Transcript

where we have said that we would be looking at mixed routes for housing delivery in a way that we wouldn't have necessarily emphasised in the early years or in the first term. The issues of development, well, development economics, the context around development economics has changed significantly. Issues around borrowing, the wider economic context, issues with cost construction, inflation all have a bearing in rightly a pragmatism that you apply in any policy orientation that you've asserted six years ago. So, of course, we are actively looking at a multiplicity of ways in which we can deliver homes, but coming back to the business plan, which I understand is the basis of the calling, and there's some specific areas that you're looking at examining as to whether or not the decision that myself and Cabinet made at that formal meeting of Cabinet was sound. You're asking whether you're asking whether the business plan has set out puts the Council at risk. No, it doesn't. As Councillor Zulfika Ali has stated, any further decisions in terms of the injection of money by the Council will need to be subject to Cabinet approval. This is a demonstration of how we apply pragmatism as it relates to the popular living vehicle. Do you foresee that you may radically change your business plan? Sorry, could you repeat the question? Do you foresee any circumstances in which you may radically change your business plan? Because in terms of you move to a delivery model, you do the $30 million conversion to equity and all of those. So those are afterthoughts. And I hear what you're saying. You're saying that because of the economic and everything else, that you didn't use the word, these are my words, but that forced some rethink. So you have to be rethinking. So you have to be rethinking. Do you foresee that you may have to be re-think? Sorry, rethink the business plan? The business plan, the current business plan that we've got here. OK, we know it is a living document, but do you foresee any radical changes? I'm asking for it to be on record, because in a year, two years, three years' time... At this present time, I don't see any reason to pivot to what you may define as radical. I don't know what you mean by radical. Sure. You accept that it is fit for purpose as of now? Yeah, I think the response to your primary substantive question has set that out. OK. All I want that for the record. Thank you. Any member? Councillor Masters and then Councillor Shaw, then Charter. I think it would be really helpful at this stage just to have clarity around the future of the Corporate Plan pledge to deliver 1,500 homes of social rent. If we're not delivering them down the Populo, which is what I drew out of the report, and apologies if I've misunderstood, how are we going to... I mean, if Populo have delivered 700 homes, where are the other 800 going to come from this year or so? So I'll do some introductory remarks, and then I'll pass over to Paul or Darren. So we've set out really clearly in terms of the delivery routes for that 1,500 homes is a combination of direct delivery, as in building, also acquisitions, etc., etc. So there isn't any significant departure through this business plan in regards to the quantum 1,500 in the manifesto and as iterated in the initial post-May 2022 corporate plan and the one that has been prioritised. So just to be clear, we're definitely still aiming to do starts on 1,500 homes for social rent. So if you read the Corporate Plan, it asserts that we will deliver 1,500 and it specifies that a portion of that would also be through acquisitions. That's fine. I mean, I'm quite happy to sort of accept that. I'm just checking, A, that that's still a priority in our corporate plan, and B, it would just be useful to know of the remaining 800 that we're hoping to deliver, whether all of those will now come from acquisitions, just for clarity. No, it would be a combination of things. It's worth noting that last financial year, the Government made approval for the RECS project, Pier Road in Cyprus, and they total about 750 homes. Now, they're not all social rented. The proportion of those will be markets are not, so that's a substantial amount of homes in which part will be social rented. There'll be a combination of schemes through the Affordable Homes for Newham project and then also bits of equity as well. So the target's still held, and the combination of delivery routes is as set out previously. It's just worth noting that this current financial year, which is contained in the business plan, haven't made approval for about 700 new homes to be delivered. Okay, and just to be clear, though, none of those are coming from Populo. Am I right in that? So Populo are acting as a developer for the RECS, for Pier Road. So, in that case, I'll repeat my question. How many of those homes for social rent are coming down the Populo route, given that that's what we repurposed to do? I mean, my understanding of the report was that we weren't delivering any more homes for social rent down the Populo route. But the specific answer, if not, we'll have to write to you, you know, what's the feel of the social rented homes in the Populo route. We were in discussions with the GLOs to try and increase the, increase the quantum up to around 500 social rent homes across three schemes. So, J. Tri-Point, First Face, the Carpenters, the Pivot Road and Cyprus project, which are already started. So, that 10-year mix of the home and the pipeline will, to a certain degree, be a function of the amount of grant that we supplied through the GLO. So, we don't know at the moment, is the answer. We have indicative, we've got approval for indicative mixes, and then we'll always seek to maximise the proportion of affordable homes as a result of affordable housing grants. But we don't know how many homes for social rent are going to be coming down the... We do know the minimum, because that's what we've got approval for. So, in the Cabinet papers, and I'm sorry, I don't have the biggest to hand counselling on our questions, but a minimum figure, the approvals, because