Agenda item

a)  That the update report including the latest financial position be noted;

b)  That it be noted that there may be a requirement for an additional loan facility to be made available to GRE5 (subject to additional analysis) which would require full Council approval;

c)  That it be noted that a Council parent company guarantee is required to enable GRE5 to enter the GFA and secure funding from HE.  The guarantee should relate to the DA costs for ACM cladding and strictly associated works only;

d)  Recommend to Full Council that approval should be given for a parent company guarantee to be entered into as set out in c) above and that the Treasury Management Strategy should be amended to reflect this;

e)  Recommend to Full Council that the loan facility previously approved by the Cabinet be approved and that authority be delegated to the Chief Executive to enter into an appropriate loan agreement with GRE5;

f)  That delegated authority be given to the Chief Executive to develop a longer-term strategy for GRE5, including appropriate phasing of future works and options for the leaseholders or another third party to acquire the shareholding;

g)  Noted that the issues arising will be dealt with as part of the ongoing financial review of the Council’s governance and contract management of its Group Companies;

h)  Agreed that a decision on an additional loan facility is deferred until further information on future works and costs is available in the next month and that a decision may be sought directly from Full Council if this is not in accordance with the Treasury Management Strategy; and

i)  Agreed that the Council requests that GRE5 prioritise essential cladding and directly associated works under the DA and that it reviews the scope and timing of all other works outside the scope of the DA, including ongoing advisor costs in light of the Council’s financial constraints.

The Director of Transformation introduced a report that updated the Cabinet on the position with regards to the fire safety works at Nova House and the financial implications for the Council.

The detailed background was set out in the report and was summarised by the Director. The Council had acquired GRE5, which owned the freehold the Nova House, to ensure the serious fire safety issues identified in the building and its cladding could be addressed following the Grenfell Tower fire in London. In addition to the issues with the cladding a range of other serious defects had been identified which needed to be addressed. The programme of works had been put in place however cost estimates had risen substantially since the report to Cabinet in 2019. A grant had been approved by MHCLG to make a significant contribution to the works and other sources of funding we’re being actively pursued, including recovering appropriate costs from leaseholders. However, there was a financial risk to the Council and approval was sought to increase the load facility to GRE5 to ensure the essential fire safety work could be completed.

The Cabinet noted that the original estimated costs were £4m in 2017 when the building was acquired and were estimated to be £7m plus VAT at the time of the 2019 Cabinet report. The current costs had risen to £17.8m and the reasons were explained and summarised in Table 1 of the report. The Leader commented that he was not on Cabinet at the time of the acquisition and had spoken at the Cabinet meeting to express opposition the purchase given the significant financial risks to the Council which had since materialised. However, since that time the options available to carry out the essential works to protect residents had narrowed.

Speaking under Rule 30, Councillor Strutton asked why insurance had not covered the costs. It was responded that live insurance claims were being vigorously pursued. If successful this would further offset the costs.

The Cabinet agreed the recommendations, including the matters to be referred to full Council, as it was essential the works were completed. It was outed there was a recommendation to explore the longer term options for GRE5 to determine the future role of the Council.

Resolved –

(a)  That the update report including the latest financial position be noted;

(b)  That it be noted that there may be a requirement for an additional loan facility to be made available to GRE5 (subject to additional analysis) which would require full Council approval;

(c)  That it be noted that a Council parent company guarantee is required to enable GRE5 to enter the GFA and secure funding from HE.  The guarantee should relate to the DA costs for ACM cladding and strictly associated works only;

(d)  Recommend to Full Council that approval should be given for a parent company guarantee to be entered into as set out in c) above and that the Treasury Management Strategy should be amended to reflect this;

(e)  Recommend to Full Council that the loan facility previously approved by the Cabinet be approved and that authority be delegated to the Chief Executive to enter into an appropriate loan agreement with GRE5;

(f)  That delegated authority be given to the Chief Executive to develop a longer-term strategy for GRE5, including appropriate phasing of future works and options for the leaseholders or another third party to acquire the shareholding;

(g)  Noted that the issues arising will be dealt with as part of the ongoing financial review of the Council’s governance and contract management of its Group Companies;

(h)  Agreed that a decision on an additional loan facility is deferred until further information on future works and costs is available in the next month and that a decision may be sought directly from Full Council if this is not in accordance with the Treasury Management Strategy; and

(i)  Agreed that the Council requests that GRE5 prioritise essential cladding and directly associated works under the DA and that it reviews the scope and timing of all other works outside the scope of the DA, including ongoing advisor costs in light of the Council’s financial constraints.