East Cambs Council celebrates its trading arm success as £1.7m chunk of £4.62m loan paid back 15 months early
PUBLISHED: 16:01 29 January 2020 | UPDATED: 16:01 29 January 2020
© Terry Harris
East Cambs Council is toasting the success of its trading arm after showing how its paid back £1.7million of a £4.62million loan 15 months early.
East Cambs Trading Company (ECTC) was set up by the council in 2016 and manages Ely market, open spaces and the development of new homes.
Initial working capital was provided by the council through a loan of up to £5million, which is due for repayment in March 2021.
"To date, ECTC has drawn down on £4.62 of the loan," said a council spokesman. "With the repayment, the outstanding loan amount has reduced to £2.92m."
The spokesman said a £1.7m loan repayment from ECTC was received by the council, 15 months ahead of schedule in December.
"On top of the repayment, the council has also collected £1.6m from the trading company in financial benefit to date," said the spokesman.
"The main financial benefits have come from the trading company's property development through Palace Green Homes."
The spokesman said Palace Green Homes has already paid the council £725,000 in land receipts, more than £143,000 in Community Infrastructure Levy developer contributions and in excess of £73,000 in Section 106 contributions.
Council leader Anna Bailey said: "We know our residents want us to be more commercial, but they want us to be reasonable about it, and that is exactly what we are doing - being commercial for community benefit."
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She said: "Having the trading company has allowed us to deliver really high quality and genuinely affordable homes in partnership with Community Land Trusts. Any profit from housing and commercial services is retained and invested for the benefit of our residents in the taxpayer's purse and helps the council protect its priority services.
She said the trading company contributes to the council's ability to freeze council tax. The 20/21 business plan will be discussed by the assets committee on February 6 and includes other potential benefits.
The council says that the efforts made by ECTC's ground maintenance team to extend their services to other organisations such as academies and parish councils, has provided the company with an opportunity to potentially reduce its fees to the council by £100,000 in 2020/2021.
Councillor Bailey said: "The opportunity to negotiate this reduction in management fees has only been made possible by allowing the grounds maintenance service to grow and be a commercial service in its own right through the trading company.
"To be in a financial situation where this option is even on the table, just shows how far the grounds maintenance team has come in three years.
"This growth provides a strong outlook for the future and as sole shareholder of the trading company, the council will be looking to use these savings to benefit the delivery of its services to residents."
East Cambs Trading Company:
Working at 'arm's length' from the district council, ECTC works with ECDC to improve services, build new homes, maximise devolution opportunities and promote an 'open for business' and 'can do' attitude.
Palace Green Homes:
Palace Green Homes successfully completed a flagship development of 11 homes at King's Row in Ely and a Community Land Trust (CLT) development of 13 homes in Soham
A further two projects are currently under construction and will deliver 146 homes at other locations across the district, some of which will be CLT homes earmarked to help local people to get on the property ladder