that will be part of the Cabinet approval, which will be, you know, our number of homes, and there'll be a minimum number of social rented homes in that. Okay. So, Pier Road and Cyprus, between them, are 565 homes. For social rent. As Paul describes, the minimum number of social rent in that will be one-third. That is then dependent on whether additional GLA grant is possible to increase. Thank you. Thank you, Chair. So, a few years back, I also brought the cleansing and the parking teams in-house. The papers mentioned that it was ruled out the use of an external development management service because of the value for money provided by Populo. And did you explore the option of forming an in-house development management team? If so, what were the findings and its financial viability? The business plan also says it will cost $59.6 million in the next 10 years to provide development management service by Populo. Wouldn't it have been cheaper if we did have a management team formed in-house? Good question. So, when we were embarking on the 1,000 affordable homes for Newham programme, we had, as mentioned previously, a multiplicity of delivery routes. One of which was Populo Living, the other one was Housing Services and then our Community Wealth Building Place team. And we, in essence, have tested an in-house development management proficiency. And we still do that in the context of some of our state schemes. So, outside of carpenters, we've got a team-driving custom house regeneration programme and Canning Town. And through an examination of the efficacy and value for money of those approaches with in-house teams, that's helped to inform the business plan as it relates to Populo Living and the reason why we've made the sound decision that we have. I don't know whether Paul or Darren would like to add. Darren? Yeah, I'm happy to add to that. Darren, I'm the director of Community Wealth Building. Yes, we've had two approaches running, like the Mercer, the in-house team and the Populo team. Over the past, I'd say the past 18 months, two years, we've had quite significant challenges in recruiting the right resource into the in-house team, whereas Populo have a stable team that's got the development experience. So, when we're considering options around the most efficient value for money way forward, it's deemed that, at this point, Populo's offering the best option for the council, but Populo need to demonstrate value for money to us. So, whenever a Cabinet decision is taken, our procurement colleagues do check value for money against market averages and other metrics. So, just for clarity, did you have a team in-house? Yes. We have teams that are currently live delivering customer house in Canningtown, and, as part of a consideration, to inform Cabinet report that was approved vis-a-vis the business plan for Populo Living, our assessment of that and other previous schemes that the in-house team, either in housing services or Community Wealth Building, combined with the reasons that Darren has just set out, it's a sound basis on which we've made the suggestions and the decisions set out in the paper that we did. Okay. Just one more question, if it's a good question. So, considering the amount of capital investment, projection of the dividends according to the table provided on page 19, it will not materialize till 2038, the dividends won't come through. So, is it financially viable, given the current financial challenges the Council has? Yes. I'm going to pass over to Comrades and Zorfica to talk through issues of medium- to long-term financial viability, but, yes. Can I say anything or should I- I'll just say, I mean, it's a very good question, and clearly financial viability is that critically important. And I was saying, as I said earlier in my introduction, it's important that we see this in the long run. You know, if you've got the homelessness crisis, we need to build homes. If we don't build the consequences of far more severe, so in the situation that we are in, it is, as a policy, it's probably the right policy in order to do that. But the long-term consequences is something that we're going to be monitoring and we'll be reviewing. And as I said earlier, there's nothing in this business plan which commits the Council to any further capital investment. And all those requirements will have to go through the proper process to approve through the Cabinet and leave from scrutiny. And Conrad, anything you wish to add? Yes. Thank you, Councillor Ali. So, the first thing to emphasise, no-one has suggested that building houses is an activity without risk. Of course, there's financial risk attached to it. That's just the nature of the activity. For the various reasons set out in here, you can see that is how it's being managed. So, the questions around affordability and risk are absolutely on point. They're the right sort of areas to be examining. But we've set out how that risk is being managed. Clearly, if one could choose not to undertake the activity, and it's not really as important to emphasise in this, it's the nature of the activity that drives the risk much more than it is the vehicle by which you do it. Whether you're doing it via a company or directly or, indeed, in any other way, you are necessarily taking on risk in doing that. In terms of the direct consequences, and you drew our attention to that table just before paragraph 4.24, yes, there isn't a financial dividend on the business plan returned for some years yet. Actually, that's moved forward a bit from the last version of the business plan. But it is not the case that the consequence of that is that, therefore, we're sort of incurring losses which the Council is having to cover that is causing the Council then to have to cut other services accordingly. The nature of the company and the way development finance like this works is that you, in effect, store the early losses that any housebuilder will always incur in the company and then repay them from subsequent activity. Where it's been set out to date has been to take the financial benefit, and I'm just talking about the