Minutes:
The Chairman reported that the last meeting of Finance and Budget Working Group took place on 7th July 2023. At the meeting, Members discussed the Council’s procurement processes in light of the Government’s New Procurement Bill, which was currently progressing through Parliament, and what the Council needed to do to ensure it complied with the Bill.
The Chairman reported that the main issue in terms of the Council’s compliance was in relation to the production of reports for all key decisions that the Council was taking. The authority’s current key decision threshold was £50,000 and for any procurement above this value a full report needed to be made to Cabinet so that the decision could be made by Cabinet. The Chairman reported that at the current £50,000 threshold level, there was a serious issue whereby a report was not produced for some procurements above the threshold value, which meant that the Council was in breach of its own constitution in those instances. The Chairman commented that this was a serious issue.
It was noted that this issue occurred in many authorities with low key decision thresholds as there were a large number of procurements that crossed the threshold and not enough resources, for example, in terms of officer time, to ensure that reports were prepared for all procurements above the key decision threshold. It was therefore proposed in the Approval to Spend report going to Cabinet that the key decision threshold be raised to £200,000 as this would ensure the level was compatible with that of most local authorities across the country and would enable the Council to have the necessary resource to ensure that reports were produced for all key decisions.
The Chairman reported that the Finance and Budget Working Group also looked at the Burcot Lane Housing Development. The Working Group came to the conclusion that the sale to a housing company owned by this District Council was the best way forward in relation to the 37 private rented units in the development that would be rented at market value. The specific arrangements associated with the housing company meant that the right to buy would not apply to these units which enabled the Council to retain ownership of these properties through the company in the longer term and thereby fill the gap in the Bromsgrove private rental market.
It was reported that the future plan was to develop additional sites including and add units from these sites to the housing company’s stock once these developments had been completed. It was reported that some of the added units could then be rented at affordable rent because, as noted by the Chairman, the plan in the long-term was to address the imbalance between market and social housing, which was currently at an 8 to 1 level in Bromsgrove.
Members discussed the plans for the housing company and it was commented the the key thing to note from discussions of the Finance and Budget Working Group meeting was that, because of the wider economic environment, it was anticipated that in the initial phase the return would not be as great as hoped on the 37 units. The view was that the benefits of a housing company would be seen in the long run when the housing company had managed to develop a bigger portfolio of houses.
It was reiterated that the primary aim of the Council’s housing strategy was to provide housing to Bromsgrove residents rather than making a profit in the short term. The houses were built to enable people to stay in the local area and Members opined that Bromsgrove District residents should be prioritised in terms of getting a home in the District, for example to ensure that local key workers could find and purchase a home in the local area. It was reported that the average cost of a property in the District was around 14 times the average annual income and that this meant a very high number of 30-39 year olds were moving out of the District as they could not afford to buy or rent properties in the District. The motivation behind the Council-owned housing company in the longer term had to be ensuring that local residents were able to afford to stay in the District.
RESOLVED that the Finance and Budget Working Group Update be noted.