Council reveals why Kennett is vital whilst fears expressed over ‘impact Brexit will have on access to skilled foreign workers’
- Credit: © Terry Harris
The delayed 2019/20 business plan for the stand alone trading arm of East Cambs Council has signalled the urgency of reaping an initial £2 million payment from the Kennet garden village scheme.
East Cambs Trading Ltd (ECTC) - 100 per cent owned by the council - has set out its projections in a business plan being considered this week (Thu) by the finance and assets committee.
The trading arm has a £5m loan agreed from the council that it is required to repay in full by March 2021.
"The ability of ECTC to repay any outstanding loan to the council is dependent on commercial activities particularly with reference to property development," says the plan.
"The repayment schedule is on track but is dependent on £2m receipt from the Kennett development".
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The report says the repayment will "most probably" be through the transfer of the site to a "special delivery vehicle" wholly owned by ECTC or joint ventures with third party funder.
"This is, of course, dependent on the availability of finance."
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The report says the £2m "assured receipt" or a substantial part of it will be required to meet ECTC obligations to the council.
The new Kennett Garden Village will see 500 homes built there to create a community with village square, commercial units, allotments, orchards, a new primary school and recreation grounds.
Despite strong opposition from the Kennett Action Group - who fought against the scheme - councillors labelled proposals as being "magnificent", "tremendous" and the "ideal enhancement" to the village when it gave it planning consent in April.
Delay to the 2019/2020 business plan came in February when the shareholder committee of the council ordered further consideration prior to re-presenting it for approval.
Lib Dem leader Lorna Dupre spoke at the time about councillors "being more than a little irked" that Palace Green Homes, the council's house building, moved to Fordham.
She claimed plans for the move were already advanced "before even senior Conservatives knew" and Cllr Dupre voiced concerns over ECTC's grounds maintenance operation.
Now the business plan is out councillors - many who joined in May - will get the opportunity to go through the finer details of ECTC which has two sections. Commercial services look after Ely markets and grounds maintenance whilst the second is property and community housing.
Among key risks identified by ECTC are inflation, possible skills shortage and a falling off in demand for new housing.
However the business plans explores other risks, such as funding, that is essential to the future of ECTC.
"The current loan facility from the council is inadequate to fund all the development activities that ECTC plans to undertake," says the business plan.
Future growth is dependent upon finance over and above that provided by the council: immediate financing requirements are in relation to West End, Haddenham (circa £6.5m), Kennett (circa £14m) and MOD Homes in Ely (circa £25m).
Loans from the Cambridgeshire and Peterborough Combined Authority already agreed include the £6.5 needed for community land trust development at Haddenham and £23.5m for the MOD homes, with the council chipping in £1.5m.
"A full assessment of the market conditions will be carried out prior to any development commencing," says the report; the council will be informed if an economic downturn means changes are needed.
The report says that since ECTC was set up three years ago, the council has benefited by nearly £1m from its trading, and it praises CAPCA for providing "a significant new source of project financing".
Haddenham and the MOD homes in Ely are the first investments using CAPCA loans, says the report, to build homes for the community and bring back others home such as the MOD site back into use.
One key fear, says the report, is the affect of Brexit, and what happens to interests rates and the possibility of them increasing faster than currently expected.
"A 'no deal' Brexit is likely to reduce projected economic growth in 2019 whilst an increase in certainty may create a modest 'Brexit bounce'" says the report.
It concludes: "Concern of course remains as the impact Brexit will have on the economy and particular on continued access to skilled foreign workers who provide around 7 per cent of the UK construction workers which will be key to the company's ability to build out its sites expeditiously."
Brexit could also cause price hikes in materials - some of which have already risen because of the falling pound - and "leaving the EU without a deal would undoubtedly add to these inflationary pressures.
"The company is likely to find it more challenging to secure fixed price tender contracts with supplies and contractors given the challenging external environment."