finances now, obviously, there's social benefit in housing and all the rest of it, in the form of long-term payments from the company. As has been discussed at a previous Scruti meeting, consideration is actively being given, of course, to whether you would need to change the balance of that financing in the future and, in effect, dispose of some of the market properties for sale rather than long-term rental. That's not reflected in the business plan because that's not a formalised change of direction yet, although it's one that, following the last Scruti discussion number four, we've given considerable thought to. So I hope that answers the question, but I'm more than happy to spend longer on it if that's helpful to you. Thanks. Thank you. I just need to come in on a supplementary. Darren, I noticed in the business plan that there is some symmetry between affordable homes to Newham and the POC room, but just for clarity, I have to consider bringing the operation, the complete operation of POC room in-house. Has the council considered that? As a consequence to that as an option. No. Okay. And, um, so do you have any intention, given that there's some synergy already between affordable homes to Newham and POC room, and then we have the canning-tongue operations, given the cost implications, et cetera, is that a worthwhile exercise to consider which one is going to more value for money in bringing all of this, um, if the risk permitting, bringing all of this, um, in-house? Would you like to... Can I answer that? Yeah. So I think it, I think we are examining whether it, whether we have a duplication of effort between our in-house effort and the skills and expertise we have in POC room. Um, the, obviously, I was at the council when POC room was formed, but the advantages, of course, having a body that's outside of the council means that it can have a singular focus. It can establish its own identity and brand. As Darren has indicated, a standalone house-building bodies like POC room and other companies, uh, find it easy to recruit and retain talent. They find it easier to focus on the day-to-day business. So lots of advantages to having a body like Populo, not to mention the track record of building, um, attractive, well-designed, popular homes that it's done over the past few years. So we are examining whether there is duplication between those two teams, but no, we have not considered the idea of bringing POC in-house, as you put it, for the reasons that I've just stated, the reason that a standalone company is so advantageous. Thank you, Councillor Charger. Apologies, Chair, for being late. Um, I did have the advantage of watching this on YouTube as I was travelling, so, but I did go into a tunnel. Am I right in thinking there's someone here from Poplar? Yes. Hello, hi. Okay, I have a question for you. Is that right? Am I allowed to ask a question? Of course. All right, thank you. But not yet, don't worry. This question, um, Mayor, you referenced right at the outset, and you might not be able to answer this here in your opening remarks, you talked about Newham being best in the field or best in the sector in terms of housing development. What's the source of that reference? Um, it's government source, the GLA. They articulated that. context of our quantum housing delivery output, and we are amongst best in class on the number of homes we've actually built or we've delivered through government grant via, yeah, give us the reference for that. Yeah, we can get that sent over to you as part of the follow-up. Okay, now moving on to the substance, the actual business plan itself. Now, I work in the charity sector where I assess organisations based on their business plan. This isn't really a business plan, is it? This is an annual report. This is a, this isn't really looking in the way you need to the future, is it? It's an annual report over a business plan, saying. It's an annual report, it's not a business plan. It's a, it's a summary, it's a very good summary of what's happened in the, in previous years, but it doesn't really give you the feel, and I just wondered, what did Cabinet feel, what did Cabinet think? How did you debate this when it came to it? I haven't watched the video, but I mean, I suppose it's more helpful just to ask you here. How, how, how much one has been critiquing this report? This plan? the, look, to your question, how did the Cabinet debate this? We exchanged through discussion, challenge, probing, asking questions, the things that you would expect, and I trust that provides you assurance. It wasn't just one meeting, it was a few, but it's also important that colleagues understand that prior and ahead to anything coming to formal Cabinet, because what you might see at a formal meeting of Cabinet as broadcast won't necessarily be the penetrative questions that you would expect that is habitual to a big scrutiny meeting, but in terms of any policy formations or flight path, as it were, imagine, say in a 12-month cycle you will commence the conversations with the portfolio lead or relevant Cabinet leads as they relate to strategic housing delivery. So we have monthly strategic housing delivery meetings, and those are attended by myself, Sulfika, and the respective portfolio leads for the different aspects of housing services, as now is, as was, and there was a period where it was just one. There are officers in attendance, there is a tracking on progress against the Affordable Homes for Newman program, and then there is a discussion around for planning what's emerging of which Popolo Living Business Plan is a feature, there are meetings between the client team of officers with the Popolo Living chair of board of directors, discussions happen there, so there's a huge amount of rigour throughout this process. What's changed in the plan? How have members influenced this plan? Are there things that have been put in here because you were saying, look, from our experience, this needs to be improved? What changed in the plan? group. Thank you. All right. Thank you. Thank you. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye.