Agenda item

Members considered a detailed report which provided a full business case in relation to Dragonfly Development Ltd.  Members’ approval was also sought for the recommendations in the report regarding the future arrangements for the operation of Dragonfly Development Ltd and also the Council. 

 

Councillor McGregor stated that it was with pleasure that he stood in for the Leader on this particular report.  He drew Members attention to the purpose and summary of the report which was to provide Council with the full business case in relation to Dragonfly Development Ltd for consideration, and to seek approval of the recommendations regarding the future arrangements for the operation of Dragonfly Development Ltd and the Council, outlined within the report.

 

On the update within the report on item 1.1, Members will be aware that Woodhead Construction Ltd, the Council’s joint venture partner from 2016, ceased trading on 14^th September 2022.  On 2^nd November 2022, Council received an update regarding arrangements put into place to ensure the continuity and completion of the current and future construction projects and option for the future of Dragonfly Development Ltd, as a wholly owned company of the Council.

 

I also refer to 1.2 on the report, at the meeting on 2^nd November, it was noted that an agreement had been reached with Woodhead Regeneration Ltd, and ratified at the Dragonfly Board for Dragonfly Development Ltd to be converted into a wholly owned company of Bolsover District Council – this process was completed on 4^th October 2022.

 

On 1.6, the case is attached at appendix 1 of the report, which Members have got, as part of the preparatory work undertaken in the development of the business case.  All Members were invited to attend a meeting with the independent consultant which took place on 13^th December 2022. 

 

1.7 of the report, in addition, all Members were invited to receive a full presentation of the final business case on 19^th January 2023, and have been provided with the opportunity to discuss the content and ask questions regarding the options proposed.

 

Finally, on this particular point in the report on the business case. 2.1 you will note the business case for Dragonfly Development Ltd of which you will see on appendix 1, which I’ll speak to in a moment, provides a detailed analysis on the 5 key themes as follows – and you will see that on page 92 of the front cover of the report further on.

 

These cover the strategic case, the economic case, the commercial case, the financial case, the management case, and details of each of these cases, together with the analysis and the options to consider, are outlined on page 1 of the business case.

 

It is worth remembering where we started in 2019.  We were engaged as a Council in a strategic alliance with North East Derbyshire District Council.  Our workforce was spread over the two authorities.  There was already a low morale and it was growing within the authorities.  Made worse by the burgeoning divide with both councils now having differing political philosophies, and to top it all, this Council was under no overall control.  You may also remember at our first meeting in 2019, Steve said, everyone has a part to play but some will play more of a part than others, at least until things become settled.  It was important therefore that things were settled as soon as possible.  It was important therefore that they were really settled.  We already had a good work force albeit worried, and faced with uncertainty.  There was a big change in the political make up of this Authority so the Cabinet needed to be experienced and committed to a new direction.  This was achieved and remains so today.  The first thing was to reassure the workforce that their jobs were safe - this Steve and I did the very first few days of the new administration, taking stock of our position in relation to the alliance - our other joint ventures and our own structure was next.  Alongside these, we had to deal with the pandemic, the looming desire by some authorities to combine through non structure reform - later Vision Derbyshire, and now a mayoral combined authority in order to get a diminishing few quid from the devolution deal. 

 

Colleagues, housing and growth needed to be addressed too.  Growth is the main policy and has been of this Council over the last 4 years.  A growing population wanted housing and local jobs to replace many thousands lost over the previous decades - government initiatives were also placing demands on planning and social housing.  Steve saw the signs that the joint arrangements with the recycling firm were becoming a bit shaky and told officers to be prepared for their collapse.  Equally, none of us relished the idea of building many 100s of council houses and other developments, and Bolsover District Council, to its credit, not having full control of costs of the build.  A good example is a proposed site in Pinxton that stalled because it didn’t stack up to Woodhead’s financial criteria.  There have been many other things that we as a collective have achieved.  So let’s have a look at five key areas.  I do and say all this to demonstrate the attitude that exists with most members of staff which places Bolsover District Council in the vanguard of creativity and progress. 

 

1 - Housing – wholly owned company, Dragonfly Development, £36m Bolsover Homes Scheme, over £10m been spent on refurbishing our independent living centres.  External wall insulation project, refurbished New Bolsover Model Village, transformed privately owned empty properties in Whitwell and Creswell. 

