Transcript

And now live streaming. Okay. Good evening and welcome to everyone attending this meeting. The meeting is being live streamed on YouTube, so welcome to everyone viewing. Concerning meeting etiquette, please may I ask that you wish to speak by raising your physical hand. People online should raise their virtual hand and we will monitor the screen for virtual hands. Please be mindful that as chair, I cannot see the screen behind me. Please direct questions and answers via myself as the chair. Anyone attending remotely must turn on their camera when speaking. Please note that the chat function on Zoom will not be used for questions and answers on the agenda, but you may communicate with the clerk. In addition, if there is an issue with the sound in the chamber, please let me know as the mics can accidentally switch off. May I remind members and officers to speak up clearly in the chamber so the clerk and the public can hear you. Since the last meeting, the Labour vacancy on the Commission's Council, Melanie Onovo, is again vacant following her appointment to Cabinet. The clerk is currently awaiting details of the replacement member. The recently appointed independent member has ceased membership due to private reasons and this post is currently vacant pending a review of committee membership. I understand this is the last audit committee for Finance Officers Alison Mackie and Stephen Wilde, who are both retiring in the near future after many, many years of service with the Council. We can give on behalf of the committee, I'd like to thank both of them for their service to this committee and to wish them the very best of luck in their futures. I'd ask everyone present to please show their thanks in the traditional way by giving them both a round of applause. If you can convey that to Alison that the committee sends its thanks will do as and Stephen have presented many times to the committee over the years, thank you. Okay, agenda item one apologies for absence and substitutes i've received apologies from councillors Garfield and Paul. Councilor Reek Chaudry also. Yes, Councilor Higgins is substituting for him, I've received apologies from independent member Carlson Seth are there any apologies from any other members. Okay, no and um councillor they has joined by but that doesn't get a vote Okay, thank you Clark item two declarations of interest to members who are present physically, are there any declarations of interest. Thank you item three myth of the last meeting members are requested to consider and agree the accuracy of the decisions in the minutes of the last meeting committee held on the 16th of October 2024 are there any matters of accuracy. A very minor matter page 15 it refers to complaints, the I think the reference was how a complaints handled by the call centre under the new complaints process that. James passes was suggesting, I think what I was really referring to was call centre handlers are they the right people rather than. the the the the individual officer so it was a question about delegated delegation post our call centre handlers. equipped to deal with complaints. What paragraph is that i'm sorry sorry i've only got notes here page 15 AC 249 Thank you. what wordings would you like to change if we could just say it was it was a call centre handlers instead of officers more generically. Thank you. Okay. Are the minutes agreed? Chad, I'd like to abstain. I was impressed. Okay. I agree with him. I wasn't there, but I agree with him. Okay. That's a chatter. Yeah, I agree with him. Okay. Item four, action log. The committee's asked to note the contents of the action log. Since the agenda publication, a response has been circulated for the following action. AC 250, marketing PDS, compliance and marketing. In respect of AC 248 contract waivers, the Office of Dealing has left the council. The replacement officer, Alison Chesil, head of procurement, is awaiting the additional information from the legal team, and this will be circulated. And Chair Alison is here tonight. Okay. Hello. Hi, Alison. Anyone have any questions for Alison? We're fine. Are there any questions on the action log? Councillor Chadder? Can we close AC 177? I think that's passes done. Was it meant to come back to this committee? No? And then AC 232. I think the reference was, this was from December 2023, was, or January 2023, was to Poplo's late filing of accounts, not new homes. But again, can that be closed? Yes. Okay. Are there any other questions on the action log? To members present in the room, may I see a bear of show hands as the report noted? Consider the substantive agenda items now. Thank you. Item five, social value subsidy and leasing arrangement. I'll allocate 10 minutes to this agenda item. Following communications with Councillor Chadder, I've requested this report, and I invite the Officer Mohamed Hamaddam to briefly introduce the report, which will be followed by questions from members. Hi there. Can you, can you hear me? Yes. Yes. Hi. There are other colleagues in the room, including Giles Clark, Caroline Ray, and Jason Stretis, who are here to provide the finer detail around how the social value is operating. In Newham. And we've had several conversations with Councillor Chadder about the arrangements and the way the social value is operated within Newham Council. So in first instance, I think I'm going to ask Caroline and Giles, because they've got further information and details in terms