ANGRY and frustrated residents in Tiverton have called for a public apology from Mid Devon District Council following losses made by its arm’s length development company, which will leave council taxpayers footing the bill.
During a heated full council meeting at which 13 members of the public asked questions on the ill-fated 3 Rivers Development Ltd and the future of its St George’s Court build in Tiverton, residents voiced concerns over the lack of independent scrutiny and the site’s suitability for social housing which is part of the council’s plan to win back public support.
The company was set up to construct high quality local homes while generating a profit for the council, but it was impacted by the pandemic and a failure to sell enough properties at St George’s Court.
The council loaned the company more than £21 million and needed annual sales of around £3-3.5 million to cover its overheads.
In both its 2021/22 and 2022/23 accounts, the council provised for potential losses by the company of around £5.3 million.
After recommendations by the council’s cabinet last month, the full council has agreed to close the company over a what it suggests is a “sensible short term period” to minimise potential financial exposure and maximise returns for the council from the company’s assets.
The 3 Rivers Development has two schemes at St George’s Court and Haddon Heights, while Bampton will be completed in the next six months.
But the saga has left residents angry and the reputation of the council in shreds.
The Conservatives were the largest party before the local elections, and at the start of this year shared control with the independents.
In February, four Conservatives on the council’s ruling cabinet left their posts, leaving the council in control of independent councillors for around 10 weeks.
One public speaker, Sue Griggs, said there were problems “almost immediately” with the company although expectations were very high.
She said there needed to be a robust plan if the “over 60s” social housing accommodation at St George’s Court failed and questioned why an independent body isn’t scrutinising the council’s actions.
“Mid Devon shouldn’t be marking its own homework,” she said.
Resident Roger Davey said the formation of 3 Rivers and St George’s Court was “a disaster” and the latest decision by the cabinet to sell St George’s Court to itself showed “a complete lack of commercial and financial competence.”
“This site could have been a jewel in Tiverton’s crown, [but] is now blighted by this eyesore, enormous, ugly blocks of flats towering over the river bank like a ridge of giant tombstones.
“It’s another nail in Tiverton’s coffin.
“The council was warned on many occasions that this scheme was not viable.
In 2020 I called for 3 Rivers to be wound up as I could see there was no profit to be had.”
Tiverton town councillor and resident of St Andrew’s Street where St George’s Court is situated Sophia Beard said, despite promises, consultations would take place with local residents, but no-one from Mid Devon Council had talked to them about the change from private ownership houses to social needs housing.
“This is a compassionate neighbourhood.
“This is not about ‘not in my backyard’ politics, but the potential implications or affect on property prices are legitimate concerns and are being overlooked in the absence of any consultation.”
She said the suitability of the site was in doubt for social housing for retired or young families, as access is dangerous and on a slope.
She fears a ghetto may be caused by the build-up of social housing on the street, there isn’t enough space for parking and she is concerned about waste collections and rats.
She said there is outrage in Tiverton about the loss of funds and she requested a full investigation that is published so it can be “totally transparent”.
One resident of St Andrew’s Road, Debra Coslin, called for a public apology for the whole of Mid Devon who have funded an “absolute disaster”.
Council leader Luke Taylor (Lib Dem, Bradninch) said: “Whilst the losses to this council will still be significant, it will be no way near the £21 million currently being reported.
“This new administration knows it has to work hard to regain the trust of the electorate that previous administrations have lost.
“The scrutiny committee has already announced a ‘lessons-learned’ initiative for their forward plan.
“However I can confirm this administration certainly has no plans for any future arms-length businesses.
“We must remember that it is central government who actively encouraged councils to look at alternative revenue streams when they abruptly stopped the funding to local authorities to the tune of millions of pounds.
“You can now see up and down the country how well this has gone.”
He said by accepting these recommendations the council could go “onward and upward”.
Delegated authority has been given to the deputy chief executive in conjunction with the cabinet member for finance to close the company, in preference to calling in administrators.
Councillors also agreed that regular updates be made to cabinet members to make sure members were all aware that matters were progressing.
Cllr Nikki Woolett (Ind, Cullompton St Andrews) said: “This will be a complex process subject to many decisions and I am sure, as demonstrated by the recommendations, further external professional advice will need to be sought.”
Cabinet member for finance James Buczkowski (Lib Dem, Cullompton St Andrews) said no money from council tax had been used to support the St George’s Court build, however, it was likely that the company would incur losses that the council would have to fund.
He said the council’s Housing Revenue Account would take over maintenance and ownership of the site and it would be managed by the local lettings policy.
The purchase would be funded by reserves, money obtained from right-to-buy, and the remainder from borrowing at preferential rates from the government’s public works loan board.
He said he expected that two-thirds of the £21 million loaned to the company would be recouped.