Agenda item

Report of the Corporate Director, Resources.

 The Committee received a report which set out updates to the Commercialisation Strategy that was approved by Cabinet in June 2015.  The Committee welcomed the Portfolio Holder for Finance and Major Contracts and the Portfolio Holder for Business, Planning and Regeneration who were in attendance for this item.

The Corporate Director of Resources & Commercial introduced the report and explained that it was of huge importance that the Council investigated how it could bring new streams of income to invest in and support the delivery of priority outcomes across the Council.  The Corporate Director made the following points:

·                     the scope and objectives of the Commercialisation Strategy had been included in the report;

·                     the Council will be part of the Advanced Commercialisation Network at the Local Government Association (LGA) and had been liaising with a number of different authorities;

·                     it was recognised that the Council would have to undergo cultural changes if the aims and objectives of the Commercialisation Strategy were to be achieved.  It was recognised that different skills and knowledge were required by the Council;

·                     when the Commercialisation Strategy had been presented to Cabinet, a number of initial ideas had been included.  For some of these ideas feasibility studies had been produced and some were quite detailed;

·                     it was expected that when the draft budget was produced in December 2015, there would be more information provided on the financial savings which it was expected that these ideas would make;

·                     the Council had taken legal and tax advice and had decided to set up trading entities and a limited liability partnership to deliver the proposals contained within the Commercialisation Strategy;

·                     there were a number of programme activities contained within the Commercialisation Strategy.  These included reviewing the Council’s subsidy position on fees and charges and revising the Council’s trading performance and an ongoing review of service specification levels in major contracts.

The Portfolio Holder for Finance and Major Contracts explained that it was important that the Council embarked on a Commercialisation Strategy given the financial cuts facing the Council.  The Portfolio Holder for Business, Planning and Regeneration explained that it was believed that the options explored in the Commercialisation Strategy would provide income to the Council.

The following questions were raised by Members and responded to accordingly:

·                    there were concerns that the risks involved with the Commercialisation Strategy had not been explored fully.  There were big risks particularly in relation to commercial property and to the skill set that existing staff in the Council had.

There were risks involved in the Commercialisation Strategy but a lot of work had been done in assessing these.  Specific analysis of risks would be included as decisions to progress key areas are brought to Cabinet in the future.  The initial Commercialisation Strategy is high level.  The Council had studied other authorities where commercialisation ideas had worked well and had also studied those were it had not.  There would be business cases for each idea contained within the Commercialisation Strategy before it was commenced and this would involve a full evaluation of risk and financial implications.

·                    Who were the three directors on the Holding Company and how were they appointed?

The Directors of the Holding Company had not yet been appointed.  A recruitment process would be followed. Role profiles for these roles had been developed and before their appointment independent advice would be sought by individuals.  Any successful director appointed would be expected to fully understand their role.

·                    A different set of skills was required by staff working in a commercial organisation than those working in Local Government.  How would this be addressed?

It was realised that there would have to be a culture change in the Council and that skills from outside of the Council would have to brought in to deliver the proposals contained within the Commercialisation Strategy.  However it was also important to recognise that staff within the Council had a strong set of skills and talent which could also be utilised.  This had been demonstrated by the success of HB Public Law.

·                    There were significant concerns in relation to the proposal to the Property Purchase Initiative and the proposal to build homes for rental to private tenants.  This involved a lot of risk and if money was lost this would ultimately be tax payers money.

A Commissioning and Commercial Board would be established within the Council as a result of the proposals.  All key proposals would be put through this Board where risks would be fully assessed and considered.  If specialist advice was required, then the Board would also ensure that this was provided.

·                    Who was responsible for recruiting staff to the Trading Company?

The Council would firstly look to recruit Directors in order to set up the company.  It was then anticipated that the Directors would be responsible for the recruitment of the remaining staff.  It was important to note that the aim was for the Holding Company to be self sustaining so any initial costs which the Council provided would have to be returned.

·                    The Commercialisation Strategy was welcomed.  Could more details be provided regarding the proposal to build more homes to rent to private tenants?

Sites where new homes could be built included the Vaughan Road Car Park and the Waxwell Lane Car Park.  Land close to the Leisure Centre could also be investigated as could the land on the old Gayton Road Library site.  It was anticipated that most of the new homes built would be on Council owned sites although new sites could be acquired in the future.

·                    In terms of advertising banners on the Council’s website, were the Council being selective on the companies that they were choosing?

The Council were careful in whom they selected and balanced this with the need to attract companies to advertise on the website.  The Council had a code which it followed for this purpose.

·                    Could an update be provided regarding the proposed Recruitment Agency?

An assessment on this proposal had been undertaken by an organisation which had done a previous assessment for Kent County Council.  It was believed that Kent County Council was now making £4 million profit on this area so the Council were keen to follow this.

·                    Could clarification be provided on the specific figures that were expected to make up the £5 million savings as part of the Commercialisation Strategy?

The exact figures were not available at this meeting but this figure was the minimum that was expected to be achieved by 2018/19.  Further details on the breakdown of how this would be achieved would be available in the draft Budget in December.

·                    In relation to the Private Rented Sector Housing proposal was it the Council’s intention to maximise its income in renting to private tenants or to build homes that were affordable?

The Council wanted to maximise its income but also hoped to create affordable housing.  It was recognised that some sites lent itself to develop affordable housing and some sites lent itself to maximise its returns on private rental.  Waxwell Lane was an area where the Council would expect to maximise its return on private rental.

·                    Could an update be provided in relation to the proposal to expand the Harrow School Improvement Partnership to other authorities?

This information would be circulated to Members after the meeting.

·                    What was the turnaround time for properties which were void to being re-let?  How did the housing rental collection compare with other boroughs?

There was a programme on voids which was 8½ weeks.  This was in line with other local authorities and the Council always tried to ensure that the turnaround time was kept to as minimum as possible.

·                    If the Waxwell Lane Car Park was let fully and could bring in more income than the proposal put forward, would the Council consider it?

The Council would consider this if this suggested income received outweighed the proposed income.  Trials would also be considered.

RESOLVED:  That the report be noted.