of how it's administrated. So if I, if I ask Giles from his perspective, from a property's perspective in terms of how social value is conducted. Thanks, Mohammed. So the, I suppose the main question arises from how properties are identified, used by voluntary and community centre sector. Obviously community centres speak for themselves, but I think one of the areas where there have been questions relates to a small number of buildings that have either previously been in corporate use or commercial use and have subsequently been leased to community organisations with social value lease discounts. So within the paper, I think it is paragraph. Sorry, let me just check. I think the main paragraph to draw your attention to is paragraph 2.7. Which really sets out the criteria that is used to assess suitable buildings. Those buildings are then offered on the market. And only after a tenant has been selected does the social value lease subsidy begin. So those two parts of the process are separated. So I think the identification of properties is as objective as we can make it. Although there is a, you know, a large degree of judgment that has to be applied, which is applied by whoever is in my post. Which is based on the, on the factors that I've listed in 2.7. I think I'll leave it there unless there are a lot of questions. Yes, Giles. So you said it's based on judgment. Do you keep a written record of your judgment or you just say, I'm happy this, this property shouldn't, this has failed in my opinion, so it should be identified for social value purposes. It is, it is probably less formal than that sometime. It is normally based on, I would say, email information that I would have been sent by the commercial property manager. If there is an asset that has not been let successfully to a commercial tenant, or in the most recent case of Stratford Advice Arcade, for example. That is a building that was recently taken back by the council where all of the other occupiers are voluntary and community sector organizations. So it may, it just made sense to allocate the last remaining space in there to another organization that was being relocated from another building. So the formality of that process or the consistency of that process is, I think it depends on circumstances. There is not, it happens so rarely in some ways that I think we would need to refer back to the files and the documentation at the time that that decision was made. But I think from the papers, you can see it's probably, I think it's only happened twice in the four years that I've been at the council. So this isn't a regular occurrence. So sorry, the properties listed at 3.16 then, the majority of those were leased prior to arriving at the council? A lot of, well, most of these, so if we look at the number of commercial properties that are on social value leases. There would be, so, so West Ham Boys Club, for example, sorry, community centers. The Bangladeshi Parents and Carers Association predated me or that wasn't a decision that was made by me. The Citizens Advice Bureau was a relocation from a building that the council was taking back from them. And we had vacant office space that had been difficult to let. So that was a decision that I made. Stock Street is a community wealth building decision. Subco is the most recent decision that I've just referred to at Stratford Advice Arcade. Fairburn Boxing Club is a commercial property, but it's part of a regeneration program. So in some ways, that was a decision to relocate an existing community use in order to facilitate the redevelopment. Okay. Any questions? Councillor Chadder, please. I've got a series of questions, conscious of time. Appendix one of the 2019 cabinet report. It's also mentioned that housing is a partner, but I've seen subsequent reports. Housing isn't a partner. Is that a shift change? The number of the community, specifically referring to community centers, about two thirds of them are HRA properties. So now housing maintains being a partner. Whenever we're making a decision about an HRA community center, we always discuss with housing. Okay. It was just because they didn't appear in later documents, but yeah, no, thank you. And on that basis, you've also got a community spaces project board. How frequently does that meet? So the project board with members meets quarterly. Quarterly. Can I just drill down into some of this a little bit further? Because one of the reasons why some members are concerned about this is because we do, as you'll appreciate, get concerns raised to us by voluntary organizations. Asking, as Giles has indicated, about the transparency, the fairness of the properties, but also the process under which we operate. And I think there is there is kind of some suggestions about what we had a very fruitful meeting where we kind of talked about how we can make this a little bit easier for everybody involved. But one of the challenges is we undertake as part of this to audit or kind of touch base with the groups at at least once a year. Yeah. Can I ask in the situation of apple cart arts, which we now know have closed? It did we at any point pick up their financial troubles through this process? I'm not saying we should have done, but was that something that this process uncovered? So I've not been involved with apple cart arts. Okay. It was, it was, I don't think anyone who's actually at the council know, which doesn't help, but it was led by commercial