My Sunday afternoon has been spent reading the agenda and reports relating to next Tuesday’s Companies Committee. On the off-chance that some SK residents are interested in how millions of pounds is being squandered or invested, I have put together this short summary about the council’s growing portfolio of Local Authority Owned Company (LACC).
Gravitas Housing Ltd
The first ‘Shareholders’ meeting’ about setting up SKDC’s first LACC took place in October 2016 and in January 2017 we decided on a name and a purpose for the company. The name would be ‘Gravitas’ and Members agreed it should focus on new build developments.
Since then, the company has completed only one project comprising 25 dwellings at Wherry’s Lane in Bourne. Only 5 of these dwellings have so far been sold and therefore the company has not yet returned its investment; nor has it ‘disrupted the housing market’ as was hoped; nor does it have any other projects currently in the pipeline.
The Shareholders Committee has been replaced by the Companies Committee and the Chair of the latter has described the progress of Gravitas as “moving at a glacial pace”.
Until July 2020, Gravitas had three Directors, all of whom were Council employees. Long-suffering member of the council’s Finance team, Mr Richard Wyles, has served since 2017 and he was originally on the ‘Board of Directors’ with Steve Ingram and Tracey Blackwell. In the summer of 2018, Steve and Tracey left the council, with significant financial settlements (aka pay-offs) and consequently resigned as Directors of Gravitas Housing Ltd. They were replaced by the recently appointed Assistant Director for Growth, Jane McDaid and the recently appointed Assistant Director for Housing, Harry Rai.
Skip forward to July 2020, two years almost to the day since they were appointed, and Jane and Harry resigned as Gravitas Directors because they too had been encouraged to leave the council, probably with significant financial settlements (aka pay-offs). This has left Richard Wyles as the sole current Gravitas Director.
On Tuesday, the Companies Committee will be asked to appoint three new Directors to the Gravitas Board: Council Leader, Coun Kelham Cooke (Con); Deputy Leader. Cllr Barry Dobson BA Hons (Con); and Strategic Director for Growth, Mr Paul Thomas. According to the Committee report: “These proposed appointments will bring the political and professional strategic support to enable Gravitas to successfully deliver the Wherrys Lane development and bring forward a pipeline of strategic housing development proposals for Committee consideration”. Only time will tell.
The failure of Gravitas to deliver housing at pace has been noted and so rumours have started about an intention to set up a new Company to focus on the delivery of affordable homes in the District. This would be Homes SK.
Unfortunately, the proposed brief and purpose of Homes SK has not been published anywhere in the public domain. Companies Committee were due to hear about it this week but on Sunday evening we were sent an e-mail stating: “It has been agreed with the Chairman of the Committee that the HomesSK item (Item 9a) on the agenda for Tuesday’s meeting of the Companies Committee will now be considered at the following meeting”. So, I guess we’ll have to wait a bit longer.
This is another Council company which doesn’t exist yet. It was an idea that the Council’s previous leader had brought with him from Peterborough and was based on the idea of the council forming a company (an LLP) with a wealthy investment company in order to bankroll a series of joint ventures.
It was reported with much fanfare in December 2018 that, after a competitive process and ‘informal cabinet’, the private sector partner had been chosen and was to be IAG Holdings which was an investment company based in Guernsey and, entirely coincidentally, the same partner engaged by Peterborough City Council on a similar wheeze.
There followed a period of virtual silence on the matter until 30 June 2020 when a holding report sent to Companies Committee explained some of the problems concerning IAG Holdings. Apparently, discussions had progressed with IAG during the course of 2019, during which it transpired that the company that would be entering into the partnership was not IAG but was in-fact a subsidiary of IAG; namely IAGH3. The Companies Committee of 30 June was informed that the change in proposed partner would require a new Non-Key Decision and necessitated due diligence on the new entity. The Committee was promised “a report at its next meeting setting out options and recommendations as to establishing DeliverSK”.
The report has indeed been circulated prior to the meeting but sadly, the entire report and its appendix has been been classed as ‘restricted’ and therefore printed on ‘pink papers’ which means that I am not allowed to tell you what is proposed relating to DeliverSK.
What I can tell you is that the Council had already incurred £90k costs in trying to establish the appropriate governance and operating structure for DeliverSK. This is broken down as: £34k to Peterborough City Council; £6k to KPMG and £50k to Pinsents.
In my opinion, the main reason why the DeliverSK report has been restricted is to prevent embarrassment of the former and existing Conservative Cabinet members responsible for the incredibly slow and uncertain progress of DeliverSK over the last two years.
The decision to bring grounds maintenance services in-house was taken at the end of the council’s contract with Glendale Services. There were a number of problems with the contract with Glendale including 1) it was quite inflexible and required a contract variation notice everytime the company was asked to adjust it’s mowing regime. This limited any creative ideas like rewilding or extra cuts; 2) although branded ‘Glendale Local’, the company was actually based in Cheshire and, at one stage, were sending resources from Doncaster to cut the grass in Deeping St James. For these reasons, and on a point of principle, I supported bringing Grounds Maintenance in-house.
