Showing posts with label Brent Scrutiny Committee. Show all posts
Showing posts with label Brent Scrutiny Committee. Show all posts

Thursday 22 December 2022

‘Tis the Season to be Sneaky! Is Brent trying to award the c£100m Wembley Housing Zone contract without scrutiny?

 Guest post by Philip Grant in a personal capacity

 

The location of the two Wembley Housing Zone sites.

 

If you’re a regular reader of “Wembley Matters”, you will be aware of Brent’s often repeated statements about the urgent need to build more Council homes for the families in temporary accommodation and on the waiting list. They are used to justify the Council’s often unpopular “infill” plans for some of its housing estates, and by Brent’s planners to justify recommending applications that breach some planning policies, and are seen by many as overdevelopment.

 

You will also be aware of Brent’s promise (and Labour Group election pledge) to build 1,000 genuinely affordable Council homes in the five year period ended 31 March 2024.

 

If you’re a regular reader, you will have seen at least some of my previous guest posts about Brent’s Wembley Housing Zone proposals. These include building 250 homes on the Council-owned brownfield site of the former Copland School building at Cecil Avenue. If they had got on and built them as soon as they had full planning permission in February 2021, that could have contributed a quarter of the 1,000 homes target. But as a result of a Cabinet decision in August 2021, 152 of those new homes are to be built for private sale at a profit by a “Developer Partner”. 

 

Title page to the Report which Cabinet approved on 16 August 2021.

 

For much of 2022, I tried to get this (what appeared to be an odd) decision properly scrutinised, but that was finally scuppered by the Chair of the Resources & Public Realm Scrutiny Committee (acting on whose instructions?) in September. Now there appears to be an attempt by those in power at Brent Council to stop any scrutiny of the actual award of the contract for the Wembley Housing Zone scheme.

 

This will be a very big contract, likely to be worth in excess of £100m. Brent advertised in April for expressions of interest from contractors for this, and they had to respond by the end of May. In November, Cabinet were informed that progress had been made, but the details were hidden away in an “exempt” appendix to the Report.

 

Extract from the November 2022 “Update on the Supply of New Affordable Homes” Report.

 

Then, in the past few days, an item appeared on the Forward Plan page, saying that the decision to award the contract, to be Brent’s Developer Partner for the Wembley Housing Zone scheme, would be made this month, under ‘urgency procedures’!

 

The Forward Plan entry from Brent Council’s website.

 

As Brent has been working towards this decision since August 2021 (in fact, long before that) and the contract procurement process has been going on for over six months, why was it urgent and what are those procedures? There are some clues from the document, dated 12 December, that was provided in a “link” from that Forward Plan, which I will ask Martin to attach a copy of at the end of this post, for general information.

 

It appears that there are various degrees of urgency. Normally, at least 28 clear days’ notice of a Key Decision has to be given. In this case, although it would be less than 28 days, it was planned to be ‘at least 5 clear days’ notice.’ The decision would be made on 19 December.

 

Extract from the Urgent Key Decision form.

 

If it had been less than five days, the Chair of a Scrutiny Committee would have ‘to agree that the decision is urgent and cannot be reasonably deferred for the reasons detailed ….’  But as it was ‘at least 5 clear days’, ‘the Scrutiny Chair is only required to note that the decision will be taken.’ In other words, there would be no scrutiny of whether or not the decision was actually urgent.

 

According to the Urgent Decision form, 28 days’ notice could not be provided because: ‘Conclusion of the contractor developer partner procurement was delayed.’ But Council Officers have been working on that procurement for months, and would have known that a decision on it would be required at some time in the near future, so notice could surely have been given earlier.

 

And the reason why it is ‘impractical to defer the decision to a later date’ is said to be ‘to meet delivery timescales and funding conditions.’ With the delays which have already occurred since Brent first entered into its Wembley Housing Zone agreement with the GLA in 2015, delivery timescales don’t seem to have been much of a priority before. As for funding conditions, the Council must have been aware of these ever since funding agreements were made (at least 15 months ago for the extra £5.5m the GLA agreed to offer).

