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Leader of the Council writes to County Council

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With over 1750 signatures so far on the petition, Cllr Joe Orson, Leader of Melton Borough Council has written to all members of Leicestershire County Council’s Cabinet calling on them to defer their decision to reject the £15m Housing Infrastructure Fund at next week’s Cabinet meeting. Reinforcing the concerns expressed by the six District Leaders and MP earlier in the week, his letter sets out a range of concerns with the County Council’s proposal and the huge detrimental impact it would have on the Borough. It also highlights that their Cabinet report contains “…a number of significant factual inaccuracies and misrepresentations, which, unless corrected could result in a fundamentally flawed decision being taken.”

Cllr Orson has also reiterated that Melton Borough Council did not walk away from negotiations and has reiterated their offer to “underwrite any shortfall in receipts requested to fund education, where matters are within our control and up to a reasonable maximum we are happy to negotiate.” He confirms that “this assurance should now remove the stated justification for rejecting the HIF,” and he has called upon the County Council to restart rapid negotiations to reach an agreement both with Homes England and the Borough Council.

People can still sign the petition by visiting: http://chng.it/QzWbBP7y.

The petition will be presented to the County Council’s Cabinet prior to their meeting on Tuesday 22 June.

Read the full letter below.

Cabinet Report 22nd June 2021: MMDR Southern Section and Housing Infrastructure Fund Grant
As mentioned in my email earlier this week, I wanted to respond more fully to the report due to be considered by the County Council’s Cabinet on 22 June 2021. As you will know, the report recommends the County Council should decline to accept Homes England’s offer of Housing Infrastructure Grant for the southern section of the Melton Mowbray Distributor Road. The paper contains a number of significant factual inaccuracies and misrepresentations, which, unless corrected, could result in a fundamentally flawed decision being taken.

Given the gravity of what is at stake, I ask that the following information be tabled at your meeting and considered alongside your report. As a consequence of the representations made below, and underpinned by significant public support, we request that the item is deferred to enable further rapid negotiations, such that the Housing Infrastructure Fund grant can still be accepted and the growth and prosperity that Melton requires protected:

The key matters I would like to draw to your attention are:

  1. The County Council promoted the MMDR through the adoption of Melton’s Local Plan in 2018. They also provided an assessment of the educational infrastructure that would be required to support the housing that was allocated in the Borough. The County Council knew the cost of this infrastructure and the contribution that would be made from sources such as developer contributions, as well as its own capital programme. The County Council’s support for the plan and the infrastructure that underpins it was tested through a comprehensive viability study which itself was subject to scrutiny through the Local Plan Examination. The County Council did not, at the time, express any concerns about its ability to fund education facilities, nor did it give any indication that it intended to ask for a contribution from the Borough Council. To the contrary, it strongly encouraged this Authority and the examining Inspector to accept the plan. The plan has not changed, nor has its evidence base. However post-examination, the County Council has reassessed the need for education infrastructure, which has impacted on its cost.
     
  2. The increased educational infrastructure you now say is required must of course be fully funded. Helpfully, work undertaken by prospective developers, the County Council and Borough Council in late 2020 (referred to in paragraph 8 of your report) established that the scheme is still viable. This is possible thanks to your access to HIF and this Council’s willingness to “flex” policy requirements in favour of the County Council. Specifically, the quantum of affordable housing has been reduced, and the developable area increased, to secure a significant boost to education contributions from developers. This was confirmed at our Cabinet meeting on 16th December 2020, and on this basis, this Council has a legitimate expectation that your authority will accept the HIF to deliver the development both councils agreed to support.
     
  3. Against that background, your report suggests the proposal to decline HIF arises from a failure to reach agreement with the Borough Council; that it will underwrite a shortfall in developer contributions towards education infrastructure.

    The facts are as follows:
    a) Melton Borough Council has repeatedly shown its commitment to this project and has publicly and privately offered its support to the County Council, recognising the level of funding required and financial risks faced.

    b) The provision of education facilities is a County Council function. It receives public money for this purpose and has a statutory duty to provide this category of infrastructure. It is quite improper for the County Council to require us to utilise resources set aside for other statutory services to fund a County Council function. This risks subverting local government finance arrangements and “double dipping” the pockets of Melton Mowbray’s residents, having already taken money from them through Council Tax (as well as grant from central government) for that purpose. Nonetheless, this Council was and is prepared to explore the kind of funding mechanism you envisage given the strategic importance of the road and the development it will unlock.

    c) In March 2019, we formally requested the County Council not to submit the Housing Infrastructure Fund bid if conditions were sought requiring contributions from this Authority. In the full knowledge of this, the County Council chose to submit the bid anyway.

    d) Melton Borough Council has an excellent track record of securing developer contributions for the County Council and there is no evidence that inadequate funds would be generated for the funding of new schools. Nor is there any evidence that the Borough Council will fail to secure those funds. The Borough Council’s record of securing developer contributions is over 99% of that requested and on a par with, if not superior to, every other authority in Leicestershire.

    e) The Borough Council has drafted and shared with the County Council a Developer Contributions Supplementary Planning Document which would prioritise the recovery of highways and education contributions above all others. This would formally establish the Council’s public commitments in planning policy. In paragraph 10 of your report, a single sentence merely notes the existence of this document, hugely downplaying its significance and the reassurance it should bring to the County Council.

