Council set to shut regeneration company as operational model "no longer works"

BCP Council is to close its regeneration company Future Places after a report from council leader Vikki Slade said a changed economic environment meant its operating model no longer worked.

Future Places’ staff and workload is to be brought in house with a cost of up to £2.23m earmarked for the operation’s orderly closure.

Cllr Slade’s report said Future Places had been set up in May 2021 to deliver homes and jobs on sites owned, or controlled by, the council as the internal capacity was not then sufficient to deliver the ambitions in its ‘Big Plan’ and the additional support and expertise required could best be found by creating a stand alone company.

In June 2022, the cabinet agreed a revised business plan and funding mechanism with an increase in the working capital loan facility from £400,000 to £8m based on approval of project business cases leading to capitalisation so the cost concerned could be included in the future value of the asset.

This model allowed the council to charge all Future Places costs through capitalisation and remove revenue provisions from its budgets, reducing the net cost.

Cllr Slade said: “However, the economic environment has changed, and we are no longer in a period of readily available capital investment and low interest rates and the council needs to focus its resources on the delivery of key sites.”

Other factors that had turned the economic climate against Future Places included the rising cost of construction, the council’s worsening financial position with a £44m gap in the medium term financial plan and “depleted reserves” together with the  “housing affordability ratio becoming increasingly poor in the area compared to UK average”.

Last August, an external review of the council found its governance was in need of “significant improvement” amid political tensions and an unhealthy member culture that has “often resulted in poor behaviour in the council chamber”.

This also recommended the council should agree a business plan for Future Places with a portfolio of priority projects with timescales for delivery.

Cllr Slade’s report noted the governance review had found “some concerns have been expressed to me about the transparency of the governance of BCP Future Places Ltd.

“The original governance structure did not reflect good practice in terms of governance and elected members were too involved in the day-to-day operational management of the company and in commissioning activity.”

Another issue raised was about how Future Places reported to the council. Cllr Slade’s report said the council could only control Future Places’ expenditure through the agreement of the annual business plan.

The report explained: “The company has control of expenditure decisions between the annual approval processes.

“Future Places value is held in its intellectual property. The company seeks to protect [this] to protect its financial position. In practice this means Future Places is minded to only release final reports to its customers on confirmation of payment for work.

“This runs counter to the shareholder agreement which enables the council to access any documentation on request. This juxtaposition has become increasingly challenging for the company and council to navigate over time.”

Mark Smulian