 

As at 6.30pm on Wednesday 21 December the formal decision has not been published on the Decisions page of Brent Council’s website. Perhaps it will be published on 22 or 23 December. But why would Senior Council Officers (and the Cabinet member responsible for this project, who is the Lead Member for Regeneration, despite this being mainly a housing development) delay making the decision, and giving the intention to make it so little publicity, until just before the Christmas / New Year holiday period?

 

Why Call-in matters, from Brent’s Protocol on Call-in.

 

I’ve said before that those behind this controversial Wembley Housing Zone project want to avoid any scrutiny of it. The award of the contract is a Key Decision, so could be called-in for scrutiny. I may be wrong, but I suspect that the decision is being made now to minimise any chance of a call-in. For call-in to take effect, at least five backbench councillors (non-Cabinet members) need to request that a Key Decision is called-in, and they need to do so ‘within 5 days of the date on which the record of the decision is made publicly available.’ 

 

How many councillors, if they were not aware that this important Key Decision was about to be made (because the usual 28 days’ notice has not been given) would be looking at the Decisions page on the Brent Council website over the holiday period? And even if any of them were keeping an eye on it, what would be the chances of organising five members to complete and submit call-in request forms before the end of the fifth day?

 

That’s the main reason I’ve asked Martin to consider publishing this guest post – so that this Festive Season is not used as a cover to sneak through a Key Decision without anyone realising that has been done until it is too late!

 

Philip Grant 

 

Monday 22 August 2022

New Homes at 1 Morland Gardens – but not the ones Brent promised! Has Brent Council shot itself in the foot?

Guest post by Philip Grant in a personal capacity


 

In January 2020, Brent’s Cabinet approved proposals for a new adult education college, and 65 affordable homes, on the site of the existing Brent Start building at 1 Morland Gardens in Stonebridge. They delegated authority to make all the Key Decisions for this project to the then Strategic Director for Regeneration (in consultation with a Lead Member). His report told them that work on the new building should be completed by the summer of 2022:-

 

Morland Gardens “Delivery Timetable” from the report to Cabinet, January 2020.

 

In fact, the scheme had already been informally approved by the Leader, and then Deputy Leader and Lead Members for Education and Housing, at a meeting with the project team in February 2019. Then they were told that 89 new homes could be built on the site. That number was later reduced to 65, as even Brent’s planners would not agree that the impact on neighbouring residents (loss of light, etc.) of the 89-home design would be ‘acceptable’.

 

The proposal had started off in 2018 as an updated college and some new housing. The original design by the architects would have retained the locally-listed Victorian villa, and developed the site in phases, so that there was no need for Brent Start to by decanted. There was a viable alternative to the scheme which the Cabinet approved. However, it seems that the Council were determined to build as many new homes as they could on the college site, even though it meant demolishing a valuable heritage asset their own policies promised to protect, and that was the first of many mistakes they have made on this project.

 

Architect’s image of the proposed new building (viewed from across Brentfield Road).

 

In August 2020, the Council controversially obtained planning consent for the development, despite strong local opposition. It was soon celebrating its “award winning” Morland Gardens scheme, and the 65 new homes it would deliver. Two years later, there are new residents at 1 Morland Gardens, but in the original building, not the new one pictured above. 

 

The Brent Start college was moved out earlier this year to a “temporary home” in the former Stonebridge School Annexe. (The adaptations to the annexe cost at least £1.2m, and the building will be demolished once the college leaves, as it is on the site of Brent’s Twybridge Way 67-home housing scheme, which was given planning consent in May 2020, and should be nearing completion now!) That left 1 Morland Gardens vacant.

 

What do you do with a large empty building, when the catalogue of mistakes you’ve made means that you are still not ready to go ahead with its redevelopment? In May 2022, Brent contacted Live-in Guardians, and by early July this organisation was housing mainly young single people in the former college building.

 

An Instagram advert for Live-in Guardians at 1 Morland Gardens, July 2022.

 

I was first aware of Live-in Guardians (“LIG”) there when I attended a site meeting with Brent’s Project Manager on 26 July, to discuss my objections to the proposed Stopping-up Order for the highway outside the property. There was a sign on the gateway to say that they were providing live-in protection for the building, and a resident would not let us enter because the Officer had not arranged access in advance. 