 

2 - Growth and regeneration – I keep coming back to that because that’s the key.  Vision Bolsover stating our ambitions – Steve didn’t like the concept of a corporate plan and wanted all staff to feel free to be free thinkers and part of our future.  Horizon 29 Regeneration, which is the former Coalite site, growth plans for Shirebrook and Creswell, Bolsover District Local Plan, demolition of the Tibshelf flats, demolition of Alder House, approaching £2m capital receipts generated from land sales.  Redevelopment plan for Briar Close, extension to the Tangent Business Hub, £200k business growth fund, increasing usage along the Robin Hood Line, Skills Audit undertaken, and we supported business for free advertising. 

 

3 – Environment - we rescued the recycling contract, increased recycling options to include flexible plastics.  Tree planting schemes in Creswell, Clowne, Bolsover and Pinxton, along with the Queen’s canopy.  Installed electric charging points in Bolsover and Clowne.  Regarding the community, we established Bolsover TV.  District wide CCTV schemes now being introduced.  We reformed the Enforcement Team and introduced that.  Covid 19 Pandemic Support – you will all recall what this Council did during that period.  Councillors’ grant scheme – approximately £450k given to parish and town councils.  £80k funding for community initiatives.  Introduced Bolsover District Community Lottery Scheme.  Supported residents on their HS2 campaign.  Building the District’s Roseland Park Crematorium in Shirebrook.  Supported communities with free advertising, and on a lighter note, supported community events such as the Palterton Flowerpot Festival. 

 

4 - Leisure and recreation – Here at Clowne, an investment of £700k on a new 3G pitch at Go Active, and £500k on a gym refurbishment at Go Active.  New wellness hubs in Clowne and Tibshelf and expanding sessions in Pinxton, Bolsover, Whitwell and Shirebrook.  Creswell Heritage and Wellbeing Centre – you all know what happened there, and if it wasn’t for this Council that would have never happened.  We introduced PALS – Physical Activity and Lifestyle Support scheme – really well attended. 

 

However, not all initiatives are welcomed with open arms but I believe that common sense always prevails.  Sometimes we don’t have the luxury of debating and explaining when speedy decisive action is necessary, and two major decisions spring to mind – Wards Recycling and Woodhead Construction.  Both had impacted this Council immediately and both were dealt with expeditiously, so much so that the transition was carried out seamlessly with the red bin collection, and just a week’s delay in the case of the construction sites.  Unlike other neighbouring councils, NEDDC and Bassetlaw but best of all, we kept our promise that no jobs would be lost at this Council and we did that four years ago and no jobs have been lost.

 

Turning to Dragonfly, the main point of today’s agenda – the recommendations before you have been arrived at after many months, that’s why I related to the dates in the reports, and costly consultation around £45k plus our good officers with their research time.  You have all had the opportunity to ask questions and receive explanations.  Even the local press have been asked to put questions to us.  However, even after all that, there will still be people who are unsure or opposed to what the Council wants to achieve and safeguard.

 

So what does the Council want to achieve with today’s proposals and how are we able to do it.  For a start, central government, have been since the early 1990s, reducing the revenue support grant to local authorities.  Not only did they want to undermine the power of local government, they wanted to reduce public spending – locally, not nationally, and you already know about the levelling up business.  They tried to politicise regional government office agencies by introducing regional government and unitary authorities but in the main it really only made sense in the big towns and cities.  Part of the RSG grant money was retained by government was put into a pot and made available to quangos like the said regional government agencies which councils had to bid for and this was called top slicing.  Today is no different.  Combined authorities and elected mayor all based on existing LEP areas – you can draw your own conclusions on the benefits of the LEPs to small rural districts.  I think we got £4k over 4 years if my memory serves me right.  The Localism Act of 2011 was introduced to assist forward thinking councils, like Bolsover District Council, to supplement their revenue and give more save to the locality.  Neighbourhood plans, joint venture companies and wholly owned companies are examples. 

 

Now some people have asked – why did you set up a joint venture with Robert Woodhead?  It was to help to regenerate the district and provide an income to the Council.  The Council always protects its assets, jobs and services – something I’m sure that we’re all proud of. 

 

Have the Council loaned the joint venture £10m?  No, the Council did not pay anything to Dragonfly until work is completed. 

 

Will officers be getting a huge pay rise out of this?  Some officers will be taking on additional responsibilities and duties - under these circumstances, pay rises will be awarded. 

