m reserves remaining at its end. The Financial Planning and Budget Specialist agreed that the wording in the report, regarding prudency of borrowing, was poor. The Plan demonstrated affordability. £100m was being proposed for spending on increasing housing stock, but only 60% of this would come from borrowing. The Treasury Management Strategy [TMS] sets out how the Council would borrow. The Section 151 Officer must only approve any borrowing if it could be shown to be sustainable and prudent, for each investment item. The TMS covered how the Council would use any surplus funds, and how to invest liquidity, including rules on ethical investment.

It was calculated that reserves would meet the level of 10%-15% of net expenditure by the time local government reorganisation came into effect. The MTFS clearly showed sustainability.

Councillor Sunnucks attended and, with permission of the Chairman, addressed the Panel, praising the progress made since December 2025 but questioning whether the draft Budget was achievable. Councillor Sunnucks stated that the savings schedule in the report did not add up, and urged the Panel to examine it in detail. Points of concern were raised, such as a projected increase in sport and leisure income from £39k to £604k, increases in PCN levels [penalty charge notices] and cemetery fees, and an intended pause to contributions to the repairs reserve for a saving of £395k; Councillor Sunnucks did not believe that Council had a repairs reserve at this time. The Budget was describes as being written in subjective format, which could not be compared to the actual results and projected spending was shown to be £6.4m more than expected income. Councillor Sunnucks requested that the latest financial forecast should be produced in the same format as the Budget was shown in. Councillor Sunnucks stated that staff numbers had increased over recent years and asked what savings had been made on staffing.

The Portfolio Holder for Resources explained that the staffing figures included NEPP and that there had been an increase in the number of joint posts, working in partnership with organisations such as the Health Alliance. This joint working helped to reduce duplication of work. There were also posts funded externally, such as in active travel. Staff numbers had increased but the direct cost to the Council had reduced. The Portfolio Holder conceded that the information could be better set out, to show these explanations. A reduced headcount was now being discussed, losing roles from some services.

The Financial Planning and Budget Specialist apologised for the errors in the savings schedule that had been provided, as the version published was the working copy, rather than the final version. The figures given for sport and leisure income were confirmed, with the figure published showing just the financial benefit from increasing the level of charges. It was agreed that the report should have shown the overall cumulative saving.

A breakdown was given of this year’s use of £4m of reserves. £2.3m had gone into the Northern Gateway Leisure Park work. An anchor tenant would be in place in the coming year. The further spending in this area was laid out and explained, including the ringfencing of a contingency fund. Many one-off projects had been funded from reserves, and so would not appear in the 2026-27 Budget. A ‘Fit for the Future’ [FfF] programme manager had been appointed to oversee its future, with regular review by the Portfolio Holder. It was hard to measure whether there was increased spending on staff, and this could not be carried out purely on FTE [full-time equivalent] figures. Many roles were project-specific and funded accordingly.

Anna D’Alessandro, Interim Chief Finance Officer and Section 151 Officer, apologised for the errors in the information provided and promised that adjustments would be made prior to the Budget coming to Full Council for approval in February. The Budget process had commenced earlier than in past years, due to many uncertainties. Much time had been spent on addressing pressures and savings, with Cabinet and Senior Leadership Board scrutinising these line by line, including opposition groups in this. Savings had been identified to correct and rebase the Budget. It was complex to manage and record savings, which would in future be reported on with quarterly reports to Governance and Audit Committee and monthly reports to Cabinet and Senior Leadership Board. If any savings were found not to be deliverable, then alternatives would be found.

The transparency of the report was praised by a Panel member, who then expressed concern about the proposed £3m spend on IT, in the context of LGR [local government reorganisation] and asked where the costs were coming from. The Leader of the Council gave assurance that the Council was working with LGR in mind, and would need to work within the terms of the Structural Change Order once 2027-28 was reached. Work was underway to share all important decisions across the shadow board. Any large expenditures must fit with expected direction of the coming unitary council and address the interests of Colchester. The Portfolio Holder for Resources explained that the £3m in IT spending would be over a number of years and would include additional cyber security work to prevent system failures or data losses. More details could be provided. A Panel member remarked that the merging of councils’ IT systems would be costly.

A Panel member ventured that the Fairer Funding formula amalgamated all of the old funding streams, but the Budget included a line showing £100k extra income from business rates. Officers were asked if the Council still participated in business rate pooling. The Chief Finance Officer explained that there would be an upside from pooling in the last year, but this had been reducing and would no longer be beneficial, with ECC [Essex County Council] withdrawing from the scheme. The effect would be negative for the Council in the future, so it would no longer participate either. Many funding lines shown in the Budget were now shown as zero, due to the new Fairer Funding allocation and formula. The Financial Planning and Budget Specialist expanded on this to say that work continued on working out the new mechanisms and reconciliations, including on business rates. The assumptions remained the same. Seminars would be provided to show the details.