 

I’m interested in all aspects of the Morland Gardens project, so I put in an FoI request for a copy of the Council’s agreement with LIG. This has been supplied to me, and as live-in guardianship is an idea which may be of wider interest, to single people (or couples) in need of an affordable short-term home as well as to property owners, I will include some information and extracts from it below.

 

The opening paragraphs from Brent’s agreement with LIG.

 

These “new homes” would not be for people on Brent’s housing waiting list, so who were they for? The agreement says that up to 26 “Guardians” would be provided with accommodation at 1 Morland Gardens, and gives details of the type of person and how LIG selects them.

 


It sounds from this extract that the Guardians living here will be people who do need relatively inexpensive accommodation, at a stage where they are not in a position to rent or buy somewhere more permanent. But how long can they stay in the building?

 


The paperwork makes it clear that the Guardians only have a licence to occupy the premises, subject to the right to 4 weeks’ notice to leave after the 26-week contract period. Their legal status is explained to them on the LIG website.

 

From the LIG website.

 

1 Morland Gardens has been used as a college since 1994, when it was sympathetically designed around the restored Victorian villa. Turning it into living accommodation would require some alterations, but as part of the agreement LIG paid the initial fit-out costs, for things such as installing a kitchen, 4 extra showers, and carrying out all of the necessary safety checks. The cost of this work was estimated at up to £17k.

 


It appears that Brent is getting a good deal out of allowing Guardians to live at 1 Morland Gardens. The Council would not have to pay a security company to look after the vacant property. The only expenses they would incur during the contract period would be the Council Tax or Business Rates, and any repairs or maintenance which the agreement made them responsible for. And, at any time after the 26 weeks, they could get vacant possession of the building and land within its garden walls by giving only four weeks’ notice.

 


I have to say that I approve of Brent’s decision to allow 1 Morland Gardens to be used for providing temporary accommodation, rather than remaining empty after they had moved the Brent Start college out of the building. The presence of Live-in Guardians will hopefully prevent the beautiful heritage building from being vandalised (and among the potential vandals, I include Brent Council and the contractors it has recently hired, perhaps unlawfully, to demolish it!)

 

1 Morland Gardens, the former Brent Start college, June 2022.

 

Another reason why I like Brent’s agreement with LIG (although, on refection the Council may regret it) is that the 26-week period will last until at least the end of December 2022. At a Scrutiny Committee meeting on 9 June, Brent’s Strategic Director for Regeneration justified the urgent award of a c.£38m contract for the Morland Gardens development on the grounds that if work did not begin on site by August ‘the Council stood to lose the £6.5m GLA grant towards affordable housing.’

 

The site is in two parts. They can’t build on the land outside, because there are open appeals against the proposed Stopping-up Order. Now they can’t begin any work inside the boundary, because that is legally occupied by Live-in Guardians. Brent can’t “start on site”, within the terms of their GLA grant agreement, this month (or this year), because they have no site to start on! 

 

Philip Grant.

Thursday 4 August 2022

1 Morland Gardens – Brent’s new contract is lawful, says Council.

 Guest post by Philip Grant in a personal capacity


Altamira” and the community garden - a rare traffic free moment at Hillside, July 2022.

 

Last month, Martin published a guest post I had written asking whether or not the new contract Brent proposed to award - for the demolition of the heritage Victorian villa, “Altamira”, at 1 Morland Gardens, and construction of a new college facility and flats – was unlawful.

 

On 18 July I wrote to Brent’s Legal Director, questioning whether the proposed contract complied with the Public Contracts Regulations, 2015 (“PCR 2015”). I also questioned whether the requirement in Brent’s own Contract Standing Orders (“CSOs”), that Cabinet had ‘received and considered a report setting out all the relevant information’, before they authorised the Strategic Director to make the award, had been followed.

 

I received the Legal Director’s response on 1 August. As I believe in openness and transparency in my dealings with the Council on important issues, especially where other residents have shown an interest in the matter (and thank you all for that interest), this is what she wrote:

 

‘I have now had an opportunity of liaising with Officers and will seek to address the issues you raise in your email.

 

I would confirm that reference in my previous email to Regulation 33(8) of the Public Contracts Regulations 2015 (PCR 2015) was indeed to Regulation 33(8)(a) and that when inviting a single contractor to bid from the Network Homes Contractor Framework (Framework), the Council complied with its obligations under Part 2 of the PCR 2015 in accordance with Regulation 37(6)(c).

