SPECIAL MEETING OF THE ORGANISATION SCRUTINY COMMITTEE

RECORD OF MEETING HELD ON 25^TH JUNE 2007

Present:

Councillor A C Johnson; Chair

Councillors W T Beard, J A Beech, D H D Charlesworth, H W Curran, R E Dodd,

B Evans and J Lewis

In Attendance:

Crewe and Nantwich Borough Council

Alastair Bain             Team Leader – Private Sector Housing (deputising for Head of Housing)

Paul Goodwin            Assistant Director (Accountancy and Audit)

Chris Henshall           Borough Solicitor and Monitoring Officer

Carol Jones               Democratic Services Officer

Wulvern Housing

Rob Allen                  Partnerships Director

David Beardmore        Legal Services Manager

David Hunter              Vice-Chair – Wulvern Housing Board

Sue Lock                   Chief Executive

Mark Thrasher            Director of Resources

David Williams            Chair – Wulvern Housing Board

Non-Committee Members in attendance:

Councillors D J Cannon, M Campbell, P A Hallett, S Roberts and R Westwood

Apology:        Councillor A Moran

7          DECLARATIONS OF INTERESTS

Councillors W T Beard and R Westwood each declared a personal interest in the proceedings on the basis that they were Members of the Wulvern Housing Board.  Councillor P A Hallett declared a personal interest in the proceedings on the basis that he worked for Crewe Alexandra Football Club which had a business relationship with Wulvern Housing.

No other Member made any declaration of interest in respect of any item of business on the agenda.

8          WHIPPING DECLARATIONS

In accordance with Paragraph 18 of the Performance and Overview Procedure Rules, Members were invited to declare in respect of items where the whip had been applied.  No such declarations were made.

9          WULVERN HOUSING – GOVERNANCE ARRANGEMENTS

(Note:  In accordance with Procedure Rule 26 (2), Councillors D J Cannon, M Campbell, P A Hallett, S Roberts and R Westwood spoke on this item with the permission of the Committee.)

9.1       At its meeting held on 31^st May 2007, the Board considered the report of the Portfolio Holder for Planning which set out Wulvern Housing’s proposed change in governance arrangements. At that time, the Board made the following decision -

“(A)      That, in the light of the comments made by the Performance and Overview Committees, a decision on this matter be deferred;

(B)        That the Performance and Overview Committee (Organisation) be asked to review this matter;

(C)        That a representative of Wulvern Housing be asked to attend the Performance and Overview Committee meeting to advise on the issues involved; and

(D)        That the Performance and Overview Committee (Organisation) be asked to make a recommendation to Board at the earliest meeting, to inform Wulvern’s decision on its governance arrangements at its Annual General Meeting on 13^th September 2007.”

9.2        The Committee (now renamed the Organisation Scrutiny Committee) was invited to consider the following documents –

- Report submitted to Board on 31^st May 2007 

- Briefing Paper on Voting Rights, tabled at the Council’s Board   meeting

- Wulvern Housing Governance Review Board Paper approved by the Wulvern Housing Board on 14^th March 2007.

- Wulvern Housing – 2005-2010 Plan (Year 2 up-date September 2006)

- Summer Edition of  “homewords”

9.3       Appointments to Wulvern Housing - Background Information

Following the transfer of the Council’s housing stock to Wulvern Housing in March 2003, the Borough Council was invited to appoint 5 Members to the Wulvern Housing Board.

On 15^th July 2004, the Borough Council’s Board appointed four elected Members (Councillors Beard, C Bratherton, Dykes and Westwood) to the Wulvern Housing Board, with David Marren (Executive Director – Direct Services) as its fifth representative.  They were appointed for a 2-year period to ensure continuity of experience and knowledge.

In 2006, the Council was informed by Wulvern Housing that it was reviewing the size of its Board and had been advised by the Housing Corporation that the Board size should be reduced to 12 Members.  As a consequence, the Council was invited to nominate four representatives only and, to comply with Wulvern Housing’s request for continuity of experience and build-up of knowledge and expertise, Councillors Beard, Dykes and Westwood were re-appointed, as was David Marren.  Councillor C Bratherton had lost her seat in the May 2006 elections and it was not, therefore, necessary for the Council’s Board to remove any of its previous nominations.

9.4       New Proposals

Mr Thrasher, Wulvern Housing’s Director of Resources, made a presentation to the Committee, which set out the background to its creation, the statutory and regulatory provisions and its proposals for a change in its governance arrangements.

The Committee was informed of the nature of Wulvern Housing as an organisation.  It was a non-profit making Housing Association and classed as an Independent and Provident Society registered with the Financial Services Authority.  The Association was bound by its charitable objects to provide for “people in housing need” and was regulated by the Housing Corporation.   Mr Thrasher outlined the principal areas of regulation.

He also presented the current financial situation including a loan profile and explained the implications for Wulvern Housing in respect of the “Right to Buy” scheme.  A total of 410 properties had been removed from the housing stock through this scheme, and each replacement dwelling cost approximately £100,000, with Wulvern Housing retaining only approximately £18,000 for each “Right to Buy” sale. 

The Association would need to consider how it replaced its housing stock to provide for the housing needs of the community in the future. 

Rationale for Change

Wulvern Housing had carried out a review of its governance arrangements, and, in response to the Housing Corporation’s request, was proposing to reduce its Board membership from a maximum of 15 to a maximum of 12.  It was good practice to reduce to 12, and each year, as part of its audit arrangements, Wulvern Housing was required to justify to the Housing Corporation, why it had failed to comply with the rules and reduce its Board composition.

