A housing company set up by Liverpool Council which aimed to build 10,000 homes set a target “which could not be met” and went public with it before a delivery and funding plan had been set, according to internal findings.
Almost five years after launching Liverpool Foundation Homes, to “radically reshape” the city’s housing market, the local authority has moved the company into voluntary liquidation. A decision was taken by the council’s cabinet in October to wind down the operation that developed just 18 properties.
In a major launch back in 2018, then Mayor Joe Anderson said the new 'Foundations' company would deliver 10,000 properties across the city, fuelled by an estimated £500m investment programme. There would be a focus on building homes for foster families, the elderly, people with disabilities and the homeless as part of an 'ethical' housing company.
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It had been described by then Mayor Anderson as the most exciting policy of his time in office. Consigning the company to history last year, Deputy Mayor Cllr Jane Corbett, said the company was “no longer a viable proposition.”
As part of the cabinet decision to shut down the company, a lessons learned exercise was ordered, with the findings to be discussed at the local authority’s companies governance sub-committee next week. The report said it had been recognised while Foundations was created to deliver on ambitious targets of social housing in the city, they “could not be met during its operation for several reasons.”
The report said the company had been “created without a clear policy strategy” and failed to “secure the internal funding required to deliver on its ambitions during its operation.” All Foundations employees left the organisation or returned to the council by April 2021.
The 18 homes it did bring about are being transferred from the council to a registered provider, who can take over the rent to buy arrangements. The report said the company had been “created without a clear policy strategy” and failed to “secure the internal funding required to deliver on its ambitions during its operation.”
There was a lack of common understanding within Liverpool Council about the role and scope of the company, according to the findings, which identified how “due process was largely set to one side in the establishment of Foundations.”
Political pressure was exerted over the company during its four years in operation according to the report, which said this resulted in council officers being “rapidly seconded” into the organisation “without clarity on the role of the company, what it was expected to deliver and therefore the skills it needed.” In addition, there was not sufficient oversight or scrutiny during the council’s decision making process, which led to a lack of key details on the strategic case, financial implications, and governance arrangements.
As the outline business case was developed by external consultants, it was “developed on unrealistic assumptions and insufficient understanding of the Liverpool context,” the exercise said. The lessons learned said Foundations was “established without due consideration as to how the Council was going to transfer/vest land and/or housing in the company.”
The report, which will be discussed by the committee at the Cunard Building next week, said the council’s target of 10,000 homes was “communicated before a delivery and funding plan had been approved and realistic targets had been set.” Furthermore, there had been a lack of agreed investment and “risk appetite for investment within the council.”
Consequently, Liverpool Council was “not prepared to make the necessary investment to support Foundations during its early days due to the lack of approved overarching business plans for the company,” the document said.
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