 

I note you indicate: 

 

None of this was actually made clear in the Officer Key Decision Report, which the record of the Key Decision confirmed it had relied on (‘the report sets out the reasons for the decision.’).

 

Whilst the Officer Key Decision report does not expressly refer to the particular Regulations referred to above, paragraph 3.5 of the report does indicate:

 

In accordance with the Framework’s rules for a direct award process, the council identified Hill Partnership Ltd as the framework bidder that demonstrated best value for this opportunity.

 

Paragraph 5.2 of the report confirms that participation in the Framework is legally permissible, which involved a review of the Framework to confirm that it complied with the requirements for frameworks set out in the PCR 2015.  Further, paragraph 5.4 confirms that the Council followed the rules for tendering.

 

In the circumstances, it is considered that the report contained sufficient information for the Strategic Director of Regeneration & Environment to make an informed decision on the award of the contract.

 

With regard to the process operated in selecting a contractor to bid, Officers followed the direct award procedure set out in Schedule 1 of the Framework, comparing all contractors on Lot 3 and concluding that Hill Partnerships Ltd. best met the criteria set out in Schedule 1.  All contractor’s qualitative responses to the framework tender were reviewed and all met the council’s requirements. However, the other contractors on the framework did not have the resources available to meet the timescales the council required in order to meet the GLA grant funding requirement to be in contract and the project beginning in August 2022 and did not have the same level of knowledge and experience of, or relationship to the project site.

 

As it is considered that the direct award procedure set out in Schedule 1 of the Framework was used appropriately, it is not accepted that the award has been made with the intention of unduly favouring one economic operator.

 

You state you believe that there is a strong case for saying that the approval given by Cabinet on 20 June does not meet the requirements of Contract Standing Order 88(c). The Standing Order requires that Cabinet should receive and consider a report setting out all relevant information necessary to enable it to give such approval(s) as it considers necessary. I have responded to the points raised in the attachment to your email below.

 

You are concerned that Members of the Cabinet had from 4.30pm on Thursday 16 June and 10am on Monday 20 June when the Cabinet meeting began to consider the report on this particular issue.  None of the members of Cabinet expressed any concern as to the time they had had to consider the matter or raised any questions which indicated they had not understood its content.  There is no reason to think they would not have raised queries if they had had any. I have no reason to doubt that they diligently considered the content of the report prior to the meeting at which the decision was taken and were not reliant on comments by the Leader in order to understand what they were being asked to agree.  It was perfectly in order for the Leader to present the report. 

 

You are correct that there is an inconsistency between the legal implications section of the report and the recommendations in terms of the Cabinet member with whom consultation would take place.  However, the content of the recommendation itself clearly takes precedence and is what Cabinet members agreed to in making their decision. I have no doubt cabinet members were perfectly clear as to the cabinet member with whom they were agreeing the Strategic Director would consult.

 

The Protocol to which the Scrutiny Committee is required to have regard required it to come to one of the following conclusions:

 

§  That the matter should be referred back to the decision maker for reconsideration with reasons for its request and what the committee wants the decision maker to do.

 

§    That it does not object to the decision and the decision can be implemented. 

 

In this case, the committee determined that it did not object to the decision and the decision could therefore be implemented. 

 

The essence of the call in was a concern about the timing of the award of the contract and as to any inclusion of pre-construction demolition of building in stage 1 of the contract.  On the basis of discussion at the meeting, the committee decided it did not object to the award at this time of a contract for the Morland Gardens development.  The issue of which framework would be used for that award was not a part of the call in nor of the decision made by the committee. 

 

I do not consider there is any reason for supposing member of the Cabinet were confused as to the decision that the Scrutiny Committee had considered at its meeting.  It is perfectly clear in the report that Cabinet is being asked to agree a new process for awarding the contract as soon as possible.

 

You are concerned that the previous mini competition was too long ago to provide a reasonable price comparison and that the price may have significantly increased.  This is not the case.  With a direct award under the Network framework, the contractor is required to submit a project specific price, with overhead and profit figures not exceeding those they tendered for the framework.  The price that Hill Partnerships Ltd submitted complies with these requirements and was a similar price to that submitted during the November 2021 tender.