Forming another LACC, rather than simply putting grounds maintenance staff on the council payroll, has its pro’s and con’s. One ‘pro’ is flexibility with regard to staff – it was mentioned at the time that EnvironmentSK was being incorporated that it was very difficult for the council to engage on incentive packages such as performance-related pay. However, there is also a big ‘con’ in that a LACC is much more difficult to hold accountable.
For example, at a recent SKDC Cabinet meeting, it was noted that SKDC refuse collectors were the poorest paid in Lincolnshire and consequently it was agreed that they should be given a pay-rise. I asked a question about whether grounds maintenance staff were being paid fairly by EnvironmentSK. The Cabinet Member for Environment, Cllr Peter Moseley (Con), responded “The salaries paid by ESK are a matter for ESK Ltd and not for this Council and they are paid in line with what the market allows”. Yes, even though EnvironmentSK Ltd is owned entirely by SKDC and, by law, at least 80% of it’s activity is delivering services to SKDC, the Conservative Cabinet Member believes that the terms and conditions of the staff are not a matter of concern to the council.
At the last Companies Committee, the Directors of ESK submitted a half-hearted and heavily redacted Business Plan. The Chair of the Committee rightly chastised them for not taking the committee seriously. One member of the Committee also criticised the ‘pie-in-the-sky’ nature of the content of the business plan. In his words: “You could drive a 40 footer through the holes in its logic and the numbers were fanciful”.
In its first published accounts, EnvironmentSK Ltd reported a loss of £133,702. A revised and more detailed business plan will be presented to Companies Committee this week. Once again, it will not be released in the public domain but, without breaking confidence, I can tell you that ‘pie-in-the-sky’ figures are still there.
Tuesday’s Companies Committee will also discuss an ‘Update on InvestSK’. Regular readers will know that, from the outset, I have had concerns about the lack of accountability and transparency of InvestSK. The last (and only) time it was seriously considered at Companies Committee, the Chair said the business plan was full of fluffy and flowery targets.
In recent weeks the Chief Executive of InvestSK has left the organisation, probably with a significant financial settlements (aka pay-off). Steve Bowyer was yet another member of staff who followed Cllr Lee up the A1 from Peterborough to Grantham.
After a lot of e-mails ‘to and fro’, I now have confirmation from the council’s Monitoring Officer that InvestSK should be subject to the same transparency rules as the Council so I can freely report that InvestSK has given £50,000 to a dance school in Grantham and £150,000 to a consultancy for a single project. Obviously, this doesn’t match the £280,000 recently given to Mace consultancy by SKDC but it’s still a lot of money.
The Directors of InvestSK are the Leader, the Deputy Leader and the Chief Executive of the Council. For a brief period, Paul Thomas was also a Director until I pointed out, on 13th August, that he was the person who was supposed to be managing the ‘contract’ between SKDC and InvestSK and he couldn’t act as ‘both poacher and gamekeeper’. On 14th August, Cllr Cooke e-mailed me to insist that there was no conflict of roles but, on 18th August, Mr Thomas resigned as a Director of InvestSK – Read into that what you will!
As far as I can ascertain, SKDC has set no targets for InvestSK and the whole relationship exists on the basis of ‘make it us as we go along’. This flexibility is handy at times of emergency, e.g. a global pandemic, but generally it’s not a healthy way to do business. The InvestSK LACC is supposed to be managed as rigorously as any contract with an external company but I hope we don’t just hand millions of pounds to our external partners in the same cheery way we do to InvestSK.
This is the latest proposed addition to the SK family of companies which has been discussed at Cabinet, at Culture Overview and Scrutiny Committee and will be discussed again on Tuesday at Companies Committee.
I am not supposed to tell you anything else about it because all the committee papers are restricted. However, somehow these rules of secrecy do not apply to the SKDC press office who have been permitted to tell all the local media about Leisure SK! As Deepings Nub News reported:
South Kesteven District Council is bringing the management and operation of its four leisure centres back in-house. The council says this will give it greater flexibility on how the leisure facilities are managed and potentially accelerate SKDC’s leisure improvements programme.
If you’ve made it this far through the blog, I admire your tenacity. Please consider liking the post and sharing the post if you know anyone else with an interest in local authority accountability.
In my opinion, the main reason why so much of the information relating to the council’s wholly owned companies has been restricted is to prevent embarrassment of the former and existing Conservative Cabinet members responsible for the incredibly slow and uncertain progress over the last two years. The current culture of secrecy and constant restriction of Council reports undermines public confidence in the council. It is time for Cllr Kelham Cooke to deliver on his promise of “a more open, transparent and collaborative style of council that welcomes constructive challenge”.