Agenda item

LOCAL AUTHORITIES TRADING COMPANIES UPDATE - 19:50 - 20:05

To receive a report from the Acting Director Commercial presenting an update on the Local Authorities Trading Companies Update.

Minutes:

RECEIVED a presentation from Nicky Fiedler (Acting Director Commercial) regarding an update on the London Borough of Enfield’s Trading Companies.

 

NOTED

 

1.    This was a follow-up of a report given by James Rolfe (previous Executive Director Resources), a couple of years ago, on the Council’s Companies.

2.    The presentation was given under the following headings as detailed at pages 33-43 of the agenda:

·         Why do Councils have trading companies.

·         Overview

·         Enfield’s Companies/Benefits of the Companies

·         Energetik

·         Enfield Innovations Ltd

·         Independence and Wellbeing Ltd

·         Housing Gateway Ltd

·         Governance & Risk update

·      Reviewed companies’ governance in 2017

·      Established Shareholder Board 2018

·      Reviewed Reserved Matters

·      Clarified Roles

·         2019/20

3.    The following questions and queries raised in response to the presentation:

a.    The committee asked for clarity regarding the Council’s energy company, Energetik, and if the purpose of the company was to provide energy to residents. Nicky Fiedler clarified that it was predominantly to provide energy to the Council’s developing estate renewal schemes and then to the Meridian Water (MW) project’s 10,000 homes. This was a unique opportunity as there would be an Energy Recovery Facility right next door to the MW development.

Energetik was established in 2015 and had been trading in the last year. The Council took an investment decision in early 2017 and Energetik had its first customers a year ago.

b.    All the Council’s trading companies are limited.

c.    Councillor Savva’s enquiry regarding Energetik and if the company was on target to be completed with the provision of energy to residents. He raised concern that the incinerator would not be ready until 2028, the pipes were not in the ground and would Brexit hinder the project with prices going up.

Nicky Fiedler clarified that Energetik was on track and that there is a Cabinet report being heard, in March 2019, around the next stage of investment. The report is leading the Council to the direction of the investment but is not asking for the investment decision. The Council would need to take an investment decision on Energetik by September 2019 and the company would need to update the business plan, go through the business model and external validation.

The company is operational, at present, and has been expanding. The Energetik program was still on coursed to connect/supply the Council’s 4 estate renewal schemes.

d.    Councillor Savva referred to the mention of the Shareholder Board and if the Council made a profit from the trading companies. Nicky Fiedler clarified that there are multiple ways the Council and residents benefit from the trading companies. The companies do make a profit and could also reduce the cost of Council services and improve service quality.

The Independent & Wellbeing company doesn’t make a large profit, but it seems to reduce the cost of the service to the Council.

In terms of Housing Gateway Ltd, the Council has increased asset values, avoids the cost of nightly paid temporary accommodation costs and makes a profit.

Enfield Innovations Ltd are breaking even as a company.

Energetik is a longer-term business plan and still delivers a percentage premium to the Council. How the Council finances Energetic going forward, there may be more significant percentage premiums.

e.    Councillor David-Sanders asked how close the Council were with company’s business plans. Were they all live, being reviewed, and where was the Council from a risk point of view. When were the reserved matters likely to be implemented and how would the Council be supporting the companies leadership skills and culture. Nicky Fiedler clarified:

·         Business Plans – Given that the Shareholder Board has only recently been established, the companies’ intention had always been that they would submit an annual business plan to the Council. But due to no mechanism in place for them to do that, they had not been submitted. Even though it was anticipated that they would. At the last Shareholder Board meeting, Companies have been asked to provide an updated business plan. Officers’ have been working with the companies to help produce a robust business plan since the last Shareholder Board meeting, by attending scoping meetings with the companies.

From these proper, robust business plans, the Council would then be able to track quarterly reporting and will be directly linked to what companies put into their business plans.

·         Reserved Matters – Some of this is procedural. The Council could just write to the companies and send the reserved matters for their boards to implement. However, the Council wants to work with the companies to ensure they understand how reserved matters are used and implemented.

·         Leadership skills – How the companies and officers can work more effectively i.e. how decisions are taken, to deliver the outcomes the Council is looking for.

f.     Peter Nwosu (Independent Member) referred to the Council’s partially owned companies, who they were and what the Council percentage ownership was for each company. Nicky Fiedler clarified that the companies were:

·         Red Lion Homes

·         Enfield Norse

·         Montagu LLP

                      Nicky Fiedler would update the committee with further accurate       details of partial percentage ownership of these companies by the Council.

                     ACTION: Nicky Fiedler (Acting Director Commercial)

g.    Peter Nwosu (Independent Member) referenced the Shareholder Board and how officers are re-assured and comfortable that they are not acting as shadow directors when dealing with the companies. Nicky Fiedler clarified that the Shareholder Board’s terms of reference makes it clear about giving companies strategic direction (linked to the Council’s strategic direction) but not operational direction. The Council were very mindful about officers’ shadow directing the companies.

4.    Fay Hammond questioned members about why those members who sit as Directors on the Council’s companies’ boards, did not mention this as a declaration of interest and that they should declare this at each meeting where the agenda item is regarding the Council’s companies. At this point the following members made declarations of interest:

·         Peter Nwosu sits as an independent director on two of the Council’s companies. These are Housing Gateway Ltd & Enfield Innovations Ltd.

·         Sabri Ozaydin sits as a Director (Chair) for Enfield Innovations Ltd

·         Councillor Yusuf sits a Director (Chair) for Independent Wellbeing Ltd.  

 

AGREED to note the Local Authorities Trading Companies Update.

 

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