property. And I personally haven't been involved with that at all. So this is a social value led. Apple carts was a social value led, social value was applied, but the property didn't follow under your jurisdiction. It fell under Giles's. Is that right? So Giles, did, do you operate the same process by which you have an interaction with those groups once a year to make sure they're on target? No, I don't council chatter. I think you've identified something. So the, the, the property process, I mean, I, I don't, you know, this isn't a, to suggest that there is any sort of that clear separation. Um, but once a property has been led and the social value subsidy is assessed, um, or once property has been led effectively, the social value subsidy is assessed. And then that social value subsidy is reviewed every year. And then not the organization, the, the, the, the, the, the subsidy that applies to that organization. So my understanding is that the organization would make their annual submission in order to retain the level of subsidy that they'd had in the previous year. So who would that go? So that would go back to yourselves. So I think Applecart is an exception. I think it was one of the very first social value leases, and that's why I wasn't directly involved in it. As I said, there was a different team who aren't in the council, people who aren't in the council anymore. My understanding, and I can go back and forth and look, my understanding is that it was actually written into the lease, which is not the way the policy is set out to be. Oh, I see. So I believe that Applecart was different from every other one that we've done since. So they had no requirements of feedback. That's my understanding. Okay. So can I just check, do they have a, a duty to, to feedback now? They've closed. They've closed. So no, no, normal, the, the rest of these organizations that have social leases, social value leases, do they feedback and can let us know what their status is? Yeah. A number of them are in their first year. Um, or just coming up to the second year. And yes, we do go back to them. And the policy says that it's actually up to them to apply in the second year for the, for the subsidy again. Although because the volunteer and community sector organizations, we normally support them in that and remind them that it's time that they need to start thinking about it. Okay. I've got more, but I'm conscious. Councillor Higgins. Thank you. The, as part of the policy, there's a matrix for assessing, um, suitability, not just suitability, but then the amount of discount that tenant might receive. Um, what's the evaluation of that matrix? So we, we don't know that it's right or that it's, it's giving the right organizations, the right amount of discount, achieving best value for the council, all of that stuff. How do we assess the matrix is what it needs to be, that the organizations that we're choosing are delivering social value for, for new residents? Okay. Okay. So the, the matrix is based on, on the council priorities. In the first instance. Yes. So you understand. Um, and we've gone back since the 29 and the 21 cabinet reports, and we've gone back and looked at it when council priorities change and make sure that as we've gone through that, they continue. Sent that. So organizations will fill up in an application form that says what it is that they are doing. And then we look at that and they are assessed a court, you know, is this once in a while? Yeah. I've seen the matrix. Thank you. So that's what creates the score that they get. I get that. It's just the, obviously I've looked at the matrix and the things on the matrix seem sensible. I, many of them, I see that it fits the council's priorities, but how do we, when we're looking at the council's performance against its priorities, assess the impact of this matrix, the, the, the properties that we are letting out for, for social value. How do we know that this matrix is, is delivering, is making the best decisions? Because we're making decisions based on it. So we should know that the matrix is right. How do we know that? I don't know that we've ever, we've evaluated the totality of the con, you know, looked in the round of the totality of the work that the organizations have done under the matrix. So that would be, I mean, that would be a, um, that would be a new and potentially kind of valuable piece of work. And it's not something that we've done looking at, looking at the contribution of those organizations in the round. It's just that they've been evaluated on an individual basis. I guess to phrase the question another way, um, and this will, this will be my last one, so apologies. Um, how, how, how much of our performance of our priorities, you know, we get these benchmarks that tell us that we're, you know, doing this well on this priority and so on. How can we know what impacts the social value policy is making in towards the progress of those goals? I mean, I think it's a relatively, you know, it's one small piece of the jigsaw puzzle of everything else that's going on in the council against those goals. Okay. Um, yeah, it's a small, I would, that's how I would, I would characterize it as one piece of a jigsaw puzzle. So, so I guess not significant enough to assess, is that, is that what it is? Well, hard to, hard to assess in a kind of, in, in a kind of quantitative sense, I think. Okay. Um, that was the part of the importance of social value act