The Chair (Councillor Coulson) prior to the commencement of the formal virtual meeting announced that one apology for absence for the meeting had been received from Ms J Maw, with Councillor S Sharma, the substitute member.
The Chair outlined the purpose of this meeting, which was to consider two call-ins, which were two requests to review the same Cabinet decision dated 16 June, 2020 concerning the development of the former Argos Building and wider regeneration of the area (report reference 20/114). As those proposals would be considered by the Planning and Development Committee, he reminded those Members who also sat on this committee not to pre-determine themselves either in favour or against the proposals. The Chair further stated that as he expected this meeting would be conducted in public session, Members should be mindful they should not discuss any commercially sensitive or confidential information whilst in public session.
Members are reminded of the need to consider whether they have a personal
or prejudicial interest to declare in any of the items on this agenda. If so, the
nature of the interest must be declared at the start of the meeting. In
addition, the attached form must be completed and passed to the Committee
Administrator. The Officers will be pleased to advise, if necessary, and any
request for assistance should be made, in the first instance, to the
Committee Administrator whose name appears at the end of this agenda.
Ideally, such advice should be sought before the day of the meeting so that
time is available to consider any uncertainty that might arise.
Councillor Smith declared a personal interest in agenda item 4, Call-In - Cabinet decision - Scarborough Town Centre regeneration (student accommodation scheme) (reference 20/114), as he was known to the owner of St Helen’s News at No.2 St Helen’s Square.
Councillor Sharma declared a personal interest in agenda item 4, Call-In - Cabinet decision - Scarborough Town Centre regeneration (student accommodation scheme) (reference 20/114), as he was known to Paul Cross, who had a freehold above the newsagents.
To consider any public questions submitted, of which due notice has been given, and which are relevant to the business of the Overview and Scrutiny Board.
There were a number of public questions received. Mr James Corrigan (questions 1-7 below) and Mr Graham Collinson (question 8 below) were unable to attend the meeting in person. The Democratic Services Manager read out their questions to the Board. The answers were provided by the Director, Richard Bradley (to questions 1,4,6 and 7), and Officers, Kerry Metcalfe (to questions 2,3 and 5) and St John Harris (to question 8).
Q1. At the Audit Committee meeting held on 25 June 2020, I asked about the Travelodge CVA and was told that this matter was commercially sensitive. It is not commercially sensitive to provide confirmation of the Council’s net income from Travelodge Hotels Limited for the year ended 31 March 2020 and the projected net income for the year ended 31 March 2021. This information was freely provided to the Audit Committee on 30 January 2020 and disclosed in report RB 18/209 (para 1.7). Please now provide this information. It is relevant to the budgetary considerations of the Agenda items of this meeting.
It has been disclosed by Secure Income REIT plc in a press release (see attached) that they have lost the equivalent of approximately 10 months rent across the majority of their investments in Travelodge Hotels. If the investment by the Council is similar then it is likely that the Council will have a loss of around £700,000. This is a huge sum and the Council must consider the effects on its own budgets before committing to further borrowing. This turns the budgeted net inflow of £328,000 shown in RB 18/209 and RB 20/26 into an actual OUTFLOW of £372,000. In effect this item has produced an estimated £700K hole that will have to be financed from elsewhere in the Councils resources.
A1. The decision by other parties to disclose their commercial negotiations is not a matter for the Council to comment on. The negotiated CVA settlement involving the Council and Travelodge Hotels Ltd is commercially confidential for the reasons previously outlined.
Q2. At the Audit Committee meeting held on 25 June 2020 it was confirmed that the Council’s Auditors had not signed off on the Council’s accounts for almost 5 years. All capital projects should be put on hold pending completion of the Audit of these open years’ accounts. With this significant and material uncertainty hanging over the Council’s finances, how can the Council contemplate such a significant project and such immense borrowing?
It is highly unusual for the accounts of an organisation not to be signed off by their Auditors for over 5 years. If the Council was a commercial entity it is unlikely that any lender would contemplate a loan with such uncertainty over its accounts. Every effort should be made to resolve the Audit issue before entering into further high risk projects. Entering into the proposed development with such uncertainty hanging over the accounts is not only reckless, but could also lead those members and officers involved with a charge of maladministration if ... view the full minutes text for item 2.
