One step closer to new council-owned company to replace Arch
Final approval of the transition from Northumberland's development company Arch to its successor will go before all county councillors early next month.
The official transfer from Arch to the new holding company, Advance Northumberland, is due to take on Tuesday, November 13.
In June, the council’s cabinet approved the closure of Arch Corporate Holdings and the establishment of the replacement holding company, which the administration says is required to ‘create a positive future and outlook for the development company and address some of the reputational issues’.
Yesterday, the cabinet approved the ‘necessary technical steps’ to make the transition, which involves the council buying additional shares in Advance before getting the money back in a dividend when Arch is dissolved.
But while the net cost to the council is zero, given that the process requires an initial outlay of £4.2million which was not in the budget, it must be signed off at the full council meeting on Wednesday, November 7.
Nonetheless, council and Conservative leader Peter Jackson said: “It’s important to mark this as a new future for development in Northumberland.
“We’re not going to do property speculation, we’re not going to waste hundreds of millions of taxpayers’ money on investments that may or may not make profit but seem nationally to be a poor investment, we’re not going to waste millions on projects outside of Northumberland, but we are going to focus on making Northumberland better by creating jobs and investments in the county.
“There are numerous projects being worked on and I think over the next few years, we will see some significant improvements in towns across Northumberland.”
After the meeting, Grant Davey, leader of the Labour group and a former director of Arch, said he welcomed the decision ‘forced upon the administration’ to bring the issue back to full council ‘because the company was set up by full council and the council is the single shareholder’.
However, he added: “The whole process so far has lacked transparency and we would urge the authority to protect taxpayers by revealing the company accounts which are signed off and would help members get a full picture of this decision to scrap a profitable company.
Sign up to our daily newsletter
“We’ve asked dozens of serious questions about actions and non-transparent decisions taken by the company over the past 14 months and have been met by a wall of silence.
“It would be helpful if the council agreed to have an emergency meeting on the subject of the scrapping of Arch, which will give councillors and residents alike the confidence that the decision will be properly discussed and debated.”
The process will see the council buy £3.3million of additional shares in Advance Northumberland, which will be used to buy Arch’s subsidiary companies, meaning the least disruption to staff, most of whom are employed by the subsidiaries rather than the holding company.
The council will also buy a further £0.9million of additional Advance shares to enable the new company to buy Arch’s trade and assets ‘at a nominal value’.
Finally, the £4.2 million paid out will be returned to Northumberland County Council via a dividend payment upon the dissolution of Arch (Corporate Holdings) Ltd.
At Monday’s meeting of the corporate services committee, members were reassured that this money will either be returned to the council on the same day or, if a more complicated process has to be followed, within a month.
Councillors were also keen to see the new governance arrangements for Advance Northumberland.
Coun Nick Oliver, the cabinet member for corporate services, said that these were being finalised alongside the new operating agreement between the council and company, and will be made available when ready.
Earlier this month, a new procedure for loans from the local authority to the development company was approved.Ben O'Connell, Local Democracy Reporting Service