coming in, in 2012, wasn't it? That it would provide a platform for public sector partners to be able to assess value. Yes. And that's done on an individual basis. But what I was, what I was saying is that what we've not done is done that on, we've not looked at the program. In the whole, in the whole. Okay. Um, something, that's something you would consider doing. Um, yeah, I mean, I think it's something that we would, we've not, that is something that, that we could consider doing. I think it would be, um, uh, because different organizations are going to be doing very different things and meeting different social elements of the matrix in different ways. It's not necessarily straightforward to do, wouldn't necessarily be straightforward to do it in a, in an additive way. Because organization a would be meeting, let's say a contribution around employment in one way. Organization B would be meeting that goal in a different way. And you wouldn't necessarily be straightforward to, to combine, combine those. Um, but I do think it's a, a health, a kind of a helpful question and a helpful thought for us to, for us to consider. Okay. Counselor, can you say it another way? You would know if they were meeting your corporate targets or our, our corporate targets in the corporate land. Could you not value it through that? Um, we'd know if we would meet, if they were meeting the, the, the goals that they'd set out to meet. Hmm. I mean, I, I think being perfectly honest, I think there's, there's lots of challenges with this strategy. Um, and is it time you updated the QIA in 2021, but not the strategy itself. Is it time for this strategy to be reviewed? I also note, well, I don't know if it's even relevant because at the same time, this is also offered as a cut in the, in the proposed draft budget. So something which isn't mentioned in the report, but if it's proposed as a cut and going back to councillor Higgins point, we don't know the total value of it. Do we need to look at that proforma again? That is, is with property and we didn't write that proforma. Charles? Yes. So the budget proposal, um, well, it's, it's, it's been put forward as an option for members to consider. That one way in which they could over time, um, effectively recoup the circa 200,000 pounds a year of subsidy would be to stop making, uh, would be to stop granting a subsidy. So I think you've raised a very good point, which is that what we haven't looked at is to say exactly what would be the impact. On the wider councils delivery of its policy objectives, uh, rather than just assuming that there will clearly be an impact on the individual organizations concerned. So that has not, so that has not been done. So maybe that. And probably should be done. And can I just say, I mean, obviously the, the budget discussions will go on in the way that they need to. If the, if the decision is made not to remove the subsidy, can I encourage you to think about refreshing and working in a slightly different way to take on board proposed changes to community right to buy and other things about starting again with this strategy? Because I think it leaves too many reputational risks and possibly other types of risks for the council. The fact that due diligence is possibly not done consistently. And I don't know if this is a systems issue, a departmental kind of mismatch. Mismatch. I don't know how we fix this, but it feels to me like there's lots of question marks here. Giles? Giles? Um, I, I would agree. And I think one of, one of the challenges, um, not necessarily with the policy, but this is about the execution or the delivery and the implementation of the policy is that, you know, property is not. You know, a sort of product that you can commoditize where everything, you know, looks to be the same. Um, the availability of property is also sporadic. And therefore, uh, I certainly, one of the things that we experience is, well, why is some property available to one organization or not another? Um, and when there is no property available, which is for the majority of the time, the question would be, well, why can't I have a discounted rent to, um, and to explain to an organization? Well, that's because, you know, we could let your property to an alternative commercial user. Um, I mean, that, that is what the policy says, but it's not a particularly satisfactory answer for the organization concerned. Um, so I think mechanically the policy can be implemented. And I think the calculation of social value subject to council Higgins comments is something that, you know, that I think Caroline and her team have a, you know, you know, rigour around. Um, the, you know, the, the challenging part of this is the translation into property. I mean, you know, I mean, it's not for me to make suggestions, but there probably are other ways in which the subsidy could be distributed. So that it's not concentrated in a very few number of commercial properties that at that particular point in time happened to be unsuitable for anything else. Um, so in many ways, I, I agree. I think it is, I, I think the, the, the policy is implemented in the way in which it was intended to be implemented, whether it has had unintended consequences or not, because it is difficult for it to be consistent, both in terms of time and the nature of buildings. Um, I, I, I, I think is a, is a, is a very relevant question. Okay. Uh, Jason, can you come in? No, I think it, I, I think it's worth saying