The Sutton Shareholdings Board met on Tuesday 10 March 2026 to review the business plans and budgets for three of the council's wholly-owned companies: Sutton Decentralised Energy Network (SDEN), Cognus Limited, and Sutton Living Limited (SLL). The meeting was scheduled to discuss the financial forecasts and strategic objectives for each organisation for the upcoming years.

Sutton Decentralised Energy Network (SDEN) Business Plan and Budget

The Board was scheduled to consider the Sutton Decentralised Energy Network (SDEN) Business Plan and Budget for 2026-29. This plan outlines SDEN's strategic approach to providing low-carbon energy to the London Borough of Sutton, aligning with the Council's corporate plan and Environment Strategy. The report details SDEN's current operations, including its provision of heating and hot water to residents on the New Mill Quarter site, and its future expansion plans, such as connecting to the Clarion Housing Lavenders development.

Key aspects of the plan included:

• Expansion Plans: SDEN aims to expand its heat network to new customers, with proposed phases of development assessed through a five-case business case model. Discussions were scheduled regarding the proposed wider expansion of the heating network.
• Regulatory Changes: The report noted the impact of the Energy Act 2023 and the government's Warm Homes Plan and Heat Network Zoning (HNZ) consultation outcomes, which aim to significantly increase the use of heat networks. Ofgem's role as regulator for heat networks, commencing in January 2026, was also highlighted.
• Pricing Policy: SDEN's pricing policy, established in 2015, aims to offer price parity with alternative fossil fuel-based energy suppliers. The report detailed the avoided cost methodology used, which includes the provision of heat, boiler operating and maintenance, repair, and replacement costs within customer charges. An annual price review, indexed in line with CPI and BEAMA indices, general inflation, employment costs, and wholesale gas prices, was scheduled.
• Tariff Increases: The SDEN Board of Directors had decided to implement a 3.4% increase to the unit tariff charge and the fixed standing charge, effective from 1 April 2026. This increase was considered the minimum affordable rise to maintain the company's financial viability while remaining within the agreed pricing policy.
• Phase 1 Progress: The report detailed the consistent supply availability of 99.99% for the New Mill Quarter development, with a single disruption noted on 14 November 2025 due to a gas sensor fault. The company apologised for any inconvenience caused and highlighted proactive measures to maintain high availability levels.
• Billing Error: SDEN discovered that a price tariff increase had not been correctly applied to customer bills from April to December 2025, resulting in undercharging. The company took responsibility, corrected the tariffs for 2025/26, and informed customers of the error and corrective actions. Adjustments to customer bills were to be recovered over a period of up to six months, with options for alternative payment arrangements for those experiencing financial difficulty.
• Heat Source Transfer: Works were advancing to transfer the primary heat connection from the Beddington landfill gas site to the Viridor Beddington Energy Recovery Facility (ERF) by 1 April 2027. This would enable SDEN to utilise up to 15MW of waste heat from the ERF. The report noted the need for new pumping equipment and a revised capital grant application to the Green Heat Network Fund (GHNF) for additional funding.
• Phase 2 Expansion: The plan included the proposed heat network connection to 348 existing properties on the Lavenders Estate, with contractual finalisation underway. Discussions were also progressing with the London Cancer Hub and other NHS stakeholders for potential heat network connections.
• External Investment: To address the large capital funding required for expansion, approval was received to employ a commercial consultancy to explore an external market investment strategy, with Hermetica Black being procured for this purpose.
• Financial Forecast: The financial model projected a cumulative cash surplus of £1.902 million by 2050/51, with council loans fully repaid. Loan repayments were profiled to prevent cash deficits. The model assumed interest payments of 3% on the existing loan and a further 5% for additional borrowing for the Lavenders expansion.
• Key Performance Indicators (KPIs): Performance was to be monitored through financial KPIs (e.g., gross margin, overheads expenditure, debt levels) and customer service KPIs (e.g., number of complaints, resolution times). Heat network KPIs included maintaining performance reliability and minimising supply disruptions.

The Board was recommended to approve the Sutton Decentralised Energy Network 2026-29 Business Plan and budget, and to note the SDEN Risk Register.

Cognus Business Plan and Budget

The Board was scheduled to review the Cognus Business Plan 2025-28 and receive a financial update. Cognus Limited provides education support services in Sutton, aligning with the Council's corporate plan to create an inclusive place for everyone.

Key points from the report included:

• Business Plan Priorities: The Cognus Business Plan 2025-28 focused on two main priorities: Optimise the Business and Securing & Maintaining High-Quality Services.
• Service Delivery: The report detailed performance highlights across various Cognus teams, including:
  • Virtual School: Achievements in educational attainment and destinations for Children Looked After (CLA), Previously Looked After (PCLA), and children with a social worker.
  • School Admissions: Positive outcomes for Sutton residents in primary and secondary school allocations, with no unplaced pupils on National Offer Days.
  • Education Safeguarding Service: High satisfaction rates from schools and extensive training delivered to staff.
  • Educational Psychology: An increase in traded work and high satisfaction from families.
  • SEND Service: Data on EHCP assessments, issuance within statutory timescales, and timely annual reviews, despite an increase in requests.
  • School Improvement: Strong performance in Early Years GLD and Key Stage 2 SATs results, exceeding national averages.
  • Hearing and Vision Education Service (HaVES): Support provided to children and young people with hearing and vision impairments.
  • Attendance Service: Issuance of penalty notices and successful Targeting Support Meetings with schools.
  • Child Employment Service: Compliance checks and licensing for businesses employing school-aged children.
  • Traveller Education Service: Support for Gypsy, Roma, and Traveller children and families, with positive feedback from schools.
  • Inclusion Service: A reduction in permanent exclusions, contributing to rates below the national average.
  • Elective Home Education: Assessment of suitable education provision for home-educated children.
  • Sutton Information and Advice Support Service (SIASS): High levels of satisfaction from families accessing SEND support.
  • Paving the Way Service: Early intervention for children with difficulties, with positive progress noted in group work outcomes.
  • Therapies Service: Positive recruitment, successful conversion of locums to permanent staff, and progress against therapy targets.
  • Assisted Travel Team: A reduction in average passenger costs despite inflation.
  • Children Missing Education: A reduction in the number of registered cases.
  • Early Years: Support for PVI settings, with a focus on SEN support and early identification.
  • Autism Advisory Service: Training for Autism Champions in schools and workshops for families.
• Financial Position: Cognus was projecting an operating surplus of approximately £429,000 for the year ending 31 March 2026, primarily due to trading activities and additional funding allocations. This surplus was expected to increase the company's reserves to 6.7% of annual turnover. The company aimed to break even in FY2026/27, with a consolidated budget of £23,000.
• Benefits to Sutton: Cognus continues to provide essential education support services, contributing to the Ambitious for Sutton corporate plan and supporting an inclusive environment.
• Implications: No material equality or climate implications were anticipated from the report's recommendations.
• Financial Risks: The company faced financial pressures in SEND services and therapies due to increasing demand and costs. Additional funding of £710,000 was approved for FY2025/26 to support these areas. Efficiency savings of £50,000 were committed for 2026/27.

The Board was recommended to note the progress made by Cognus Limited against its 2025/28 Business Plan and to note the update on Cognus Limited's financial position and year-end position.

Sutton Living Limited (SLL) 2026/27 Budget & Ten Year Business Plan

The Board was scheduled to review Sutton Living Limited's (SLL) updated Business Plan for 2026–2036 and its proposed budget for the financial year 2026/27. SLL is a council-owned company focused on delivering quality and affordable housing.

Key aspects of the report included:

• Strategic Shift: SLL's strategy has shifted from new build development to the acquisition and long-term management of affordable rented homes, supporting the Council's objectives to reduce homelessness and reliance on temporary accommodation.
• Portfolio Growth: SLL's landlord portfolio was expected to grow from 61 homes to over 100 by the end of 2026/27 and over 300 by the end of the plan period. These homes are primarily let to households nominated by the Council, generating savings for the Council's homelessness budgets.
• Financial Challenges and Projections: The plan acknowledged short-term financial challenges, including a forecast loss from the Grove development and the need to grow rental income. However, it projected improving financial performance as the acquisition programme progresses, with SLL forecast to generate cash surpluses from 2027/28 and return to profitability from 2028/29.
• Registered Provider (RP) Status: The plan to establish an RP was progressing, aiming to unlock access to additional grant funding, potential tax efficiencies, and reduce reliance on Council funding.
• Acquisition Programme: Progress was noted on the Local Authority Housing Fund (LAHF) acquisition programme, with LAHF 3 expected to complete in the second half of 2026, bringing the total LAHF homes to 88. LAHF 4 funding of £9.6 million was secured for 46 homes, with a bid for further funding to deliver 100 homes. SLL was also exploring alternatives to leaseholder buybacks, such as street properties and Private Rented Sector (PRS) portfolios.
• New Build Developments: The Grove development in Carshalton was expected to complete in spring 2026, providing 10 market sale apartments. However, delays due to unforeseen structural improvements and design information requests were anticipated to impact the financial performance, with a forecasted deficit of £0.85 million.
• Properties Delivered and In Pipeline: The plan outlined the current and forecasted properties, including completed schemes like Blackstar House and Alexandra Gardens, and those in the pipeline such as LAHF acquisitions and the Grove development.
• Company Management and Resources: SLL was described as a well-managed entity with plans to scale up staffing resources in line with the Business Plan's demands. IT and Financial Management systems were deemed sufficient for the short to medium term.
• 2025/26 Forecasted Outturn: A loss of £0.87 million was forecasted for 2025/26, primarily due to the Grove scheme deficit and associated revenue.
• 2026/27 Budget: A budgeted turnover of £6.8 million was projected, with significant income from the Grove development sales and growing rental income. A deficit after interest but before tax of £0.55 million was expected, largely due to the Grove scheme's forecasted loss.
• Ten Year Financial Plan (2026-2036): The forecast showed improving financial performance, with cash surpluses expected from 2027/28 and profitability from 2028/29. Retained surpluses were projected by 2037/38.
• Financial Support and Treasury Management: SLL remained reliant on Council support for cash surpluses, including short-term deferral of interest payments and a working capital loan facility. The treasury management strategy focused on long-term fixed-rate borrowing to minimise exposure to market fluctuations.
• Stress Testing: The business plan was stress tested against various scenarios, including increased borrowing costs, LHA lagging inflation, and failure to achieve management cost efficiencies, highlighting the company's sensitivity to these factors.
• Benefits to Sutton: SLL's acquisition programme was anticipated to deliver at least 188 homes by the end of the LAHF programme, providing long-term homes for homeless households and generating savings for the Council.

The Board was recommended to approve Sutton Living Limited's updated business plan for 2026 to 2036, approve its proposed budget for 2026/27, and note its Risk Register.