Council ventures rated 'high risk' as most are not trading, say finance director
Josh Mellor, Local Democracy Reporter and Daniel Gayne
- Credit: Ken Mears
Redbridge Council’s business ventures’ “high risk” rating reflects the fact that the majority are not yet trading, according to the borough’s finance director.
Since 2017 the council has set up a number of wholly-owned companies for services such as housebuilding, education and waste collection.
Operational director of finance Ian Ambrose was asked at Monday’s (November 1) governance and audit committee why the risk rating relating to the ventures remained "red".
He explained: “The risk for me still remains red on the basis that it’s got one active trading company, RCS, which is now in a proper cycle of reporting into the Shareholder Reference Group.
“So that’s feeling secure, but the other companies are nascent.
“Once we’ve got those companies in a robust live environment where they get the proper transparent monitoring on a quarterly basis as is being planned through the Shareholder Reference Group, I personally would see the strategic risk downgrade into more sort of amber territory.”
The Shareholder Reference Group is a new oversight board, which which will publish reports on what council-owned companies are doing.
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Before the group was set up, Redbridge’s leadership was able to limit what information was available to councillors and the general public on the grounds that it related to “financial or business affairs” of their companies.
So far, waste and recycling company Redbridge Civic Services (RCS) is the council’s only fully operational business.
A report published through the SRG shows it is expected to make a £141,000 loss this year from an income of £5.4million. Asked , Mr Ambrose said:
The council’s housebuilder, Redbridge Living, was “effectively paused” in September because it was no longer “cost-effective”, said Mr Ambrose.
Redbridge Living’s three proposals would have added 489 homes to the borough, but were rejected by the Greater London Authority as they lacked enough affordable housing.
A spokesperson from Redbridge Council said: "The council’s trading companies themselves are not red risk because they are not yet trading.
“The risk relates to the need to ensure that prior to the companies running, the council is seeking to ensure that proper reporting and governance processes are fully in place. This is to ensure transparency and value for money in the delivery of services.”