that at least from my point of view, that there is a distinction of being in the application within the community center sphere and the wider kind of potential commercial property sphere. And in, in the space of the community centers, since it's been introduced, and it's not just the result of the social value policy, but it's, it's, it's been a contributor. We've managed to bring a lot of what were previously defunct community centers into use with organizations delivering against outcomes with organizations paying, um, supporting the council in terms of the upkeep of those centers. So I think it has been, um, has really supported a, yeah, bringing effectively back the number of community centers into effective and cost effective use. So I, I do think there is a distinction here between, um, the application in that context and the application in, um, the areas that Giles, um, is challenging, challenge to deal with, which is those properties on the fringe of whether they are commercially viable or not. Thank you. Councillor Lee Parkway, please. Councillor Lee Parkway, please. Thank you. Chair. I've just had two questions, if you don't mind, um, just off the back of something Giles said and something you just said, Jason. So what I'm hearing here is actually more checks and balances needs to be done in order to ensure that whether it's commercial property or community center, HR property, it needs to be more checks and balances to understand what it is that we're doing. So I, I hear a lot of baton passing, which doesn't, you know, to the general public, that doesn't make any sense. And then I heard Jason, you talked about the comments you just made made me think about, it makes me question the, how, how viable are these? You know, I agree with social value. I agree with the idea of subsidy for organizations that are given back to community, but I don't agree with that at the cost of losing organizations. Because we haven't done some checks and balances in the meantime. And, and, and I heard in the beginning specific to the question about apple carts. There was no answer. So I guess what I'm trying to understand is in the current situation with our finance, is there more that could be done and will be done? Because what I heard just a minute ago is it would be, yeah, we might need to, we could do it, but I didn't get no definites as to the, the audit of this. It will be better going forward and it will be tighter because I didn't, I don't, I don't feel like you can answer all the questions, but coming to an audit committee, I'd expect that the answers are there. Okay. One second. In terms of community centers. I think there's, there's a real story to tell in terms of the community centers, in terms of the, since this time and the wider program around bringing community centers back into use. I think there is a really, there is a really clear story and a, and a clearly auditable story about, um, about getting those, those centers taken on by organizations who are delivering outcomes, who are paying an affordable rent to them. Hmm. But then sorry, council listening to the conversations that Georgia said, sorry chair, just listen to what Georgia said. If that performer needs to be re-looked at in regards to 200,000, then that would, how would that impact the community centers in which you're, you're talking about? So, you know, is there more checks and balances that need to be done? Is, is my question basically. Okay. Conrad. I think just, just one point on that checks and balances thing. Uh, cause I think there are two separate things going on. It's helpful to differentiate them. I mean, regardless of whatever social or financial support you want to give for social value, whether that's discounted rent or some other means of providing that support. And that's, that's one sort of, but yeah, we have what we have. And you've heard that having assessed for social value and prove that it delivers X social value or whatever it is. And hence is, is just worth that as an annual reappraisal of that social value point to confirm that the organization is still doing that. I think that's a bit different to carrying out a financial assessment of the sustainability of all those organizations. I mean, you know, there's not just accountable than other organizations in our properties. There's, you know, I don't know, hundreds of other sort of tenants as well. We can't assess the sustainability of each of those on a annual basis, trying to do that by whether they're paying their rent or not. And I just think, you know, it would be an unrealistic resource demand, you know, to, to try and build into it. This sort of assessment, we will carry out a financial assessment of each organization that frequently. You know, if you're then only going to do that for a small subset of those, why one subset over another? So you get into quite, quite tricky territory with that. And you've got a decent proxy for it, because if they're paying the rent, probably okay, I mean. Okay, final count question, Councillor Chadder, then we need to. So one, one quick one from Councillor Higgins, the final one from Councillor. Thanks. Thanks, Jack. One of my questions was going to be considering that the policy is supposed to be financially net neutral. Kind of what's the assessment about how we make sure that that happens. But I hadn't seen the saving yet that Councillor Chadder had referred to, which suggests that we can save 200,000 pounds from