Agenda item

This report provides the Audit and Standards Advisory Committee with an update on the work of the Housing Companies, i4B Holdings Ltd (i4B) and First Wave Housing (FWH) to deliver against their business plans for 2024-25, which were agreed by the Council as Shareholder of i4B and Guarantor of FWH.

Ahead of the formal introduction of the item, the Chair reminded members of the change in reporting arrangements for i4B Holdings Ltd (i4B) and First Wave Housing Ltd (FWH) with the role of the Audit & Standards Advisory Committee now focussed around assurance relating to the arrangements the Council, as Shareholder (in the case of i4B) and Guarantor (in the case of WFH), had in place to oversee the governance and performance of both companies rather than on their detailed operational management & performance, which would be monitored through the Council’s scrutiny function.  Members were advised that this would involve operational performance being scrutinised by the Community & Wellbeing Scrutiny Committee with performance of the companies in contributing to the Council’s strategic priorities by the Resources & Public Realm Scrutiny Committee, who had undertaken an initial review on 4 September 2024.

Minesh Patel, Corporate Director of Finance & Resources then introduced the reports which updated the Committee on the governance arrangements of both i4B and FWH, including updates on issues considered at the most recent Shareholder and Guarantor meetings in relation to delivery against each respective Business Plan, financial and operational performance along with outline of key risks and the reports provided for the most recent Shareholder and Guarantor meetings (held on 12 September 24) attached as appendices to the update report.

Key issues highlighted were as follows:

·            The Committee’s attention was drawn to the updates provided in section 3.4 of the update report which outlined the key issues covered at the most recent Shareholder meeting between the Council and i4B and Guarantor meeting between the Council and FWH relating to operational performance and financial performance as well as progress against each respective Business Plan.

·            The overarching focus of the Shareholder and Guarantor in terms of the performance of i4B and FWH Ltd on their ability to support the Council’s strategic priorities through their core business activity which involved increasing the supply of good quality affordable housing in the borough and reducing the use of Temporary Accommodation.

·            In terms of acquisitions, confirmation was provided that i4B remained on track to exceed its target in acquiring 25 properties during 2025-25 with the company expected to acquire circa 40 properties during the year that would help to mitigate pressures caused by temporary accommodation costs.  This was due to a combination of favourable loan rates, property market conditions, and an increase in Local Housing Allowance.  Members were advised that the Shareholder had confirmed their continued support for i4B in seeking to move forward with further acquisitions, subject to loan rates and market conditions continuing to combine positively to make acquisitions viable within i4B’s financial criteria.

·            The i4B 2023-24 outturn position had shown a higher operational surplus for the company than in 2022-23, though this was partly due to large increases in the asset revaluation.  Whilst officers and the Shareholder therefore regarded i4Bs operational performance as stable key areas of ongoing focus for both the Board and Shareholder included performance in relation to voids, addressing outstanding gaps in health and safety compliance and in relation to tenant satisfaction with metrics noted as being below the Council’s benchmark.

·            Similarly, the Council as Guarantor and FWH Board had confirmed the company also remained available to take advantage of any opportunity available to it as a Registered Provider, for example government grants issued via the Greater London Authority to acquire affordable housing. Members noted that both the Council and company were awaiting further information on potential grant funding from central government with both keen to explore options that would enable FWH to contribute to increasing housing supply across the borough.

Having thanked Minesh Patel for the initial update provided, the Chair welcomed Andrew Hudson to the meeting (as Chair of the Boards for both i4B Holdings Ltd and FWH Ltd) and then invited the Committee to comment on the updates in relation to both i4B and FWH, with the following issues discussed:

·            Further details were sought on the value of assets held by both companies, which, whilst not able to provide exact details at the meeting, officers advised would consist of the valuation of stock assets held by each company as well as the value of loans secured to support their operation.  The Business Plans for both companies had been designed to ensure they were operating on a financially viable basis, although it was noted that whilst also having achieved an increased surplus in 2023-24 FWHs revaluation had shown a decrease in asset values.

·            In terms of sources and limits placed on i4B’s borrowing, the Committee were advised this was determined by an assessment of what the company could afford and would also need to reflect current loan rates and market conditions to ensure any loan arrangements remained viable within i4B’s financial criteria.

