Nottingham City Council has decided to sell off a company it has owned for less than three years, saying it no longer had “a strategic purpose”. Civil engineering and road surfacing contractor, Thomas Bow Ltd, was purchased by the Labour-run authority in 2019.
The company works around the Midlands and delivers infrastructure services to support, develop, and maintain road networks and public areas. It was awarded the contract by the city council for construction work around the Broad Marsh and the pedestrianisation of Collin Street.
But it has now been sold, with the council saying the company had been successful but the decision to sell provided “best value”. No further financial detail has been provided so far about the deal.
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The council has been carrying out a review of all the companies it owns following the demise of Robin Hood Energy in January 2020. The council energy company lost taxpayers an anticipated £38m when it collapsed.
A government-appointed improvement board was set up in the aftermath of Robin Hood Energy and as part of the council’s transformation programme, its companies needed to be reviewed. The council has carried out meetings about Thomas Bow’s future behind closed doors and did not answer a series of questions posed by the Local Democracy Reporting Service.
This included how much the company was bought for, how much it was sold for, and whether it had lost or made the council money overall in the three years it had been operating it. Companies House states the company was owned by the city council from September 2019 to July 1 this year before being passed on to Breedon Trading Limited in Breedon-on-the-Hill.
The most recent accounts for the company are to be published in December. The last set of accounts up to March 2021 said the company’s turnover for the year was £27.9m, with pre-tax profits of £1.1m. It states the company maintains ‘a healthy cash position’. It said like most businesses, it had “a challenging” start to the year due to the pandemic but from May onwards turnover exceeded budget and the business returned to full operation.
Cllr Kevin Clarke, opposition leader of Nottingham Independents, said he will be calling on the strategic director of finance to provide details next week on the ‘financial status’ of Thomas Bow. He said: “It was a bad buy in the first place. Why did the council buy it? We want to know how much money this has cost taxpayers.
“If it had not lost money, then why did the council sell it? It is another council company that is being kept out of the limelight and they should be telling the public more.” Cllr Andrew Rule, opposition leader of the Conservative Group, added: “In the interests of showing the culture of the council has truly moved away from the behind closed doors culture of the previous administration I would call for the Labour Group to show full transparency over the sale of Thomas Bow Ltd.
“The deal is done. There should be no reason for the Labour Group to keep details secret from the Nottingham public.” Nottingham City Council refused to answer any financial questions about the company.
A Nottingham City Council spokesman said: “As part of our ongoing transformation and improvement and the review we are undertaking of our companies, the council has achieved best value by selling its interests in Thomas Bow Ltd to Breedon Trading Ltd, part of the Breedon Plc Group. We acquired the local highways construction firm in 2019 which has traded successfully under council ownership, and supported the delivery of multiple highways and public realm schemes across the city.
“However, the review has concluded there is no longer a strategic purpose to the council owning the company and that support to schemes can continue successfully through the ongoing contracts we have with Thomas Bow Ltd. We anticipate continued success for the company under new its ownership and look forward to working with them as a provider of services in the future.”
The council owns/owned eight core companies: Nottingham City Homes, Nottingham City Transport, EnviroEnergy, National Ice Centre, Thomas Bow City Asphalt, Nottingham Revenue and Benefits, Blueprint and Nottingham Futures. Last year, the council decided to liquidate Enviroenergy and bring the service in-house at a cost of around £500,000 to the taxpayer.
The company provides heating and hot water to around 5,000 homes in St Ann’s and 70 commercial businesses including the council-owned Motorpoint Arena. During the last two decades it has been given a number of loans by the city council with more than £11m of these loans unpaid.
The council says £17.5m is now needed to upgrade the heating network to continue to provide services to EnviroEnergy’s 5,000 existing customers. But the city council says the company saves the authority £5m a year by reducing the amount of waste it has to take to landfill.
The council pays to have its non-recyclable waste burnt at Eastcroft incinerator on London Road. Power generated by the incinerator’s steam is then sold on to customers in St Ann’s by Enviroenergy.
Most recently, in April, the council terminated its contract with Nottingham City Homes, which managed the council’s housing stock. The service was brought in-house at a cost of around £750,000.
It came after an investigation, commissioned by the council, found up to £40m of ringfenced cash from the council’s Housing Revenue Account (HRA) was spent on the wrong services. Council housing tenants’ rent which should have been pumped into council housing and repairs was put into general council services instead.
This money must now be put back and has triggered a response from the government who are ‘minded’ to bring in commissioners to help run the authority for at least two years. The council has written to the Government appealing against this decision.
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