 

Paragraph 5.2 of the report refers to Standing Orders and summarises the relevant content of Standing Order 86 in respect of Frameworks.  I do not consider not including the number of the Standing Order has any implications for the report or the decision made in relation to it. 

 

Having considered the various points you have raised I do not consider there is any reason why the award should not now proceed.’

 

Cabinet authorising the award of a new contract on 20 June, in 59 seconds. (From Brent’s webcast)

 

The Legal Director has stated, about the Cabinet decision, ‘I have no reason to doubt that they diligently considered the content of the report prior to the meeting at which the decision was taken.’ My reply was: ‘I have to admit to some scepticism over your response in connection with the Cabinet's consideration of the Report on the Authority to Award, both before and at the meeting on 20 June.’ I’m sure there will be others who share my scepticism!

 

I am also sceptical about the claim that Council Officers considered all of the contractors under Lot 3 of the Network Homes Contractor Framework (“NHCF”), before deciding that Hill Partnerships Ltd was the one who best met the criteria for the direct award of the contract. The bid they made in response to the invitation under the NHCF just happened to be the same* as the one they’d made under a different framework, which Brent would have accepted if they had not run out of time to do so!

 

If Council Officers did do all that consideration and review of the other contractors, there should be documentary evidence, so I have requested that “audit trail” under Freedom of Information. 

 

“Altamira” from the community garden – the corner of Brent’s proposed new 9-storey building would be where the Sundisc sculpture (a Harlesden City Challenge public artwork) now stands.

 

My FoI request will not stop the award of the contract, which may have been done already. The Legal Director’s reply refers to ‘the project beginning in August 2022’, but can it really begin straight away, especially “on site”? 

 

The former Brent Start college building, including the Victorian villa, is now being used as a home by “Live-in Guardians” (I’ve told Brent’s Capital Projects team that I am quite happy with that, as it should protect the heritage asset from vandals!). And the land in front of 1 Morland Gardens, which Brent’s plans need, so that they can build out over it, is still the subject of objections to the Council’s proposed Stopping-up Order. It is likely to be Spring 2023, at the earliest, before those objections are resolved, hopefully by an independent Inspector, and the decision could go against the Council.

 

Philip Grant.

 

* Hill Partnerships Ltd November 2022 tender bid was £37,933,491. Their July 2023 bid is £37,933,561. Perhaps the extra £70 is an “admin. fee” for re-submitting the same paperwork?

Wednesday 10 November 2021

Scrutiny Committee minutes lay bare South Kilburn's Granville New Homes scandal

 

Granville New Homes

The Minutes of the special meeting of the Community and Wellbeing Scrutiny Committee of October 7th that examined the scandal of the Granville New Homes, built by Higgins, that will cost more in remediation (£18.5m) than the purchase price.

 

It was a very thorough examination of the issues involved and members’ concern that Higgins was not spoken to about the defects. no redress sought and that this poor build was not taken account of in awarding them current contracts in South Kilburn and Stonebridge, was very clear.

 

The Committee agreed a comprehensive list of recommendations including that they and the audit committee should receive copies of the independent Ridge Report on the defects. Observers were astonished that such a key report had not been presented to the Committees. Two weeks after the meeting in a twitter reply to Wembley Matters, Brent Council said that that a response to Scrutiny Committee's recommendations was being compiled. For the sake of transparency this should be put in the public domain and include the Ridge Report before Scrutiny's next meeting on Monday.


The Minutes 

 

Councillor Southwood (Lead Member for Housing and Welfare Reform) introduced the item which provided the Community and Wellbeing Scrutiny Committee with an update on the options analysis that First Wave Housing (FWH) carried out with the Company’s Guarantor, Brent Council, on finding a viable option to fund and deliver the required remediation works at Granville New Homes. She advised that this was about putting things right, and fixing a historic issue that was not of the making of anyone attending the meeting that evening but which needed to be responded to in the present, looking to the future. 

 

The proposal related to Granville New Homes which were built in 2009. The Committee heard that, following the Grenfell tragedy, all Council blocks were inspected to check cladding materials and also for wider fire safety issues. Granville New Homes was found to potentially have cladding that was not fire safe, therefore FWH went through the process of getting relevant inspections into the fire safety of the blocks. A Waking Watch had been in place in the blocks since October 2020 as a result of the concerns raised through those inspections. 