The Board meetings were an essential part of the governance arrangements of Wulvern Housing.  Its constitution’s quorum requirements were seven Board Members, or half the Board (whichever was the lower), with a further provision that at least one must be a community member.   In recent years, it had been necessary to cancel some Wulvern Board meetings, owing to the calling of Borough Council meetings, at short notice, with a consequent unavailability of the Borough Council members.  A revision to the Board size, and as a consequence, a reduction in quorum, would minimise the risk of meetings being cancelled.

The Wulvern Board’s current composition was –

- 5x Tenant representatives

- 5x Borough Council representatives (notwithstanding this, as noted above, the Council had only nominated 4 representatives at its last round of appointments to the Wulvern Housing Board).

- 5x Independent Members

Borough Council representation:  The consequence for the Borough Council was that it would be required in future to nominate only 3 Members;  moreover, one of Wulvern’s proposals was to introduce a new rule which would allow the Local Authority to nominate a person who was not an elected Member or an Officer. This nomination would be included within the 3 nominations.

Term of office:  It was also proposed that each appointment be for a 3-year period to provide greater stability. 

Remuneration for independent members:  Wulvern Housing was experiencing difficulties in attracting independent Board members with appropriate skills, and as an incentive, was proposing a remuneration scheme for such members.

Following the presentation, Members of the Committee and non-Committee Members were able to make comments and ask questions, and these were responded to by representatives from Wulvern Housing and Officers of the Borough Council, as appropriate.

9.5        Comments

- There should be an equality of representation on the Wulvern Board (across all three groups).

- In the interests of equality, any remuneration should be offered to all Wulvern Board members.

- A Member challenged the way in which this Council had dealt with the consultation exercise. The Wulvern proposal had been submitted to the Council’s Board (as noted above) and the Member commented that the proposals were outside Council policy and should, therefore, be a matter for the Council itself to decide.  He stated that, at the point of transfer, there were obligations enshrined in the Deed of Covenant, and any variation to that amounted to a change to this Council’s policy.   The original transfer document had stated that there should be 15 Members on the Wulvern Board and this agreement should be honoured.

- Concern was expressed that the proposed reduction in Council Membership may be a covert method of enabling Wulvern Housing to privatise the housing stock if it wished.

9.6       Responses to Comments

- The Committee was informed of the role of the Housing Corporation and its wide powers.  Wulvern Housing was accountable to a Lead Regulator, and its influence over Wulvern’s business dealings was significant.

- The Committee was reminded that Wulvern Housing was bound by the charitable objects and, even if it were so minded, it could not dispose of the housing stock.

- The Council’s Board was the appropriate body to consider Wulvern’s proposals as it was the Board which was empowered to respond to all consultation exercises, on behalf of the Council.  The Borough Solicitor and Monitoring Officer had responded to the Councillor who had raised this issue, but at the invitation of the meeting, summarised his view to the effect that the “policy” of the Council in 2003 was to transfer the Council’s housing stock to Wulvern Housing.  Self-evidently, the sale of the stock was a single “once and for all” transaction, the terms of which were protected by contract. The Council did not need a policy to guide its continuing relationship with Wulvern; what ensued was the establishment of a contractual relationship between the two, and that was the current situation.

- Whilst the offer document had stipulated 15 Board Members it did not prescribe 15 in perpetuity. Consequently, this could be revised, as necessary by Wulvern Housing.  The independence of Wulvern Housing to conduct its own business, without interference or influence from outside organisations was emphasised.  It was a private sector organisation which “stood or fell” by its financial dealings.

- The Working Party established by the Wulvern Board initially discussed payment to all Board Members;  however, this had been rejected because Tenant Members considered that this would affect Benefit payments and Council Members were already in receipt of an allowances payment.

- An elected Member of the Wulvern Housing Board commented that the Board operated in a harmonious manner, with the absence of “political battling”.  Whilst its constitution provided for formal voting, Board Members worked together with a common aim and managed to resolve all issues without conflict.  He also commented on the issue of equality and stated that a strict adherence to an equal mix could amount to “token equality” and could be to the detriment of the quality of representation. It was more important for Wulvern Housing to be managed in an effective and business-like manner and that required the correct mix of skills and experience.

- The proposals to revise the Board composition were not disingenuous;  they represented a genuine approach to address the issues faced by Wulvern in trying to manage the Association appropriately and to meet the requirements of the Housing Corporation.  Wulvern was obliged to abide by the Codes of Guidance and the Regulatory Code.

9.7       Council Nominees

Paragraph 4.5 of the report submitted to the Council’s Board stated “The Association has asked that the Council’s nominees are members of the Council’s Executive Board”. This was an error; the Wulvern Housing representatives confirmed at the meeting that there was no such requirement.

9.8       Recommendation to Board

It was AGREED that the following be submitted to the Board as this Committee’s recommendation –

(a)       That Wulvern Housing’s proposal to reduce the number of Council representatives on its Board from 5 to 3 be accepted; and

(b)       That one of these may include a person who is neither a Council Member nor an Officer.

Note:  The Committee did not make a recommendation on the term of office for appointees, nor remuneration for independent members.  This would be a matter for the Council’s Board to consider at its meeting on 26^th July 2007.

10        CLOSING REMARKS

The Chair thanked representatives from Wulvern Housing for attending the meeting and for their contribution to the discussion.

………………………………………………….Chair