Exclusion of the public
To consider the following motion:-
“that in accordance with Section 100A(4) of the Local Government Act 1972 (and subject to consideration of the public interest under Paragraph 10 of Part 2 of Schedule 12A of the Act) the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information (as defined in Part 1 of Schedule 12A of the Act), namely information;
(a) relating to any individual;
(b) which is likely to reveal the identity of an individual; and/or
(c) relating to the financial or business affairs of any particular person (including the authority holding that information)”.
Subject to the undermentioned procedural advice given by the Director (LD) at the request of the Chair, the Board agreed it would hear this meeting in public. She advised the Board that as long as members did not divulge any of the commercially sensitive matters under consideration during the course of the meeting, the meeting could be held in public session.
RESOLVED: not to exclude the press and public from this meeting.
To consider the report of the Director (RB) (reference 20/114) in respect of the Cabinet’s decision dated 16 June 2020 concerning the development of the former Argos Building and wider regeneration of the area, and to determine whether to recommend that the Cabinet amends it decision to:
approve entry into the conditional contract for sale and the funding agreement with Buccleuch Property (Scarborough) Limited to purchase and facilitate the development of the former Argos building (50-59 Newborough and 46-49 Queen Street and 18-20 Market Street, Scarborough) as student, NHS key worker accommodation and associated ground floor retail space on terms principally contained within the report.
The Cabinet’s decision has been called in for scrutiny pursuant to Section 4.6 of the Constitution, additional Overview and Scrutiny Board Procedure Rules, paragraph 10.
Call-In Forms, Cabinet Extract Minute and report of the Director (RB) (reference 20/114) are all attached.
The Board reviewed the Cabinet decision dated 16 June 2020 in respect of Scarborough Town Centre Regeneration (Student Accommodation Scheme).
Cabinet had resolved to:-“approve entry into the conditional contract for sale and the funding agreement with Buccleuch Property (Scarborough) Limited to purchase and facilitate the development of the former Argos building (50-59 Newborough and 46-49 Queen Street and 18-20 Market Street, Scarborough) as student, NHS key worker accommodation and associated ground floor retail space on terms principally contained within the report”.
The decision had been called in for scrutiny pursuant to Section 4.6 of the Constitution, Additional Overview and Scrutiny Committee Procedure Rules, paragraph 10 (v) separately by both Councillor Bastiman and Councillor Chatt. Members had before them, for reference, the report of the Director (RB) (Reference 20/144), the extract minute, and the call-in form.
The originator of the first call-in on this matter, Councillor Bastiman addressed the meeting in support of the call-in. He outlined and spoke on his reasons for the call-in, namely that: (a) the decision reached by the Cabinet on 16 June, 2020 was taken without due regard to the massive change in the economic outlook for the Borough Council, the promised cross-party working group agreed in July 2019 had never been set up – no non-executive member outside the Overview & Scrutiny Board had been able to put their views forward. There had been no open and transparent discussion of the whole issue. Elected members from all over the Borough should have the opportunity to re-examine the decision taken in July in 2019. For many councillors this was the first major vote they had taken part in and the basis for agreeing to the project had changed; (c) pre-decision scrutiny relied upon at the Cabinet meeting was in fact a tied vote with the Chairman’s casting vote being material. This was not the ringing endorsement the Cabinet was maybe expecting; this emphasises the concerns of other members. The presence of the relevant portfolio holder Cllr Colling during the meeting was unusual. It could lead to accusations that undue pressure was applied to members who sit on the committee to come to the “correct decision”; and (d) the current economic climate was so uncertain it would be incredibly risky to commit every citizen of the Borough to spending over £200 per person. It was difficult to support a project on this scale when it was not readily apparent how it would benefit the whole Borough.
The originator of the second call-in on this matter, Councillor Chatt addressed the meeting in support of the call-in. He outlined and spoke on his reasons for the call-in, namely that: (a) the overall situation in which the Council currently found itself, together with the likely consequences following Covid-19 of significant additional expenditure and loss of income, warranted re-evaluation at a meeting of the full Council; and (b) the financial implications for the Borough Council at the time of the decision by Cabinet, 16 June 2020, ... view the full minutes text for item 4.