Assurance was requested regarding building control and trade services, with income projected to increase but for these services where income generation had always struggled. The Portfolio Holder for Resources detailed greater focus on building control and the ability to increase charges because of changes made by Government. Waste Services believe that they have a market which can be pursued. The Council had the ability to engage a ‘no success, no fee’ third party to seek increased income opportunities.

The Financial Planning and Budget Specialist addressed questions about the £300k extra cost from regrading salaries in sport and leisure services. The services employed significant numbers at lower wage levels, including living wage level. An increase in the living wage rate had a ripple effect up the pay scale, with a similar situation being seen in waste services. This may happen again in the future. There was confidence that there would not be issues with pay levels between different Council service areas, as the Council conducted pay negotiations in a collective bargaining process, with scales agree to by the Union. The Head of People would be able to provide greater information on this.

The Chief Finance Officer underlined that the Budget had to be robust, in order for her, as Section 151 Officer, to support it. There was an approach as to how to make savings, and reserves in place in case of the need for mitigations. Some information was not yet available to the Council, such as information regarding future business rates. The Portfolio Holder added that, should the first round of savings and measures to increase income not achieve their targets, he would ask Cabinet to approve further savings measures. Confidence was expressed in the asset disposals planned, and in the contingencies which had been put in place.

A Panel member informed the officers that he did not see how to understand the reserves position at the start and end of the year, or how to see the additions and use of reserves over the year. The Budget assumed savings and increases to income, but would still run a deficit in four of the next five years. The Panel member if the Council would therefore increase in reliance on short-term borrowing, especially if it did not achieve its expected savings or income generation.

The Financial Planning and Budget Specialist noted that Table Three of Appendix A showed only what was to be taken from reserves, but the Finance Team could provide Scrutiny Panel with an overview of movements planned into and out of the reserves. The Chief Finance Officer agreed that there was a high chance that some of the assumptions which had to be made would not materialise, but projections had to be made, whilst ensuring mitigations were in place to provide alternative routes to make savings or increase income. Individual budgets would be monitored via the monthly reporting process, with adjustments made if appropriate.

The Chief Finance Officer was asked if more could be cut, to increase the Council’s room to manoeuvre. The Panel was told that the Council was ‘not running close to the wind’, and detail was given on the reserves and how these could be mobilised, if needed. The situation would be re-examined in the coming year, as the Council proceeded towards LGR; the Council would look again if it needed to find further savings or income.

The Panel considered the section on the Council’s companies, such as Colchester Commercial Holdings. A Panel member stated that it appeared that the Amphora companies were close to the required minimum of 80% of their work being for their parent local authority which allowed them to retain the status of being Teckal companies, benefiting from the related taxation provisions. It was queried as to whether there should be contingencies put in place in case the companies fell below that 80% threshold.

The Financial Planning and Budget Specialist gave assurances that the Council’s companies were not in danger of falling under the requirement for at least 80% of its work to be done for the Council which their Teckal status required. Another Panel member noted that this would be reviewed by the Governance and Audit Committee.

A request was made for an explanation of matters relating to the Northern Gateway cinema agreement. Patricia Barry, Interim Head of Corporate Landlord, laid out the transfer of responsibility of Northern Gateway lettings to the Council in May 2024, from Turnstone. Fit out costs were outlined, with a number of vacant units remaining. The situation with Canada Life was explained.

Councillor Sunnucks, with permission of the Chairman, spoke to ask the Panel to recommend that Cabinet obtained clarity on this year’s deficit and what it would be in cash terms, and that Cabinet should obtain a reserves statement and a savings statement. If this would not be possible in time for the Cabinet meeting, Councillor Sunnucks urged this be done before Full Council in February. An additional column was requested for the MTFF, to show the outturn for 2025-26. The projected £381m debt position at the end of the period was raised.

The Financial Planning and Budget Specialist answered that the savings statement update had already been presented to the Portfolio Holder for Resources and to the Leader of the Council. Reports had also been taken to Governance and Audit Committee on a quarterly basis to show Budget positions. The Chairman noted that the Portfolio Holder had already agreed to provide greater detail on staffing arrangements, including joint roles.

A statement for this meeting had been submitted by Councillor Çufoglu but had not been addressed. The Leader pledged to answer this statement and circulate a copy.

Owen Howell, Democratic Services Officer, requested that the Panel agree to add an item to the agenda for 24 March 2026, for the Panel to approve its annual report for 2025-2026.

A Panel member asked why the Forward Plan of Key Decisions published in the agenda did not show the key decisions relating to asset disposals which had been discussed by Scrutiny Panel on 22 January 2026. The Democratic Services Officer explained that the agenda for this meeting had been published prior to the meeting held on 22 January 2026. The Democratic Services Officer stated that he would raise this matter with colleagues to ascertain when these would be added to the Forward Plan.

RESOLVED that the Scrutiny Panel approves its work programme, subject to the addition of an item to agree its annual report, scheduled for the meeting on 24 March 2026.