Still questions despite new era
TROUBLED council company Arch is being formally scrapped.
The transfer from Arch to a new holding company, Advance Northumberland, will now take place on Tuesday.
Northumberland County Council’s Conservative administration, which pledged ‘to scrap Arch’ in its manifesto before May’s elections, believes a fresh start is required.
It follows Arch undertaking some controversial moves under the previous Labour administration. There were serious concerns about spending and governance at the company.
Council leader Coun Peter Jackson, said Arch was started to manage housing and council properties, but became involved in risky speculation, with assets of £350m with £300m in loans.
He said it has not returned money to the council to spend on services ans there’s past governance issues.
But Labour leader, Coun Grant Davey, talked through Arch’s last set of published accounts (201617), starting with the £1m donation to Active Northumberland that year and the year before.
He also referred to increases in profitability and shareholder value as well as the leverage of private-sector investment into the county and other achievements.
“You are destroying a company that was really successful, just because you put it in your manifesto,” he said.
Coun Nick Oliver, the cabinet member for corporate resources, hit back by pointing out Coun Davey had not mentioned net profit or levels of borrowing.
Labour did not vote against the transition, but abstained - as did some of independents, with Coun Davey saying councillors should not make a decision without knowing all of the information.
The final vote was 35 for, none against and 21 abstentions.
The cabinet had recently 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 had to be signed off at a full council meeting.
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.
Afterwards Labour reiterated calls for ‘a full, independent investigation into Arch.’