Agenda item

(Strategic Director) To consider the attached financial monitoring performance report for Qualis for the first two quarters of 2019/20.

At the request of the Chairman, the Committee agreed to take this item and the next item on the agenda together.

The Strategic Director, A Small, presented the two Quarterly Monitoring reports for Qualis covering the first three quarters of 2020/21, and stated that he would focus on the report for the third quarter. The emphasis during this period for Qualis had been in completing the loan funding transaction, progressing planning work for the Epping development sites and preparing for the transfer of the Housing Repairs service from the Council to Qualis. Qualis was meeting its obligations under the shareholders agreement, and all but one of the key performance indicators had been met. The Covid-19 pandemic had delayed many of the key actions for both the Council and Qualis, some of the originally planned targets had slipped, and the pandemic had affected values and capital markets, but good progress was now being made. The next quarter would be different as key asset acquisitions and further service transfers would take place, and future monitoring reports would reflect this.

Councillor M Sartin enquired whether local companies had been secured to fulfil the various roles outlined in the report? The Chief Operating Officer, N Dawe, stated that Qualis had required an audit company with the necessary skills and experience but the auditors engaged were a local regional company. Legal support was temporarily being provided by a non-local company, but it was the intention for Qualis to use local companies in preference wherever possible.

Cllr J H Whitehouse referred to the options for the re-provision of a Leisure Centre in Epping, and queried when would the decision be made regarding the provision of a Sports Hall in the new Leisure Centre? The Chief Executive, G Blakemore, stated that the next stage of public consultation for the Epping development sites, including the Leisure Centre, would begin in early November. The Leader of the Council, Cllr C Whitbread, added that the responses for this next stage of the public consultation would inform the resulting planning applications for the different sites. Cllr S Murray was concerned that the residents of Epping could be disappointed if the replacement Leisure Centre did not contain a Sports Hall, and the Board of Qualis needed to take note of this. Cllr D Wixley also commented that he hoped a Sports Hall would be included; N Dawe reiterated that a decision had yet to be taken.

Cllr J M Whitehouse enquired whether Qualis would continue to own the proposed new Leisure Centre in Epping or whether it would be leased to the Council? N Dawe reminded the Committee that the current Leisure Management contract with Places for Leisure gave them the right to design and build the new Leisure Centre, and this was the subject of ongoing discussions. No commercial decision had yet been taken over whether to purchase or lease the new Leisure Centre.

Cllr S Murray went on to enquire if Qualis would also consult with the recognised trades unions as part of the staff consultation plan for the transfer of the Housing Repairs service? A Small responded that the law required meaningful consultation and so it would involve the recognised trades unions. Cllr D Wixley commented that he hoped the Housing Repairs staff would not be disadvantaged as a result of their transfer, but A Small reassured the Councillor that they would retain their existing benefits under the TUPE regulations.

Cllr D Wixley wanted confirmation that the Pyrles Lane Nursery had been purchased by Qualis. N Dawe reminded the Committee that the Nursery site at Pyrles Lane had originally been the subject of a conditional offer to purchase by a third party, but this had been withdrawn. A Small added that the Council would lend funds to Qualis to purchase this and other sites, and would earn interest on those loans. It had not been part of the first batch of property assets to be transferred to Qualis. Cllr D Wixley also asked for the neighbours to be taken into consideration when the site was developed as their back gardens all backed onto the Nursery site. N Dawe acknowledged that it was a difficult site to develop but Qualis would be mindful of the neighbours, as indeed it would be of any site within the District that it developed. Cllr D Wixley also enquired whether the management of private rented properties in Loughton referred to in the report related to the Council-owned properties in the High Road? N Dawe confirmed that this related to the residential properties owned by the Council in Centric Parade.

In response to some questions from Cllr I Hadley, N Dawe stated that Qualis would provide any information required by the Council as a shareholder, and that A Small had been appointed as the intermediary between the Council and Qualis. A Small added that the Council had considerable control over Qualis through the Shareholder Agreement, including unfettered access to their accounts, and was content that there was sufficient access to Qualis information for the Council.

Cllr D Plummer wanted confirmation that any Council housing built through Qualis would not be subject to Right-to-Buy? N Dawe replied that none of the proposed  property transactions had an envisaged future sale in terms of social housing. The sites were more likely to consist of privately rented properties, but would provide some affordable housing. Cllr Plummer was disappointed to hear this as he felt that the District needed more social housing throughout the District.

Cllr J M Whitehouse requested further clarification regarding the purchases yet to be actioned referred to in the report for quarter 3, and whether the forecast shortfall in income for the Council of £1.6million represented interest payments for loans already agreed for Qualis. N Dawe explained that the search for potential investment properties began in March 2020, and several have been examined. The first purchases should be actioned by the end of October, although it generally took 6 to 8 weeks to complete a purchase, which would hopefully give a yield of 7%. N Dawe confirmed that the shortfall in income to the Council represented lost interest payments.

Cllr H Whitbread, the Portfolio Holder for Housing & Community Services, reminded the Committee that the Council had a successful Housebuilding Programme in the District, and was considering further ways of assisting people to own their homes. In addition, the first few weeks following the transition of the Housing Repairs staff to Qualis had been successful with more repairs being undertaken by staff for tenants.

            Resolved:

            (1)        That the Qualis Quarterly Monitoring reports for quarters 1, 2 and 3 of             2020/21 be noted.