 

Have any officers worked for Robert Woodhead’s before?  Prior to the collapse of Woodhead Construction, where we employed six staff who had been made redundant, and this was to complete the live projects that were in existence.  No officer of the Council, involved in Dragonfly, has worked for Robert Woodhead before. 

 

Are the staff happy about the proposals?  Well ask them yourselves.  We have undertaken staff consultation and no one has raised any major issues of concern.  Unite and Unison attended the business case briefings and they were in full support of it.  All employees will remain on the same terms and conditions as they are now for the Council.

 

Robert Woodhead have only filed some small amounts of profits on their accounts, so why did you choose them as a preferred supplier?  Robert Woodhead was split into three separate companies and filed their own accounts.  We always do due diligence on the companies we use.  When they bid for the Bolsover Homes and B@Home house building contract, they came out top of all the bids in terms of both quality and price.  They also offered a whole host of social outcomes that they delivered through these contracts.  We also carried out a credit check only a few weeks before they went into administration, which did not show anything to be worried about. 

 

Are Dragonfly building Shirebrook crematorium and Woburn House, as an example?  The answer is yes.  As a wholly owned company, any developer and construction company profits would then be redistributed back into the Council to improve services for the benefit of residents, instead of sitting on a private company’s balance sheet.  It’s called control colleagues! 

 

Is this a conflict of interest that the Council is the planning authority and can make the decision to suit them?  No, business cases are prepared for all developments and we have to submit an application like anyone else does and go through all the normal processes, which is then decided by a planning committee on its merits, as it normally would with any other planning application.  This is not something we are looking to do here, but there are examples like BFirst, set up by Barnet and Dagenham Council, actually transferred their planning authority into their own company.  So there are many options available which all meet current legislation. 

 

It has been suggested that Members should be on the board of directors as it is a conflict of interest!  It clearly points out in the report that Members can be on the board – there has been a Member on the board of Dragonfly since 2016, and Members are well versed in insuring that conflicts of interest are removed.  All Members have been trained on that.  When discussions are taking place with regard to Dragonfly, Members have always declared an interest and left the room.  This ensures there are no conflicts of interest.  As the Leader has said many times, if you want to control it, you need to own it.  Which is what we have done for Dragonfly and the burgundy bin recycling service.

 

Is it true it’s not just about social housing but you are looking at private housing as well?  Yes, the answer is yes.  The company will look to build Council housing but will also develop private housing for sale and rent to attract income and provide a wide variety of housing in the District.  We are also looking at developing commercial premises to help boost the economy.  Were always talking to private landlords about becoming exemplar landlords, and we can show this through the additional housing and commercial stock that Dragonfly will be involved in.

 

Colleagues, to summarise.  With regard to the report and business case before you today, as I mentioned earlier, all Members had the opportunity to attend two presentations on the business case, and have been given plenty of opportunity to ask questions and discuss the proposals.  The recommendations on page 89 of the report, I referred to earlier, are all required in order to ensure appropriate arrangements and delegations are in place to implement the outcome of the business plan.  Council are not being asked to approve any specific schemes or funding arrangements today.  These will always come back to Council to be assessed on their own merits.  It is essential colleagues, that we take this opportunity today to maximise the potential of Dragonfly, I therefore move the recommendations in the report.

 

The motion was seconded by Councillor Chris Kane.

 

The Chief Executive clarified that herself, the Executive Director of Strategy and Development/Chief Executive – Dragonfly Developments, theAssistant Director of Property Services, and Housing Repairs and the Assistant Director of Development & Planning, would stay in the meeting to answer any technical questions but would all leave the meeting before the vote was taken.  However, the two other statutory officers, the Assistant Director and Monitoring Officer and the Section 151 Officer, would stay in the meeting whilst the vote was being taken.

 

