Council joint venture still in red after three years

Nearly three years into its contract looking after Powys County Council’s property, Heart of Wales Property Services (HOWPS), is £392,000 in the red.

Plaid Cymru group leader, Councillor Elwyn Vaughan, put the firm under the microscope.

HOWPS is a joint venture between PCC and construction group Kier and looks after 5,400 homes and 630 properties in the county.

The joint venture started in July 2017 after 109 workers were transferred to the company, with PCC having four members on the HOWPS board - Finance portfolio holder Councillor Aled Davies; Education and Property portfolio holder Councillor, Phyl Davies; head of Finance, Jane Thomas; director of Economy and Environment, Nigel Brinn.

Cllr Vaughan asked: “Please confirm the total amount of investment or money that Powys council has put into HOWPS since the beginning?”

Cllr Aled Davies and Cllr Phyl Davies issued a joint response: “There has been no direct investment in the joint venture to date. The business plan has been developed to fully fund the organisation through delivering the services.

“This is worth around £12.5million a year and the contract is approaching its third anniversary. The council is liable for 50% of any loss made by the company but also gains proportionally any profit.

“To date overall loss and this sits on the council balance sheet at a value of £392,000 as at March 31.”

Cllr Vaughan also asked: “What conditions or break clauses exist in the contract with Kier which enables a clean break in the partnership?”

Both councillors replied that the 10 year contract has a break clause on the fifth anniversary which would be in July 2022. But, written notice warning of the termination would need to be given six months earlier.

“This would be a potentially expensive option in terms of having to provide compensation,” they said.

There has long been disquiet amongst councillors about the performance of HOWPS with calls to bring the service back in-house.

Over six months ago they were asked to appear before the Economy, Residents, Communities and Governance scrutiny committee discuss their second year performance and have yet to do so.

By Elgan Hearn, Local Democracy Reporter