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The Chairman introduced this item, describing the original intention to sell the land for housing, office space and community facilities. The concerns of some members were described, with some believing that the Council was not proceeding quickly enough, leading to additional debt servicing being required. The Chairman explained that the report and subject involved commercially sensitive information and explained his intention to start the discussions in public session for transparency.
Comments from the Panel included the welcoming of additional social housing, alongside the wish to maintain current walking and cycling links between existing housing and the Northern Gateway site. Councillor Mark Cory, Portfolio Holder for Resources confirmed that the routes were in place and completed, with the site development to maintain the open space and active transport routes for existing and new residents. Boreholes were in place, ready for the energy scheme to progress once homes and businesses were in place on the site and ready to connect.
Panel members discussed the nature of the decision, and whether the Council should be a small operation, only carrying out statutory duties, or to do more to improve the local situation. A Panel member stated that the opposition had proposed selling the site, ending the Council’s investment in housing and removing millions rom the housing budget. There was a concern that, should the site be sold to private developers, it could be land banked, or arguments made that affordable housing requirements would make development unviable. The Panel member argued that there were ethical, moral and financial reasons for the Council to proceed as proposed in the report. An increase in houses to rent would lead to the Council having to spend less on temporary accommodation and would increase the chances for households to move from temporary accommodation into more stable housing.
With permission of the Chairman, Councillor Dundas addressed the Panel as the elected member who had requested this item be considered. Northern Gateway was described as being the largest project taken on by the Council for years. Councillor Dundas stated that published figures indicated that total costs and losses had amounted to £4-5m in 2024-25, which constituted 28%-33% of the Council’s total tax take. Discussions had been held publicly with Councillor King, Leader of the Council, over the scale of the calculated losses. The Leader maintained that costs were between £1.8m and £2.5m per year. Councillor Dundas stated that the Council’s Section 151 Officer had agreed with his [Councillor Dundas’s] figures, but Councillor Dundas added that he was content to use the lower figures at this meeting, to save disagreement.
The original scheme was described by Councillor Dundas as not being a bad idea a decade ago and was described. Site sales were planned to pay off short term loans. Since then, £30m of debt had accrued, with no housing built as yet and interest payments coming out of the revenue budget. The Conservative Group had advocated for the sale of the site, to allow more cash to be put into service provision. The Council’s administration had now accepted the need to sell the site. Councillor Dundas told the Panel that it was being asked to scrutinise how the decision had been taken as to how the site should be sold, how the purchaser was to be chosen, who it would be marketed to and whether it was best to restrict the site to use for affordable housing. Evidence was requested as to whether sale for 100% affordable housing was the best option.
Questions were asked by Councillor Dundas as to what type of development and density was being sought, whether new planning applications would be needed and whether the proposals were in line with Council policy to pepper-pot affordable housing with other housing types. Officers were asked if all housing built would be available to people on Gateway to Homechoice, asked to provide information on the junction works that had been proposed and whether the Panel had received the legal advice as to whether the Local Government Act might have been contravened by the actions proposed. Councillor Dundas proposed that, although advice given said that marketing for 100% affordable housing was permissible, the Council still needed to show evidence to support its approach and ensure competitive tendering. Councillor Dundas asked why this approach had been chosen, prior to the date of the legal advice being given, what had happened regarding the heat network and whether the new housing would have boilers or heat pumps.
The Portfolio Holder for Resources explained that the recent press release issued had been about approach taking, and not to say that the Council had gone to the market and found a provider. The situation was not as advanced as it had been made out to be. The Members’ Estate Group had examined the process and financial figures, with the corporate landlord model meaning that there was more engagement with councillors. The Portfolio Holder argued that the best way to address costs would be to get development going on the site, which would be most quickly done by a housing provider due to availability of grants and greater market drivers for the rental market. Relevant secondary costs for consideration included the high cost of temporary accommodation, being the Council’s biggest current budgetary pressure. The increase in new housing would help to address the loss of stock via right to buy, but there was an increase in households presenting as homeless. If these households could not be housed locally, they might be housed in hotels where funding did not meet the cost of the accommodation. New rental properties on the Mill Road site were intended to be offered to people registered on Gateway to Homechoice, to prioritise local need.
Councillor King, Leader of the Council described the number of households waiting for settled accommodation, involving hundreds of children and many adults in hard situations facing years of uncertainty. There was a huge social cost to this situation and high costs from use of hotels and Bed and Breakfast accommodation. Moving households to permanent housing would reduce costs, help key workers and assist people into homeownership.
The site had been invested in, which had involved a cost and interest to be paid, but the sale of parcels of land would enable substantial recovery of the investment and would benefit local health and wellbeing, in line with Council policy. The aim was to provide good places to live. The Portfolio Holder added that the site would not just be for social housing. Research had shown that there was not much financial difference to the Council between selling to a housing provider or a private developer, and by working with a housing provider the Council would get good value and good housing.
Councillor Naylor attended and, with permission of the Chairman, addressed the Panel to urge it to scrutinise the decisions made on behalf of all residents, not just those experiencing homelessness, and to ask whether taxpayers’ money was being spent correctly. The Panel was urged to conduct its discussions in open session for as long as possible. Councillor Naylor argued that significant numbers of families would now have been housed if the original plans gone ahead, increasing housing and lowering Council costs and the monthly interest payments on debt. Councillor Naylor stated that many non-homeless families were struggling and that taxpayers should not be asked to foot costs from the site. The Portfolio Holder was asked why legal advice had not been commissioned prior to the decision as to how to market the site.
