Agenda item

An update was provided to the Committee in respect of the budgetary position of Spadesbourne Homes Limited.  In considering the report, Members were asked to note that the details provided related to the budget for the whole of the 2025/26 financial year, rather than to just the first quarter.  Members were also asked to note that the report contained a typographical error at paragraph 2.1 of the report, which should have reported no creditors in respect of the balance sheet.

Reference was made to the balance sheet for the company and Members were asked to note that a closing balance figure of £143,000 had been identified for the period 30^th March to 30^th June 2025.

In terms of assets, Members were asked to note that Spadesbourne Homes Limited leased all properties from Bromsgrove District Council for a nominal fee of £1.  Therefore, the properties were not listed as company assets.

The figure recorded for debtors as of June 2025 was £17,500.  This included £4,174 in VAT payments that the company was due to receive back from HMRC.  Confirmation was provided that this repayment would be received but the timescales for the repayment could not be confirmed.

Bromsgrove District Council had provided Spadesbourne Homes Limited with a loan valued at £50,000 when the company was established.  This was acknowledged in the balance sheet for the company.  The loan had been made on an interest-free basis.

Members were reminded that at the previous meeting of the Committee, a request had been received to provide an updated budget forecast for the consideration of the Committee.  The report detailed the updated budget position and had incorporated the estimated costs arising from time spent by senior officers who had been appointed to the Board.  This included costs reflecting 20 per cent of the time of the Assistant Director of Community and Housing Services and the Assistant Director of Finance and Customer Services as well as 60 per cent of the time of the Strategic Housing and Business Support Manager, all of whom had been appointed to the Board.  In addition, the budget figures took into account contributions from the Housing Development and Enabling Manager and secretarial support from the Personal Assistants’ team.

In relation to other points raised at the previous meeting of the Committee, Members were informed that insurance costs had been incorporated into the figures provided for the budget as the company now had insurance in place. 

Following the presentation of the report, Members discussed a number of points in detail:

·             The amount of time members of the Board were allocating to duties associated with the activities of the company.  Clarification was provided that this was difficult to estimate at this time as duties during the initial set up period might differ from tasks required in the long-term.  Therefore, the figures recorded for officer time might change over time.

·             The number of Board meetings that were taking place and how lengthy these meetings could be.  The Committee was informed that Board meetings generally took place once a month and lasted for approximately two hours.

·             The additional tasks required during the initial set up period and what this entailed.  Members were informed that this had included working on reviewing the budget, establishing effective VAT returns and resolving issues with the Tech1 system to ensure that this supported the company effectively.

·             The potential for a three-year budget plan to be produced to enable Members to review projected costs.  Members were advised that this would be possible to achieve although time would be required to produce a useful document and therefore it was agreed that this plan should be prepared in time for consideration at the third meeting of the Committee due to take place in the 2025/26 financial year.

·             The need for the company to maximise tax efficiencies moving forward.

·             The potential implications of Local Government Reorganisation for Spadesbourne Homes Limited and the extent to which arrangements for managing Council companies under the new Unitary Authority(ies) had been taken into account during discussions about the future of Local Government in Worcestershire.

·             The potential for the Council to receive any profits arising from the work of a Council owned company, subject to payment of corporation tax by the company.

·             The need for the management costs for the quarter to be reflected in the budgetary figures presented for the Committee’s consideration to help Members assess the company’s finances effectively moving forward.

·             The length of time that the loan from Bromsgrove District Council to Spadesbourne Homes Limited was intended to be made available.  Clarification was provided that no deadline appeared to have been set for the repayment of this loan.

·             The extent to which it was appropriate for Spadesbourne Homes Limited to be in receipt of an interest-free loan from the Council.  Officers advised that it was not unusual for interest-free loans to be provided to Council companies.

·             The length of time that the Council’s lease with Spadesbourne Homes Limited for the properties owned by the authority was set to last.  The Committee was informed that the lease was due to last for 999 years.

·             The costs arising from payment of a service charge by the company and which organisation received this payment.  Members were advised that Spadesbourne Homes Limited paid into a service charge which applied to all properties and which was applicable to all property owners.  The company charged tenants a rent not a service charge.  By contrast, Bromsgrove District Housing Trust (BDHT) charged their tenants a rent and a service charge.

·             The purpose of the principle tenants and 6 per cent rental income referred to in the budget.  Confirmation was provided that this related to the costs charged by the Management Agency that managed tenancies on behalf of the company.

·             The need for Members to agree a budget for the company and the work in respect of the budget that would take place once this had occurred.  Officers explained that once the budget was agreed, expenditure could be allocated to specific budget lines.  The quarter 2 monitoring report would provide further information about income and expenditure.

·             The fact that action was being taken to try to sort a budget for the company mid-way through a financial year and the complications arising from this situation.

·             The need for the detail in the company’s budget to be presented in a different manner to Council budgets, in line with accountancy rules.

·             The potential for the service charge details to be provided on a quarterly basis in future budget monitoring reports to help provide clarity.

·             The need for clarity in the minutes of the meeting reflecting the fact that Members were noting a revised draft balance sheet at the Committee meeting.  Members agreed that the resolution in respect of the balance sheet should also be updated to reflect this accordingly.

The Financial Regulations and Procurement Regulations, both of which were intended to form appendices to the company’s business plan, were also discussed during consideration of this item.  Members noted that at paragraph 13 of the Financial Regulations, reference was made to the Scheme of Delegation and urgent decisions, with a proposal for Directors of the Board to have the power to approve up to £10,000 individually and for anything above that threshold to be approved by more than one Director.  Clarification was provided that there were differences between authorised orders, made through the usual route on the Tech1 system and the unauthorised route, involving urgent decisions.  There was general agreement amongst Members that decisions taken in line with this paragraph needed to be open and transparent and it was therefore agreed that the Board should be required to report any such decisions retrospectively to the Committee.  The request was made for the Financial Regulations to be updated accordingly.

RESOLVED that

1)          The position on the Spadesbourne Homes accounts as at 30th June 2025 be noted.

2)          The revised draft balance sheet for Spadesbourne Homes as at 30th June 2025 be noted.

3)          The revised draft budget for 2025/26 for Spadesbourne Homes be noted.

4)          Subject to the amendment detailed in the preamble above, the Financial Regulations, an appendix to the Spadesbourne Homes Limited Business Plan, be approved.

5)          The Procurement Regulations, an appendix to the Spadesbourne Homes Limited Business Plan, be approved.