 

After further intrusive works were conducted, the total cost estimate needed to remediate the properties was substantial at £18.5m, which had considerable financial implications. Councillor Southwood advised that the proposal to Cabinet was to transfer 85 (84 social tenants and 1 leaseholder) Granville New
Homes properties from FWH into the HRA, and further to transfer 25 intermediate rented homes into i4B stock. This recommendation was the option that met all the priorities set out in the Cabinet report.

The Chair thanked Councillor Southwood for her introduction and invited the Committee to raise comments and questions, with the following issues raised:

Further context on the history of Granville New Homes was sought, including when the Board and Guarantor became aware of the defects. Peter Gadsdon (Director of FWH) advised that FWH took over the stock from Brent Housing Partnership (BHP) in 2017. He advised that effectively BHP had stock that was unable to go into the HRA at the time which included Granville New Homes, which FWH took on. He advised that the first time the Board and Guarantor were aware of the full extent of the issues to the stock was in May 2021 when the Ridge report was received. He advised the Committee that the Audit Committee had also been sighted on the issues in the blocks, including the extent of the financial implications, although they had not seen the Ridge report. This was part of the Audit Committee’s Forward Plan who, on an annual basis, looked at the business plan for FWH as a subsidiary to the Council. The issue had also been discussed with FWH’s external auditors.

The Committee requested further details about how the report was commissioned and who had oversight of the defects, and wanted further details on the considerations given to legal due diligence and financial due diligence. Peter Gadsdon advised that as a result of the government MHCLG asking for all properties over 18 metres with any form of cladding to be reviewed, the Board took the decision to review the Granville blocks at 17.5 metres, where the fire service reviewed the fire safety arrangements and were the first to alert the Board in October of 2020 of issues with the fire safety arrangements. The Waking Watch had been implemented since October 2020 as a result of the advice received to ensure the safety of residents in the event of a fire. Further intrusive works were commissioned following this as there was a need to cut into walls, take windows out and break through walls to understand what the composition was, which Ridge conducted, including in a number of flats which were empty. Following the fully intrusive works where Ridge could see the full extent of the issues, the Board received the final Ridge report in May 2021 and made the Guarantor aware. In response to what financial due diligence took place, Minesh Patel (Director of Finance, Brent Council), representing the Guarantor, advised that Ridge were appointed as independent specialists to work through the surveys and provide an estimate, which internal Finance Officers and Officers on behalf of FWH had checked to ensure was correct. He advised that it was an estimate and they would not know the true cost until the work had been started. Hakeem Osinaike added that Ridge had been commissioned to undertake the intrusive works with a good quality specification and therefore he had confidence in the report submitted by Ridge.

The Committee queried whether the Council, as Guarantor of FWH, had chosen to challenge FWH on the issues. Minesh Patel advised that the Council’s role as a Guarantor was to meet with the Board of FWH on a regular basis to go through Key Performance Indicators and understand how the Company was running. The Guarantor had not been made aware of any issues prior to the final Ridge report.


Hakeem Osinaike (Operational Director Housing, Brent Council) advised that the properties were managed by Brent Housing Management (BHM) on behalf of FWH, and they had managed the repairs in those blocks up until the inspection. He advised that it was in rectifying the fire safety issues a decision was taken to rectify any other issues as well.

The Committee noted that Higgins had been appointed to design and build the blocks in 2009, and had heard from residents and staff that there had been problems with the blocks since they were built. They queried what legal action against Higgins, as the contractor, had been pursued, considering the roofs had been previously replaced when FWH took over the building. Peter Gadsdon confirmed that BHP had replaced one of the roofs before FWH took over, and once FWH had taken over they had done works on water ingress issues and had planned to replace all roofs over time as part of previously published business plans for the Company, with an original cost estimate of £2m – 2.5m. With regard to any legal action taken, Peter Gadsdon advised that the records showed the building had been signed off and handed to the Council, but he was unable to comment on anything before 2017 when FWH took over the buildings. He advised that FWH had not had any conversations with Higgins regarding the defects which they were made aware of in May 2021. Legal advice was previously sought about whether there was any chance of redress but due to the passage of time were advised it was unlikely. The Board’s priority was to ensure the properties were repaired back to safety.