    f)Even though it is the County Council’s job to fund education infrastructure, and there is no requirement for a “district council” to share that burden, officers from this Authority have spent many hours helping the County Council’s lawyers put together a proposal that would have resulted in the Borough Council underwriting a part of any shortfall. Despite the legal complexities, the Borough Council continues to believe an agreement is possible and has been pushing for progress and terms to be drafted for a number of months. The County Council’s response has been slow, tentative, unimaginative and lacking in confidence or conviction. We have documentation we can produce to demonstrate this if necessary. The Borough Council had not ended negotiations or failed to reach an agreement.

    g) The Borough Council did not specify a ceiling on the amount of any contribution as part of the recent negotiations. That remained to be negotiated and would have been dependent on the level of risk and flexibility set out within the specific terms of the agreement, had the County Council’s lawyers progressed with actually drafting them as requested. Clearly, the County Council will always need to be realistic about the scale of financial risk this authority is able to accept; given its budget and reserves are a fraction of those of their own. To demand what could never sensibly be provided by any prudent and well-run Authority, might be viewed by some as a device to escape from the promise to deliver the MMDR.

    h) The reference to various figures in paragraph 8 is hugely misleading. To be clear, the Borough Council has never limited the amount it is prepared to offer to the sum of £800,000. Nor is it appropriate to use the £6m quoted as a suitable comparison to more recent discussions. The £6m figure arose from the Borough Council agreeing to share the New Homes Bonus it would receive from the projected c.4,000 homes built as a consequence of the whole MMDR. This was agreed by both parties in November 2019 on the understanding that the County Council would then accept the HIF. Following the Government’s proposed changes to this funding stream, the County Council then changed their requirement of the Borough Council to a s106 guarantee scheme. This would not require the Borough Council to share new funding arising from housing growth; rather it would be required to underwrite risks associated with securing contributions, but crucially using existing core service funding, rather than growth incentives. The £1m cap confirmed in December 2020 by our Cabinet was therefore in that context, set against a total annual revenue budget of £5m, and therefore bears no reasonable comparison to the £6m previously stated.

    i) The Council has previously clarified it would be prepared to revisit a cap subject to reviewing the specific terms of any agreement, and our ability to directly control the risks for which we were being asked to underwrite. Moreover, since the terms of an agreement have not been drafted by your lawyers, it is unclear how the County Council has sought to judge the Borough Council’s position, let alone determine their own risk cannot be mitigated.

    j) Paragraph 20 of the report suggests the Borough Council was only being asked to underwrite any shortfall arising from actions of its own. This is not accurate. Melton Borough Council was in principle being asked to accept the risk created by future changes in market conditions. Such changes may, through no fault of its own, affect viability and make it impossible for the Borough Council to reasonably hold a developer to a roof tax level, established now, but still being maintained at the same level by the County Council. If paragraph 20 is accurate, the Borough Council is happy to reiterate that we are fully and quickly prepared to enter an agreement to underwrite any shortfall arising from actions for which it has complete control, up to a reasonable maximum.

    k) The summary of your report omits and therefore significantly underplays the challenge the County Council has faced in reaching an agreement with Homes England, as set out in paragraph 23-25. The last meeting held between the Leadership of both councils, Homes England and MHCLG was March 10th, over 3 months ago. Since then discussions have continued between Homes England and the County Council as contracting parties, to which the Borough Council was specifically asked to step away from. Consequently the emphasis within the report on seeking to shift blame and responsibility to the Borough Council is malicious and entirely unjustified. The report should reflect the position more accurately.
     
  4. The result of the County Council’s refusal to accept the HIF would be that the South MMDR may never get built, and the key southern neighbourhood of our Local Plan, poised to deliver c.2,000 much needed homes, could be fatally undermined. Should the Council’s Local Plan be damaged in that way, and Melton’s housing land supply fall, pressure for development will be placed on the villages, which would be difficult to resist. The County Council would remain under a statutory duty to fund the required infrastructure. However, it would be much more difficult to maintain a coherent strategy to secure the County Council’s s106 contributions to fund schools.

The potential impact on Melton of the decision before the County Council’s Cabinet cannot be under-estimated. It will seriously undermine the proper planning of the Borough, reduce housing delivery, undermine growth and reduce prosperity. It will be counterproductive and harm the County’s reputation with funding agencies. For all these reasons I ask you to defer this item and immediately recommence negotiations with both Homes England and ourselves.

If, as the report suggests, MBC is merely being asked to underwrite any shortfall arising from its own actions, then I would like to reiterate, categorically and publicly, what we have said many times; Melton Borough Council will underwrite any shortfall in receipts requested to fund education, where matters are within our control and up to a reasonable maximum we are happy to negotiate.

I propose that should you agree a deferral, we will immediately instruct our lawyers to draft full contract terms, such that our respective Councils can seek to agree them as soon as possible thereafter.

This assurance should now remove the stated justification for rejecting the HIF, and by seeking a resolution, would enable you to maintain support for the Local Plan you shaped and promoted, facilitating sustainable growth for the people of Melton Mowbray, the Borough and the County.

 

Yours sincerely,

Councillor Joe Orson
Leader – Melton Borough Council

18 June 2021
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