The council set up Tawd Valley Developments in 2018 to boost the delivery of homes in the borough, but the authority has now decided to commission an external assessment of the company’s business plan amid uncertainty over its trading position.
The business plan, signed off by the council in February 2020, outlined an ambition to build 363 homes over the next five years and forecasted a “healthy profit”, according to the council.
The review into Tawd Valley Developments, which completed the first of 80 pipeline homes in Skelmersdale earlier this month, aims to discover if that business plan remains fit for purpose in light of the impacts of Brexit and the pandemic.
A spokesperson for West Lancs Council said: “The council has instigated and welcomes an independent review into Tawd Valley Developments and looks forward to hearing its recommendations so we can review the work and plans of TVD as part of our commitment to provide quality, affordable homes for residents to buy or rent in the most cost-effective way for the council.”
West Lancs is also seeking clarity over the future financial projections of Tawd Valley Developments after the council identified a £1.2m budget gap.
The budget gap needs to be filled by 2023 in order to satisfy external audit requirements and West Lancs Council is seeking clarity on Tawd Valley Developments’ trading position before setting its budget for 2022/23.
If the housing company cannot pay dividends to the council agreed in the business plan “the future trading position of TVD presents a risk to the council’s financial position”, a report to the authority’s executive said.
Aside from Brexit and the pandemic, another factor adding to the uncertainty around the future of the Tawd Valley Developments is the political make-up of West Lancs Council.
The authority is under no overall control following Labour losses during the May elections.
The recent changes within the council could impact future decisions in relation to Tawd Valley Developments’ schemes, a report to the council’s executive overview and scrutiny committee suggested.
The company requires council support for decisions in relation to individual schemes and “without such approvals, the current forecast profit within the business plan is at risk”, the council said.
The £30,000 review, to be carried out by government agency Local Partnerships, aims to find out if the council’s aims are best served by the continued operation of Tawd Valley Developments within the current business plan.
It will ultimately allow members to make an informed judgement as to the future of TVD “in the light of factual evidence and in the best interests of West Lancashire”, the report said.
Mark Kitts, managing director of TVD welcomed the review, which he states should “demonstrate the resilience and adaptability of TVD to continue positively throughout both Brexit and the pandemic”.
“Having completed its maiden scheme on time and to budget in Skelmersdale earlier this month, and with four other live construction sites, TVD is forecast to deliver a second year of profitability for the period 2021/22 accompanied by a steadily growing portfolio of development activity.”