Councillors have clashed over how seriously issues identified at a property development company wholly owned by Cambridgeshire County Council should be taken.
An independent review by real estate consultancy Avison Young (AY) into This Land Ltd has found areas of concern including how risks have been assessed.
The report was commissioned by the council’s joint administration following last May’s election.
Labour and Liberal Democrat councillors highlighted what they argued were “shocking findings of recklessness”.
But opposition Conservative councillors disagreed. They said they recognised there needed to be some “tweaking”, but one councillor suggested that they “seem to have read a different report”.
The council currently has £113.9million on loan to the company which was set up in 2016 in addition to around £6m invested as equity.
This Land pays interest on the loans, providing income to the county council, but also means the authority needs to rely on the company’s commercial success.
The review raised some areas of concern, including that there is a dependency on “as yet unsecured sites”, with it being behind on identifying new sites.
There was also concern about the difficulty that had been faced in trying to extract information from the company, which the review said would normally have been expected to be readily available.
It added that a number of sites from the original portfolio which was transferred from the county council had been sold for a loss, but the review recognised the company had also faced setbacks in the planning application process.
The review also said that errors had been identified looking at the company’s assumptions, which the report said indicated that the risk management processes are “not fully robust”.
It added that not enough detail in the business plan means the county council can not “fully understand its exposure to risk”.
The review was discussed by councillors at a county council strategy and resources meeting on Thursday (January 27).
Councillor Edna Murphy (Liberal Democrat, Bar Hill) said the report showed that the creation of the company was a “reckless venture” and that it is now “critical” to get it right.
Councillor Richard Howitt (Labour, Petersfield) said the report was “shocking” saying the financial model is “not fit for purpose” and that the business assumptions are “based on falsehoods”.
Councillor Lorna Dupré (Liberal Democrat, Sutton) said the report raised concerns for her and that more than just “tweaking” would be required, highlighting where the report said that several shortcomings had been identified needing immediate attention.
“I have to say that one of the things that jumped out at me were two words in the same sentence that really ought never to be in the same sentence, and one of those is ‘accounting’ and the other one is ‘unusual’,” added Cllr Dupré. “I don’t like to hear about unusual accounting, that worries me enormously.”
Conservative councillors refuted that the report was as damning as was being suggested.
Leader of the opposition Steve Count (Conservative, March North and Waldersey) said he acknowledged that there are issues that have been picked up in the report and said he welcomed the fact that the various issues had been identified.
However, he argued the description of the report’s contents as being “shocking” was “a little bit overboard”.
Cllr Count said the reason the company was set up was to provide funds to support the county council’s frontline services, which he said it had so far done.
Councillor Josh Schumann (Conservative, Burwell) argued that to portray This Land as being in “complete disarray” was a “huge disservice” to the previous administration officers, and officers at This Land.
He said: “To suggest it’s in complete disarray to the rest of the world is inappropriate and irresponsible, because if you can guarantee one thing, the way to make this company fail is to tell the world it is failing.”
Leader of the council Lucy Nethsingha (Liberal Democrat, Newnham) told the meeting it was “difficult to overestimate the risk This Land poses”, with the “enormous” amount of money the county council has invested. She added that it is important the money is being well directed.
Cllr Nethinsingha said there were clear issues that needed to be resolved, and that they are doing everything they can to make sure they are resolved.
She ended saying a report is due to come back to the committee in March to update on the situation.
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