Issue - meetings

The Committee considered a report that provided an update on the current position of James Elliman Homes (JEH).

The background to the company was summarised and it was noted that JEH was a company limited by shares wholly owned by the Council.  The company had a stock of properties in the borough and the original purpose had been that they be used for key workers and Band C clients.  However, a significant number of families in temporary accommodation had been placed in JEH properties and circa 80% of the properties were being rented at Local Housing Allowance level or below bringing in significantly less income that had been envisaged in the original business plan.  The company had provided a valuable route by which the Council discharged its duty to homeless applicants but its financial performance had been well below expectations and it had significant cumulative losses.

All properties were managed by the Council a service level agreement and the company had no staff of its own.  One of the identified weaknesses in the company was insufficient separation between the Council and the company.  Many local authorities operated similar housing companies effectively, however, there had been insufficient oversight and governance of JEH by the Council and the lack of a properly functioning board running the company.  These issues crystalised when Companies House issued a notice that JEH would be struck off due to a failure to file audited accounts for 2022/23.  Council officers, following consultation with the relevant lead members, took action to avoid the strike off as set out in the report.  Having resolved the immediate issues it was now imperative for the JEH board to undertake further work to improve governance and it had been directed to take a series of measures including submitted a draft business plan for 2024/25 for approval by Members and to set out options for returning JEH to profitability.

Members expressed concern at the poor governance of the company since it had been established in 2017.  The Committee supported the next steps including the development of a business plan and options appraisal for the future of the company.  The Chair commented on the importance of protecting the tenants of JEH properties as well as the assets held by JEH.  The Executive Director, Finance & Commercial highlighted the need to stabilise the company then move it to a stronger financial position, including dealing with the problem of JEHs cumulative losses.  Assurance was provided that the impact of tenants needed to be carefully considered in the development of the options appraisal.

At the conclusion of the discussion the Committee supported the approach being taken to address the issues facing the company.  The recommendations were then agreed.

Resolved –

(a)  That it be noted that the audited Statement of Accounts for 2022/23 were filed on 14 August 2024 (due 31 March 2024);

(b)  That the issue of two special resolutions giving direction to the JEH board be noted;

(c)  That the planned next steps to improve governance of JEH, including management of risks be noted;

(d)  That the next steps to undertake a detailed options appraisal to consider the role and case for continuing with JEH be noted.