Questions remain over council's 3 Rivers company

Mid Devon's leader pledges not to set up more companies

Mid Devon District Council has reduced the risk it believes its failed housebuilding firm 3 Rivers can now cause.

At its audit committee meeting this week, the council revealed its updated corporate risk register, which outlines issues it thinks pose the biggest risks to it

It has reduced both the risk of delivering the 3 Rivers closedown plan and the reputational impact of the failed firm on the authority from a rating of eight to three.

Even though the developer is now defunct, some residents have persisted with questions, keen for a deeper post-mortem examination than the one carried out by the scrutiny committee last year.

That investigation set out 10 ‘lessons learned’, while the council’s Liberal Democrat leader Luke Taylor (Bradninch) has pledged not to launch any more council-owned companies.

But the full financial impact of the 3 Rivers debacle on the authority is still playing out, and it’s this area that many residents’ questions focus.

With a new chair of the audit committee elected at the meeting – Cllr Lloyd Knight (Liberal Democrat, Cullompton Padbrook) – questions 3 Rivers’ finances yet again featured in public questions.

Resident Nick Quinn asked the committee whether it would look into the £3.7 million the council paid for land at Knowle Lane, Cullompton, given that it has subsequently reduced the value of the land to £1.7 million.

“It was already known this land was not worth £3.66 million, so this purchase breached the council’s financial regulations on the acquisition of assets, which state that all purchases or leasing of land and buildings shall be on the best financial terms that can be obtained for the council,” he said.

“Will the audit committee please look into this breach?”

He also asked whether the audit committee would look into whether an overpayment to 3 Rivers meant the company could repay loans which it  otherwise couldn’t afford.

And he queried why some assets the council bought from 3 Rivers weren’t on the list presented to the audit committee, notably parking spaces at Halberton and architectural drawings for the “failed Park Nursery development”.

On the downgrading of risk, Cllr Rhys Roberts (Conservative, Cadbury) said he understood why the closedown plan appeared to be lower risk, given an application to strike the company off as a company was about to be submitted, but queried the situation with the reputational risk.

“That risk-rating has also decreased, but I would argue the reputational damage is still significant to officers and the council as a whole, and so I’d be interested to hear what the thinking was behind that,” he said.

Stephen Carr, corporate performance and improvement manager, said risk ratings were decided by officers and, in relation to 3 Rivers, by the senior leadership team.

The council said it would provide a written answer to Mr Quinn’s questions within 10 days.