Councillor Allan Bailey referred to a proposed development by Dragonfly on Rood Lane, Clowne and raised various concerns.  The Executive Director of Strategy and Development/Chief Executive – Dragonfly Developments replied that the report in front of Members at this meeting was not about Rood Lane and was about Dragonfly.  Rood Lane would be subject to a business case, which would be presented to Council for approval, if a case for developing the site was made.  With regard to money going into Dragonfly, no monies had gone in to it that hadn’t been spent on building or improving property.  As with any other scheme with the Council, it was paid in arrears, so the Council would only pay for work that had been carried out and only pay for work which had been approved on an approved business plan.  With regard to workforce – one had been put in place – some of the former people form Woodhead’s had been employed and had been integrated into the teams at Bolsover.  So Dragonfly now had expertise at managing contracts and contractors, and expertise in people who build; project managers, site managers and quantity surveyors, and this was approved at Council several months ago.  With regard to why Woodhead’s went into administration – it wasn’t the Bolsover schemes that put them into administration, the Bolsover schemes were profitable, Dragonfly have taken them over and are still finding that Bolsover Schemes are in a position where monies can be put back into the Council.  The first scheme taken over was a difficult one due to additional costs having to be taken on for restarting the site but the Council would still come out with a small profit.  Woodhead’s had signed two contracts pre Covid with other local authorities but they did not have any mechanism in the contracts to increase the value of the projects in line with inflation – the cost of materials went up and Woodhead’s did not have the ability to react to that.  Those two projects are named by the Administrators as to why Woodhead’s failed.  The Council had a good set of staff that knew their jobs and would monitor contracts through.  In line with the business case, there are a set of people within the Council who will be looking at what Dragonfly are doing and were achieving the outcomes stated in the business case.  The Monitoring Officer added that Dragonfly was a wholly owned company owned by Bolsover District Council and would only be able to do what the Council authorised them to do.  There would be a robust set of governance arrangements, which would ensure the Council kept a close eye on Dragonfly, there would be shareholder agreements, service level agreements – the Council could put controls on Dragonfly to ensure that Members’ concerns about Dragonfly doing whatever they wanted, did not materialise.

 

Councillor Maxine Dixon noted Councillor McGregor’s comment that “the Council did not want to be part of a mayoral authority for the sake of a few quid” but as she understood it, there was more than a few quid that the Council was able to apply for.  She also noted Councillor McGregor’s comment that no staff had been made redundant in the past four years but noted that the previous Chief Executive had gone.  The Chief Executive clarified that the previous Chief Executive had not been made redundant.

 

Referring to a housing development site at Glapwell and the proposal for Rood Lane, Clowne, Councillor Peter Roberts felt that if Dragonfly went ahead, it would get away with whatever it wanted to get away with.  Councillor Tom Munro confirmed that the Glapwell site had been a private development site not associated with Dragonfly. 

 

Councillor Allan Bailey requested a recorded vote be taken on the motion which was supported by Councillors Tracey Cannon and Peter Roberts.

 

The Chief Executive, the Executive Director of Strategy and Development/Chief Executive – Dragonfly Developments,theAssistant Director of Property Services & Housing Repairs, and the Assistant Director of Development & Planning, left the meeting at this point. 

 

For the motion (23):

Councillors Derek Adams, Rose Bowler, Dexter Bullock, Anne Clarke, Nick Clarke,

Jim Clifton, David Dixon, Mary Dooley, David Downes, Donna Hales, Ray Heffer,

Mark Hinman, Andrew Joesbury, Chris Kane, Duncan McGregor, Clive Moesby,

Tom Munro, Sandra Peake, Liz Smyth, Janet Tait, Rita Turner, Deborah Watson and Jen Wilson.

 

Against the motion (4):

Councillors Allan Bailey, Tracey Cannon, Natalie Hoy and Peter Roberts.

Abstention(s) (1):

Councillor Maxine Dixon.

 

RESOLVEDthat (1) the full business case at appendix 1 to the report, including the recommended business and governance model, be approved,

 

(2) subject to full and appropriate staff and trade union consultation and TUPE requirements, staff within the teams outlined within the business case are transferred into Dragonfly Development Ltd,

(3) delegation be given to the Head of Paid Service to make any required changes to the above staffing structure and arrangements following staff consultation,

(4) Executive receive a report regarding additional appointments to the existing Board of Directors in due course for approval,

(5) that Grant Galloway, Ian Barber and Chris Fridlington be permanently appointed to their posts within Dragonfly Group on the same terms and conditions as previously agreed within the current temporary arrangements,

(6) that Karen Hanson be appointed as Chief Executive of Bolsover District Council on the same terms and conditions as previously agreed within the current temporary arrangements,

(7) Subject to full and appropriate staff and trade union consultation, the senior management structure of the Council outlined within the report with staff assimilated into posts where appropriate and in accordance with the Council’s restructure policy be approved,
 

(8) delegation be given to the Head of Paid Service to make appropriate amendments to the above following staff consultation,

(9) the use of £0.100m already added to the Transformation Reserve be used to obtain specialist advice as described in paragraph 3.10 of the report, be approved.

(Chief Executive)