Agenda item

12.1 To receive an update on i4B Holdings Ltd’s recent performance, business plan and risk register.

12.2 To receive an update on First Wave Housing Ltd’s recent performance, business plan and risk register.

The Chair advised that the updates on both i4B Holdings Ltd and First Wave Housing Ltd (included as Agenda Items 11.1 and 11.2 on the agenda) would be taken together.  He then welcomed Martin Smith, Chair i4B Holdings Ltd and FWH Ltd to the meeting and invited him to introduce both reports.

In introducing the item Martin Smith advised that both reports provided the Committee with an update on i4B Holdings Ltd and FWH Ltd.’s recent performance, 2023/24 business plan and risk register, with the following issues noted by the Committee:

·                 Both companies were financially secure, with i4B recently demonstrating a positive financial return, the Committee was advised that financial forecasting suggested that this would be likely to continue in the foreseeable future.

·                 The context in which the 2023-24 Business Plan had been developed along with the progress made against the objectives within the 2022-23 Business Plan and key strategic priorities for 2023-24.

·                 In terms of operational performance, the main issues continued to be void turnaround times and (in relation to i4B) rent collection, with ongoing strategies in place to address both issues.

·                 Risks continued to be regularly reviewed with the biggest strategic development since the last Committee recognised as the challenging external economic environment in which both companies were having to operate which had seen high inflation and a sharp increase in interest rates.  This had posed issues in relation to the i4B Business Model relating to the purchase of street properties. In response to the economic challenges, members were advised of the measures taken to secure available finance at preferential interest rates, as part of i4B’s Development Strategy. Additionally, the decision had been taken to temporarily suspend the i4B street property acquisition programme until market conditions had stabilised.

·                 The Business Plan for i4B and FWH Ltd had both been approved by Cabinet on 13 March 2023 with the strategic priorities identified remaining focused around increasing the supply of affordable housing in the borough; running a viable business; delivering safe and sustainable homes; and providing a consistently good housing service in support of the Council’s wider Housing Strategy. Members were advised these also included, as specific priorities, an approach designed to deliver accessible adapted accommodation as well as meet current environmental and decarbonisation requirements and standards, given the additional costs relating to environmental efficiency works.  In working towards these objectives, the Committee was advised of the current focus within the i4B Business Plan towards the acquisition of new build block properties utilising the funding available pending any decision to re-enter the street property market.

Having considered the reports, the Chair invited Committee members to ask any questions or points of clarity they may have, with the following points of discussion summarised below:

·                 In response to concerns identified regarding the performance on voids and rent collections, Darren Armstrong (Head of Audit and Investigations) advised of the recent completion of an internal audit undertaken with Brent Housing Management (BHM)in relation to voids management, on which a follow up was scheduled for Quarter 1 2023-24, with an update due to be provided to the Committee as part of the Annual Internal Audit Report in June 2023 to advise of the summary outcomes and recommendations.

·                 The Committee welcomed the actions listed in section 5.1.2 of the i4B Performance report that provided an overview of the measures being taken by BHM to improve voids and re-letting performance but were keen to understand the reasons for the current performance. In response, the Committee were advised that there was no one clear reason, it was a combination of issues mainly around process that needed to be addressed to support a reduction in voids and re-letting times.  As a result of concerns expressed at the ongoing performance in this area, members were advised of the regular review mechanisms now in place with the actions identified felt to be reasonable and proportionate in their design and overall impact in seeking to monitor and address ongoing turnaround performance issues and their causes..

·                 An additional factor that had been identified in terms of performance on voids was an external issue that extended beyond Brent, in relation to the supply of material and trade and labour to undertake the necessary maintenance and repair to allow properties to be in a suitable condition for re-letting.

·                 In response to the detail provided on the financial performance of both companies, further assurance was sought by the Committee regarding the financial viability of both companies. In response, the Committee were advised that both companies were financially secure. Despite the ambiguity of the external economic climate and the potentially large expenditure in relation to the decarbonisation of properties, financial forecasting had indicated the mitigating actions being taken to address these challenges would ensure the operation of both companies would remain viable.

·                 The Committee queried if there were plans to increase housing opportunities for residents with more complex needs such as large families, families with household members with disabilities and residents seeking refuge from domestic abuse. Whilst the housing of those residents suffering domestic abuse was provided through a separate arrangement and not a function for either i4B or FWH addressing supply issues in relation to large families and disabled residents had been recognised as a priority and had been included within the Business Plan to purchase new builds that were more adaptable to meet the needs of these groups.

·                 In response to a query regarding the timescales and plans to progress the retro fitting of properties to support Brent’s climate ambition the Committee were advised that pilot work and stock energy efficiency surveys had been undertaken to ascertain the likely costs of retro fitting properties to relevant standards. As a result, it was envisaged that a more detailed position would be available by the end of 2023 - 24 on the financial impact, and an action plan could be formulated accordingly including any necessary updates to the company Risk Registers

·                 It was confirmed that Service Level Agreement’s (SLA’s) were regularly reviewed and the i4b and FWH Boards felt that a fair package was in place for both the companies and Council.

·                 In relation to the decarbonisation of properties in properties not owned by i4B or FWH, the Committee were reassured that finances had been set aside for the retrofitting and decarbonisation programme of works, however, this would also involve, where necessary, full consultation with leaseholders in relation to the costs of any works.

·                 Following concerns highlighted in relation to the effectiveness of the current housing repairs service, the Committee were advised of the alternative options being considered linked to the upcoming renewal of the existing housing repairs contract with Wates.

·                 Referring to the risk identified in relation to i4B and the impact of poor data quality on asset management systems and effective monitoring of compliance with health and safety standards the Committee were assured that Health and Safety compliance continued to be a high priority for the Board, particularly in relation to concerns highlighted around mould issues.  In recognising the mitigating actions identified to support further improvements moving forward, the Committee noted that BHM had implemented a whole system review of compliance arrangements. The Committee were assured that Health and Safety compliance would continue to be identified as high risk on the Risk Register until the newly introduced system was in use and confirmed to be operating successfully at which stage consideration would be given to reducing the overall level of risk. Members also noted that part of the operational challenges in managing health and safety compliance was in gaining access to third party owned properties to carry out checks.

·                 In response to a Committee query in relation to the financial modelling used to forecast i4B/FWH cashflow, including the risks and variability assumptions used to stress test the model, the Committee were advised that the stress test looked at factors including costs around the decarbonisation of properties, the challenging economic environment including inflationary cost pressures, the likely increase in tenant arrears and the changes in governance to local housing. After exploring the impacts of these points individually and collectively it had been established that FWH could withstand significant variation in the impact of these factors on their financial viability. Whilst the impact of these factors would be greater on i4B it was felt that the company remained in a financially sustainable position with additional mitigations available should the position in relation to its viability alter, including the option to dispose of stock, if necessary.

·                 The Committee required clarity on how the loans drawn down to reinvest as part of the company Business Plans had been utilised. The Committee were advised that £23m had been borrowed by i4B prior to the interest rates rising rapidly in 2022. It was clarified that approx. £20m was available and ready to spend, however this money would not be used to support business cashflow but would be deployed at the right time in line with positive economic peaks to purchase more affordable housing, with a preference that the housing purchased would support groups with the greatest housing needs as previously discussed, in line with the agreed Business Plan.

As no further issues were raised the Chair thanked Martin Smith for attending the meeting in order to present both the i4B Holding Ltd and FWH Ltd reports and it was RESOLVED to note the performance update reports provided in relation to both i4B Holding Ltd and FWH Ltd and continued focus required on the key risks and performance issues identified.