Continuing to discuss the contract with Higgins, the Board queried why the Council were not communicating with them on this considering they were current contractors on other blocks being built. They queried whether there was a risk of this happening in other blocks that had been built or were being built. Minesh Patel advised that he did not have the details on the construction contracts with Higgins as that was a procurement process, but nothing had been brought to his attention that there were any concerns on any of the blocks Higgins had worked on.


Councillor Southwood advised that the contractor had been awarded work by the Council through a procurement process without prejudice, the specification of which would have applied modern building control and expectations to whatever they built, and which would include monitoring on the delivery of their contracts. From a FWH perspective it was highly unlikely any other stock would have these issues as Granville New Homes were the only medium rise buildings in the assets. Peter Gadsdon added that, like the Council, FWH and i4B commissioned stock condition surveys and had Fire Risk Assessments in place and there were no issues in that regard. Councillor Southwood agreed to provide written assurances to the Committee that there was no issues in any of the blocks Higgins had worked on, and further information on the procurement process such as whether past performance of a contractor was considered before awarding a contract.


The Committee considered the financial implications of the proposals, and Ravinder Jassar (Deputy Director of Finance, Brent Council) confirmed that no funds were being written off to the Council’s general fund. FWH would refinance the debt but still have a debt to the Council and service that debt over a 50 year period. The remaining stock in FWH remained with positive cashflow that allowed the servicing of that debt.

 

The Committee queried what risk assessments had been done considering the rise of inflation and high likelihood of a rise in interest rates. Councillor Southwood advised that was why the paper was being brought to Cabinet, as every penny borrowed against the HRA was needed and the Council wanted to minimise the amount per year that tenant’s rent was used to pay interest towards. It was in the Council’s interest to secure the borrowing as soon as possible before interest rates changed. Further considering financial implications, the Committee highlighted the labour shortages, and increased labour and material costs as a result of the pandemic, and queried whether that had been budgeted for in the contingency. 

 

Peter Gadsdon advised that the costings were estimated in May of the current year, post pandemic, with those things taken into consideration as much as possible. In considering the finances of FWH, Committee members highlighted that FWH’s most recently published accounts showed a discrepancy in the valuation of the Company, and asked about the justification and reasoning behind the valuation. Finance Officers agreed to provide a written explanation to the Committee. In terms of the financial implications to i4B, Ravinder Jassar advised that i4B would acquire the units for £3.5m, with an average weekly rent of £324 per unit per week, which made the purchase price per unit around £140,000. This was within the overall affordability limits of i4B and was a reasonable deal for them.

The Committee queried the rationale behind the proposal and why the Council were not able to lend FWH money to undertake the remediation. Ravinder Jassar explained that FWH were not able to afford the remediation works required even if they tried to refinance at a lower rate, and the business plan would no longer be viable. The option to demolish and rebuild had also been considered but was not financially viable. The Committee were advised that borrowing with the HRA was cheaper than lending to FWH, and the Council could not lend money to its subsidiary at the rate it could get as a Local Authority.

The Committee queried whether there was a risk to the business plan of a loss in rental income should a large number of tenants exercise the right to buy once they were brought in to a secure Council tenancy. Hakeem Osinaike advised that the right to buy in itself did not affect the financing of the transfer, and the income from any right to buy would be used to build New Council Homes. Councillor Southwood gave assurance to the Committee that the Council knew how many people exercised the right to buy on average per year, and she had received assurance from officers that there was no reason to think the proportion would be greater amongst this cohort. The financial assumptions were modelled on the same as any right to buy across the HRA, and if a greater proportion exercised that right there was contingency built in to the revenue forecasting. Peter Gadsdon added that 72 of the 84 social tenants had right to buy when the blocks originally transferred into BHP with only 1 tenant exercising that right. The Committee highlighted that the refurbishment of the blocks may change the numbers exercising their right to buy.

In considering the tenants within the block, the Committee queried what the proposals would mean for them. Councillor Southwood advised that for the 85 residents transferring to the HRA, the tenants would become full secure social tenants with the same rights as anyone else in the HRA, which she highlighted was one of the most secure forms of housing. The one leaseholder would become a Council leaseholder. The intention was for the Council to waive the charging of the cost of refurbishment to the leaseholder. The rents for the 84 social tenants would not change, and neither would the 25 intermediate rented properties proposed to transfer to i4B. In addition, there would be no change in their housing management services, which would continue to be delivered by Brent Housing Management (BHM). The Ridge report predicted that the works could be carried out without decanting residents.

