Arch scrapped and its successor aims to offload assets
The replacement for much-maligned council company Arch will look to get rid of some of its assets, but the goal of maintaining value for Northumberland taxpayers means there will be no fire sale.
Among these are the £15million of holdings outside the county, as Arch’s successor Advance Northumberland will not invest elsewhere, plus Manor Walks and Westmorland shopping centres, which were bought for a total of £114million in 2016, sparking criticism.
Coun Richard Wearmouth, the chairman of Arch, said that the new company will look to divest assets which don’t meet ‘strategic interests’, but only if or when it represents value for the taxpayer.
“If we could find a partner or buyer for Manor Walks, we would consider that, depending on the offer, but there’s no rush to do that. For now, we are focused on making sure it’s an asset that works for the community.
“We don’t want to hold assets for no purpose, they should be helping to create economic growth. We want to put our money to good use and make sure it’s driving investment, job creation and growth.”
At last night’s meeting of the county council’s cabinet, members unanimously approved the closure of Arch Corporate Holdings and the establishment of the replacement holding company.
A report explains that revised arrangements will be required to address ‘a number of irregularities in the governance identified in the independent strategic review’, with a series of revelations about worrying spending at Arch being made public in recent months.
Coun Wearmouth said there will be three main areas of focus for the new company – support to help small and medium businesses grow, alongside efforts to attract firms to the county; redevelopment and regeneration of town centres, with work already ongoing in Amble, Ashington, Bedlington and Prudhoe; and addressing the need for affordable housing – to buy and to rent – across the county.
“We want to draw a line and put in place something that the people of Northumberland and the staff of the regeneration company can be confident in, that will deliver a county that works for everyone,” he added.
“Arch has never returned a dividend to the county council, it has made charitable donations to Active Northumberland, but all it does is service its debt and that’s not a sustainable model for the long term. Regeneration companies shouldn’t necessarily be cash cows for councils though.”
The report to the cabinet recommended establishing the new company rather than getting rid of Arch and bringing the work in-house.
Coun Wearmouth, who is also cabinet member for economic development, said it’s about the council and company working together to deliver projects that the private sector might shy away from.
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“There are really dedicated, hard-working staff in the regeneration company who have been let down by certain individuals and by the governance and processes.
“What’s important is the outcomes and we will put in place processes and governance that will give the public confidence that we will have transparency and that procedures will be in place to avoid a repeat of what has happened.”
Advance Northumberland will be a limited company with the council as sole shareholder, like Arch, and staff and assets are set to transfer to the new company next month ahead of a full launch in the autumn. There will be no change to rents or agreements for tenants of Arch homes.
But while the Conservative administration is keen to draw a line under Arch and move forward, that doesn’t mean investigations by the council’s auditors or other organisations will be halted.
“That’s really important for the public I feel,” Coun Wearmouth said. “I had people talking to me before the election saying, ‘no one’s ever going to do anything about Arch so I’m not going to vote’.
“The same people have since thanked the administration for tackling it head-on and they feel they can bid for contracts and at least are going to get a fair chance.”
However, the Labour opposition claims that a ‘witch-hunt’ has been taking place in relation to Arch and said that the decision to scrap it should have been taken by the full council rather than the cabinet – ‘essentially a small committee of nine Tory members’.
On this, Coun Wearmouth said that there is ‘sufficient democracy’ through following the usual process in which a proposal is looked at by a scrutiny committee, decided by the cabinet and then reported to the full council via the minutes, where there is ‘a chance for people to address it and talk about it’.
In their manifesto ahead of last May’s elections, Northumberland Conservatives pledged to scrap Arch – something which caused controversy in itself due to claims that leader Peter Jackson, as a director, potentially breached the Companies Act.
Since then, an investigation into Arch has been taking place, which has seen referrals made to Northumbria Police and a number of matters of concern discussed by the council’s audit committee.
Northumbria Police has said that while it is working with the council on matters ‘relating to finance and governance issues at Arch’, there is ‘currently no ongoing criminal police investigation’.
By Ben O'Connell, Local Democracy Reporting Service