·            Moving on, further details were sought on the action being undertaken to address concerns relating to performance in terms of health and safety compliance by both companies with a focus on outstanding electrical certificates.  In response, Andrew Hudson (Independent Chair of i4B and First Wave Housing) advised that this had also been recognised as an issue by the Boards of both companies and was subject to ongoing monitoring and review.  Whilst highlighting the difference in powers available to enter premises in order to undertake electrical as opposed to gas safety inspections the Boards were continuing to explore the options available including, as an example, the potential to ask electrical contractors to attend at the same time as gas contractors, who were legally able to force entry to inaccessible properties in order to carry out works and benchmarking also undertaken through House mark.   In noting that the trend in terms of performance was currently flat the Committee was assured this remained a key focus for the Board of both companies with action also being monitored at both the Shareholder and Guarantor meetings.

·           In considering the update on the financial performance regarding i4B, further details were sought on the changes identified in relation to the Income & Expenditure Statement within the report. These related to the reasons why expenditure on the Service Level Agreements (SLA) and the provision of supplies and services were higher than budget. In recognising these concerns, Andrew Hudson advised of the Board’s continued to focus on accuracy of the budget monitoring and forecast process. Current issues highlighted included delays in the submission and processing of invoices from third parties and also management of the costs associated with repairs and maintenance of stock, given the demand led nature of the service and in seeking to avoid disrepair claims with preventative works seen as the best way to prevent overspending.

·           As a follow up issue, details were also sought on the forecast void rent loss which it was noted had been calculated at £443k for the year based on Brent Housing data over the first 4 months.  Highlighting reference to the availability of data from those properties managed by Mears, members were advised that whilst awaited the current assumption remained that losses would equate to 4%.

·            As a further issue, details were sought on the impact of delays in processing of Universal Credit claims and associated challenges and in relation to rent collection and how each of the companies were seeking to support tenants in this process, given the wider benefits identified.  In response, Andrew Hudson advised that whilst not currently subject to a specific workstream the relationship had been recognised, with the Board keen to review what support could be made available to tenants in seeking to apply for Universal Credit.

·            In response to a query regarding the management of a void commercial property held by i4B, the Committee was advised that an update on the current position was due to be reviewed at the next Board meeting.

·            Returning to the action being taken to improve management and turnaround of void properties, which had been recognised as a significant challenge by both Boards as well as the Shareholder and Guarantor, the Committee were provided with further detail on the work being undertaken to address the issues including a deep dive review planned in order to identify ways of improving the efficiency of the voids management process. This would have a particular focus on turning round more simple voids as quickly as possible with it acknowledged that more complex cases would take longer e.g. due to the state of repair of individual properties, pest control issues etc.  In response, the Committee advised they would also be keen to review the progress being made in addressing void performance as part of the next update on delivery of the i4B and FWH Business Plan.

·            Referring to details provided on the operational performance of i4B further details were sought on the reasons why data relating to a number of key performance indicators for properties within the Home Counties, managed through an SLA with Mears as opposed to Brent’s Housing Service, were shown as unavailable.  In response Andrew Hudson assured the Committee of the action being undertaken through the Board to ensure performance was being monitored in relation to the management of these properties with the existing management contract also in the process of being relet and awarded to Greystoke who would be taking over as the new management company.  In terms of the potential to further expand the portfolio of properties held within the Home Counties Andrew Hudson informed the Committee that this option was not current subject to active consideration recognising the wider policy considerations that would need to be considered and assessed in relation to the associated costs and ability to manage and let the properties and any change in approach needing to be agreed following discussions with the Council.

·            As a final issue, technical clarification was provided in relation to the accrual process relating to the i4B accounts with members advised of the work being undertaken to ensure this was subject to ongoing monitoring throughout the year

As there were no further questions the Chair thanked officers along with Andrew Hudson for presenting the report and responding to the Committee queries. The Committee RESOLVED to note the update on progress being made by i4B Holdings Ltd and First Wave Housing (FWH) to deliver against their 2024-25 Business Plans as detailed in the reports provided for the Council as Shareholder of i4B and Guarantor of FWH.