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Overview & Scrutiny Committee
Monday, 2nd November 2026 at 7:30pm

 
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  1. Cllr Jaymey McIvor
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  1. Laura Kirman
  2. Jennifer Gould
  3. Cllr Jaymey McIvor
  4. Cllr Stephen Murray
  5. Jennifer Gould
  6. Cllr Stephen Murray
  7. Cllr Jaymey McIvor
  8. Owen Sparks
  9. Cllr Stephen Murray
  10. Cllr Jaymey McIvor
  11. Andrew Small
  12. Cllr Jaymey McIvor
  13. Cllr James Small
  14. Andrew Small
  15. Cllr Jaymey McIvor
  16. Cllr Razia Sharif
  17. Cllr Geoff Shaw
  18. Cllr Geoff Shaw
  19. Cllr Howard Kauffman
  20. Cllr Jaymey McIvor
  21. Cllr Geoff Shaw
  22. Owen Sparks
  23. Cllr Geoff Shaw
  24. Owen Sparks
  25. Cllr Jaymey McIvor
  26. Cllr Michael Owen
  27. Cllr Jaymey McIvor
  28. Laura Kirman
  29. Jennifer Gould
  30. Cllr Jaymey McIvor
  31. Cllr Stephen Murray
  32. Cllr Jaymey McIvor
  33. Andrew Small
  34. Cllr Stephen Murray
  35. Cllr Jaymey McIvor
  36. Cllr Geoff Shaw
  37. Andrew Small
  38. Cllr Geoff Shaw
  39. Cllr Jaymey McIvor
  40. Cllr Howard Kauffman
  41. Cllr Jaymey McIvor
  42. Cllr Howard Kauffman
  43. Cllr Jaymey McIvor
  44. Cllr Howard Kauffman
  45. Cllr Jaymey McIvor
  46. Cllr Mandy George
  47. Andrew Small
  48. Cllr Jamie Braha
  49. Cllr Geoff Shaw
  50. Cllr Jaymey McIvor
  51. Cllr Jamie Braha
  52. Cllr Jaymey McIvor
  53. Cllr Karen McIvor
  54. Cllr Karen McIvor
  55. Cllr Jaymey McIvor
  56. Cllr Howard Kauffman
  57. Cllr Jaymey McIvor
  58. Cllr Lisa Morgan
  59. Cllr Jaymey McIvor
  60. Andrew Small
  61. Cllr Jaymey McIvor
  62. Cllr Jeane Lea
  63. Cllr Jaymey McIvor
  64. Laura Kirman
  65. Cllr Jaymey McIvor
  66. Jennifer Gould
  67. Matt Winslow
  68. Cllr Graham Wiskin
  69. Owen Sparks
  70. Cllr Stephen Murray
  71. Owen Sparks
  72. Cllr Stephen Murray
  73. Andrew Small
  74. Cllr Stephen Murray
  75. Cllr Jaymey McIvor
  76. Laura Kirman
  77. Cllr Jaymey McIvor
  78. Jennifer Gould
  79. Cllr Geoff Shaw
  80. Sacha Jevans
  81. Cllr Geoff Shaw
  82. Handan Ibrahim
  83. Andy Howarth
  84. Cllr Geoff Shaw
  85. Andy Howarth
  86. Cllr Jaymey McIvor
  87. Cllr Graham Wiskin
  88. Owen Sparks
  89. Cllr Michael Owen
  90. Cllr Jaymey McIvor
  91. Public Speaker
  92. Cllr Jaymey McIvor
  93. Jennifer Gould
  94. Cllr Stephen Murray
  95. Cllr Jaymey McIvor
  96. Cllr Stephen Murray
  97. Owen Sparks
  98. Cllr Mandy George
  99. Owen Sparks
  100. Cllr Mandy George
  101. Owen Sparks
  102. Cllr Jaymey McIvor
  103. Cllr Geoff Shaw
  104. Cllr Jaymey McIvor
  105. Sacha Jevans
  106. Cllr Geoff Shaw
  107. Sacha Jevans
  108. Cllr Jaymey McIvor
  109. Cllr Graham Wiskin
  110. Sacha Jevans
  111. Owen Sparks
  112. Cllr Graham Wiskin
  113. Cllr Jaymey McIvor
  114. Public Speaker
  115. Cllr Jaymey McIvor
  116. Cllr Stephen Murray
  117. Cllr Jaymey McIvor
  118. Public Speaker
  119. Cllr Jaymey McIvor
  120. Jennifer Gould
  121. Cllr Jaymey McIvor
  122. Public Speaker
  123. Cllr Jaymey McIvor
  124. Public Speaker
  125. Cllr Jaymey McIvor
  126. Cllr Stephen Murray
  127. Cllr Jaymey McIvor
  128. Andrew Small
  129. Cllr Jaymey McIvor
  130. Public Speaker
  131. Cllr Jaymey McIvor
  132. Cllr Stephen Murray
  133. Cllr Jaymey McIvor
  134. Andy Howarth
  135. Cllr Stephen Murray
  136. Andy Howarth
  137. Cllr Stephen Murray
  138. Cllr Jaymey McIvor
  139. Andy Howarth
  140. Andrew Small
  141. Cllr Jaymey McIvor
  142. Cllr Howard Kauffman
  143. Cllr Jaymey McIvor
  144. Cllr Graham Wiskin
  145. Cllr Jaymey McIvor
  146. Andrew Small
  147. Cllr Graham Wiskin
  148. Andrew Small
  149. Cllr Jaymey McIvor
  150. Cllr Michael Owen
  151. Cllr Jaymey McIvor
  152. Andrew Small
  153. Cllr Jaymey McIvor
  154. Cllr Geoff Shaw
  155. Cllr Jaymey McIvor
  156. Cllr Howard Kauffman
  157. Cllr Jaymey McIvor
  158. Cllr Martin Morris
  159. Cllr Jaymey McIvor
  160. Cllr Mandy George
  161. Cllr Jaymey McIvor
  162. Cllr Sheree Rackham
  163. Cllr Jaymey McIvor
  164. Andrew Small
  165. Cllr Jaymey McIvor
  166. Andrew Small
  167. Cllr Jaymey McIvor
  168. Cllr Stephen Murray
  169. Cllr Jaymey McIvor
  170. Cllr Stephen Murray
  171. Cllr Jaymey McIvor
  172. Cllr Chris Whitbread
  173. Cllr Jaymey McIvor
  174. Cllr Geoff Shaw
  175. Cllr Chris Whitbread
  176. Cllr Jaymey McIvor
  177. Cllr Geoff Shaw
  178. Cllr Jaymey McIvor
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  1. Cllr Geoff Shaw
  2. Cllr Jaymey McIvor
  3. Cllr Richard Bassett
  4. Cllr Jaymey McIvor
  5. Cllr Mandy George
  6. Cllr Chris Whitbread
  7. Cllr Jaymey McIvor
  8. Cllr Mandy George
  9. Cllr Jaymey McIvor
  10. Cllr Mandy George
  11. Cllr Stephen Murray
  12. Cllr Chris Whitbread
  13. Cllr Michael Owen
  14. Cllr Michael Owen
  15. Cllr Jaymey McIvor
  16. Cllr Geoff Shaw
  17. Cllr Jaymey McIvor
  18. Cllr Geoff Shaw
  19. Cllr Jaymey McIvor
  20. Jennifer Gould
  21. Cllr Chidi Nweke
  22. Cllr Holly Whitbread
  23. Cllr Stephen Murray
  24. Cllr Holly Whitbread
  25. Cllr Stephen Murray
  26. Cllr Jaymey McIvor
  27. Cllr Chris Whitbread
  28. Cllr Lisa Morgan
  29. Cllr Holly Whitbread
  30. Cllr Lisa Morgan
  31. Cllr Geoff Shaw
  32. Cllr Holly Whitbread
  33. Owen Sparks
  34. Cllr Geoff Shaw
  35. Owen Sparks
  36. Cllr Jaymey McIvor
  37. Cllr Geoff Shaw
  38. Sacha Jevans
  39. Cllr Jaymey McIvor
  40. Cllr Stephen Murray
  41. Cllr Jaymey McIvor
  42. Andy Howarth
  43. Cllr Jaymey McIvor
  44. Cllr Geoff Shaw
  45. Sacha Jevans
  46. Cllr Geoff Shaw
  47. Cllr Jaymey McIvor
  48. Andrew Small
  49. Cllr Jaymey McIvor
  50. Cllr Geoff Shaw
  51. Cllr Jaymey McIvor
  52. Cllr Sheree Rackham
  53. Cllr Raymond Balcombe
  54. Cllr Raymond Balcombe
  55. Cllr Jaymey McIvor
  56. Cllr Stephen Murray
  57. Cllr Jaymey McIvor
  58. Cllr Geoff Shaw
  59. Cllr Jaymey McIvor
  60. Cllr Stephen Murray
  61. Cllr Jaymey McIvor
  62. Cllr Mandy George
  63. Cllr Jaymey McIvor
  64. Cllr Smruti Patel
  65. Cllr Jaymey McIvor
  66. Cllr Sheree Rackham
  67. Cllr Louise Mead
  68. Cllr Jaymey McIvor
  69. Cllr Graham Wiskin
  70. Cllr Jaymey McIvor
  71. Cllr Howard Kauffman
  72. Cllr Geoff Shaw
  73. Cllr Jaymey McIvor
  74. Cllr Stephen Murray
  75. Cllr Craig McCann
  76. Cllr Jaymey McIvor
  77. Andrew Small
  78. Cllr Jaymey McIvor
  79. Cllr Mandy George
  80. Cllr Jaymey McIvor
  81. Cllr Lisa Morgan
  82. Cllr Jaymey McIvor
  83. Cllr Bob Church
  84. Cllr Jaymey McIvor
  85. Webcast Finished