With regard to whether tenants would get a rent waiver, reduction, or rent free period, the Committee were advised that none of those issues had been considered yet but would be as part of the consultation process. Hakeem Osinaike advised that it was not usual for the Council to offer rent reductions when carrying out major refurbishment.

The Committee asked how tenants would be engaged and how resident engagement had gone so far. BHM undertook engagement on behalf of FWH. At the time of the fire survey all residents were written to with an explanation of the issues, the Waking Watch and the work that was done to strip out flammable portioning. An online Zoom meeting had also been set up for tenants to raise concerns, however only a few people had joined. The Committee were advised that up to the point of the Committee meeting there had not been much response from residents. As such, BHM were engaging with residents individually when repairs were carried out in their homes, and everyone was aware of the issues and the way they were being taken forward. Further communications to residents would be necessary with the next steps.

The Committee queried whether the Council had considered carrying out energy efficiency and decarbonisation works in tandem with the remediation. Councillor Southwood advised that any discussion about decarbonisation works for those homes would be considered in the context of them being part of the HRA. The £18.5m in costs referred only to structural and safety works required and not any additional cosmetic work such as updating kitchens or bathrooms or decarbonisation works. She advised that the cyclical maintenance schedule would mean the properties under discussion would be due for new kitchens and
bathrooms around the time of the works being undertaken, so while builders were in and tenants were disrupted it made sense to do as much work as possible. Hakeem Osinaike added that as the internal and external walls had been stripped back as part of the intrusive surveys, when they were reconstructed they would meet the required energy efficiency targets. In terms of the Council’s decarbonisation work they were currently looking to retrofit a street property. No decarbonisation grants had been considered for the Granville New Homes properties.

The Committee questioned the delegated authority for the decision and Councillor Southwood advised that the issues crossed portfolios, but because the issue was specifically a technical financial recommendation it sat with the Deputy Leader, Councillor McLennan. Councillor Southwood was presenting to the Scrutiny Committee as they had asked to look specifically at the HRA, which was within her remit as the Cabinet Lead for Housing and Welfare Reform.

The Chair thanked officers for their responses. In considering their recommendations, the Committee discussed concerns over the reputational risk to the Council, the relationship between the Council and its subsidiaries, the engagement and communication between the residents and the Council and its subsidiaries, the concerns over the building handover process of the blocks, and concerns regarding the commissioning process and contract monitoring of these types of contracts.

The Chair reopened the meeting to provide the recommendations agreed. The Committee RESOLVED:

 

i) To recommend that officers provide assurance that the Council has undertaken due diligence reviews of its subsidiary bodies, including governance, fitness for purpose, financial soundness and reputational risk.

ii) That officers ensure that the Ridge report is made available to the Community and Wellbeing Scrutiny Committee and audit committee.

iii) To recommend that officers review arrangements for entering contracts of this kind, in particular to ensure adequate arrangements are made to ensure appropriate design and build quality, and that the Council has appropriate recourse where latent defects are later identified.

iv) To recommend that officers ensure all potential contractors are made aware of the standards expected by the Council and to ensure these are met before buildings are formally accepted by the Council.

v) To recommend that the Council provide written assurance that it has taken, or will undertake, independent legal and financial advice (including tax) regarding the proposals and next steps.

vi) To recommend that all contracts procured by the Council and its subsidiaries include a review of past delivery of any potential contractors.

vii) To recommend that the Council ensures that where issues are evident in a particular project, all remaining projects by the same contractor are reviewed as a matter of urgency.

 

viii)To recommend that officers review the steps that make up the procurement, commissioning and contract monitoring system to identify any gaps, especially in relation to risk and review. Where risks are identified to recommend that immediate action is taken.

ix) To recommend that the Council puts in place arrangements to ensure learning about this case and any others raising issues of similar significance is shared across the Council as well as with existing and potential future partners/contractors.

x) To recommend that officers establish and publish a comprehensive plan for ongoing engagement with residents.