it, which suggests, unless I'm fundamentally misunderstanding something, that the policy is not currently financially net neutral. And it actually says that that should be a minimum. And actually, this policy should, in theory, make us money, because it lets us let things at a lower value than not letting them at all, which wouldn't make us any money. So I guess I don't actually understand what this 200,000 pounds is. If, if, if, if all we're doing is letting, uh, properties that we couldn't otherwise let, how is there actually a real subsidy here? And the 200,000 is the difference, roughly speaking, between the commercial rent that could be had for the properties in question and the rent at the... Okay, that's understood, but what that suggests is that we could, some of these properties that we're sort of letting under this social value, the commercial properties that we're letting value, we could let commercially and we're choosing not to, but that's not actually what the policy says that it's designed for. Um, we might have opinions about whether that's a good thing or not, and I could talk about that. Um, I, you know, I would love to see community and voluntary sector organisations preference, but that's not what the policy says. It says that it's only for properties that we can't let them operate. So I just don't understand what's happened here. Councillor Higgins, can I answer that very quickly? Um, the total value or, uh, cost of the subsidy is all the properties, not just those that could be let commercially. So that, so that would, so if the subsidy were removed, then it means that community centres, uh, would also be let at a higher charge than the current social value leases required. For the occupiers of those. So it's not just for that, for that small number of what could otherwise be commercial properties. So effectively what the subsidy is doing, if, if the subsidy were to be saved as a cost to the council, then all other things being equal, effectively what the council is doing is transferring social value into, into cashable value. Okay. Thank you. Quick question. It just, I mean, I think this is the distinction we're talking, we we've heard a lot of that. So we've got one team looking at through the lens of social value. We've got another team looking at it through property. I would just recommend that we, that we do actually commit to re looking at social value. We've got after the outcome of the budget. So, you know, what you can, what, how the council can provide social value and then having another look again at how property and social value work together. Because the way I think from just the discussion this evening, you've got three members here who are equally confused now, and I'm even more concerned than I was when I originally came into this. So can we have a commitment to doing some more work on this? Hmm. Jason, Giles. Yeah. Okay. Please note that Pauline. Okay. We need to move on. Thank you. Report is for noting to members in present in the room. May I see by a show of hands is the report noted? Thank you. Item six. Trocary management mid-year reports. I'm allocating 15 minutes for this item. I invite Andrew Ward and Stephen Wilde to briefly introduce the report, which will be followed by members' question. Andrew, Stephen. I'll start. Thank you, Chair. Andrew Ward, Deputy Director of Finance. So item six and indeed item seven, both concern Treasury management and item six is the Treasury management mid-year report for the 24-25 financial year. I think members will be familiar with the format of such reports, and all importantly, there are two appendices to this report. Appendix one lists our prudential indicators, which are sort of measure of whether we've stuck within the limits of the of the Treasury management strategy that was set back in February 24. And then appendix two has details on our borrowing and on our equity. Okay. If you just highlight some details. Yeah. Thank you, Andrew. Yeah. Perhaps some of the highlights in the mid-year report is that we did draw down 246 million pounds BWB debt. And you'll see that we we drew down that debt at the lowest points or close to the lowest points on the. Sorry, Steve. Just speak up a little bit. Yeah, sorry. Okay, so I was just saying that drew down the 246 million pounds. We drew it very close to the lowest point on the PWB curve. And it was pretty good timing to do that borrowing the first half of the year, because since the October 30th UK budget. The lowest rates have surged. The lowest rates have surged. But we picked that dead up, but an average rate below 5%. And if we were doing it now, those rates would be above 5 and a half percent. So it makes a big difference in terms of borrowing costs going forward. We still sit behind the central premise that those those rates will start coming down. This is backed up by the Treasury advisers and information we've got from that rates will start to come down. But they receive wisdom is that they will be remain higher for longer. So in that environment, it pays to take down short term debt or debt on shorter 10 years with a view to refinancing into much longer term debt closer to the asset life. So that's on the mid year report, as Andrew mentioned, we stayed within the parameters of the Treasury management strategy statement that was set by in the budget report. 2425. Just to point out in terms of this report. We proved We proved We proved We proved That we proved it that we