The Portfolio Holder replied that much works were needed to the site, including junction work. The Council had endeavoured to decouple highways works from the development needs; this could not proceed quickly. The economic situation over the past five years had prevented delivery on the plans, with financial backers not coming forward. The plan was ongoing when the now Leader of the Opposition, Councillor Dundas, had been Leader of the Council. A mix of business and residential had been planned, but there would be less business now that the market had changed.
The Portfolio Holder reiterated that there would not be a huge disparity between what housing providers and private developers would pay for the site and asked for the matter to be depoliticised and considered in a balanced way. The Leader noted that it would not be routine for third-party legal advice to be sought, but allegations of illegality had been made, leading to this independent assurance to be sought. Officers could defend the value generated.
A Panel member stated that it was not their intention to seek a reduction in the amount of affordable or social housing produced but questioned why the site was not to be put out to the open market and why the Council could not seek affordable housing elsewhere instead, such as where office construction had originally been planned. The original planning permission for this site required at least 30% affordable housing, and the Portfolio Holder was asked why there was now a requirement being set of 100% affordable housing on this site. The Panel member argued that the quickest delivery option would be to sell to a private developer with the existing planning permission in place, arguing that insisting on 100% affordable housing would require a major redesign. The view was given that a social housing landlord would not give the best value, and that private developers showed this.
The Portfolio Holder explained that the planning permission in place was only an outline planning permission, so it would always have been the case that a detailed planning application would then need to be submitted for any development. A soft test of marketing was carried out and the results of this were to be shown in the confidential presentation later in the meeting. The value and housing delivery would be shown, with housing providers assessed to be able to deliver housing more quickly, being able to obtain grant funding and accelerated government funding for projects of this type. Latimer Clarion Group had shown that such a development can increase the site value at the same rate or faster than a private developer.
The Portfolio Holder was asked why Government would give grants to housing providers, and especially in regard to this site. The Portfolio Holder explained that housing infrastructure grants were available for housing delivery, with the Government wanting more affordable housing built. If the Council were to proceed with a private developer and go against the criteria of existing grant funding, there would be the risk that grants would have to be repaid if or when the site was sold off. A view was given by a Panel member that this should have been confirmed prior to the decision to restrict the site marketing to only housing providers, to ensure that original grants would be secure, and ascertain what new grants would be possible.
Officers were asked how the site value could be known if it wasn’t being marketed without restrictions on who could bid. Patricia Barry, Interim Head of Corporate Landlord, emphasised that the Council was not selling the site at an undervalue. Open marketing was to be carried out to the social landlord sector without offering discounts. A private developer would, at most, provide only 30% affordable housing. Such developers often did not even achieve that level across the UK. The value in this site was not only in the capital receipt, but also in the mitigation of costs from the current housing situation and demand for temporary accommodation. Lee Rainforth, Major Projects Director, explained the soft market testing, with informal bids received. The data showed that marketing to housing providers produced benefits greater than the soft marketing to private developers. A range of informal offers had been received and taken to the independent consultant who had confirmed that they were relevant and deliverable. The officers highlighted the difference between getting best price and best overall value to the Council, confirming that this was legal and standard practice, and not in contravention of Section 123 of the Local Government Act 1972.
A business case was requested by a Panel member, to show that the proposed marketing of the site would not undervalue the site by more than £2m. The Panel member stated that they had not seen what was asked of the Council’s legal advisors in order to produce their advice and suggested that the Panel could make a resolution calling for all correspondence with the Council’s external legal advisors to be produced for its consideration. The Cabinet members and officers were again asked why the site would not be marketed to all potential buyers, with the Portfolio Holder reiterating that housing providers would give best value and quickest delivery of housing. The Leader of the Council explained that the legal advice, which had been shared with Panel members, was in regard to the value of the site. When the decision on site sale came to be taken formally, this could be sent first to Scrutiny Panel for pre-decision scrutiny. There was no suggestion that this was improper, and would be subject to formal scrutiny. The Interim Head of Corporate Landlord confirmed that the questions put to the Council’s legal advisors could be provided to the Scrutiny Panel, if requested. The statement and questions which had been submitted to the Chairman of the Panel by Councillor Dundas had been put to the Council’s independent legal counsel, who had replied with the advice that had been provided to the Panel prior to this meeting.
The Interim Head of Corporate Landlord laid out that a housing provider could develop a minimum of 350 units of affordable housing, whilst private developers would produce around 110 at best. None of the private developers approached by the Council was willing to engage in a full site purchase, with all demanding shared development, with the risks borne by the Council.
RESOLVED that this item be further considered in confidential session, under Part B of the agenda.
The SCRUTINY PANEL resolved under Section 100A(4) of the Local Government Act 1972 and the Local Authorities (Executive Arrangements)(Meetings and Access to Information)(England) Regulations 2012 to exclude the public from the meeting for the following item as it involved the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A to the Local Government Act 1972.
[The record of the further consideration of this item is recorded as confidential minute 516.]