1 Webcasting Introduction

Cllr Jaymey McIvor - 0:00:00
I'd like to remind everyone that this meeting
will be filmed live or recorded and uploaded to the internet
and will be capable of repeated viewing.
Therefore, by participating in this meeting,
you are consenting to being filmed
and to the possible use of those images as sound recordings.
Members are reminded to turn their microphones on
before speaking and to turn them off
when they have finished.
So welcome to the overview and scrutiny meeting this evening.
I'm Councillor Jamie McIver, and my Vice -Chairman is Councillor Craig McCann.
To my left is Jem Gaud, Deputy Chief Executive, and Barbara Beardwell, who is our Monitoring Officer.
To my right is Laura Kerman from Democratic Services, and Lou Barker, who is webcasting our meeting this evening.
And as you will be aware, tonight is a meeting dedicated to the scrutiny of Qualis Commercial Limited.
This has been added to our work programme, specifically at the request of Councillor
Shaw and Councillor Rackham, and this has been an area that has attracted a great deal
of public attention.
And I do want to ensure that this meeting is held in public as much as possible, and
I'd like to request that we ensure that questions and responses are framed so that we can keep
all of this meeting in the public domain.
If there is a need, we can go into specific details, but that would possibly require private
session.
So, as detailed in my announcement, item two on the agenda and the exclusion of public
and press and public item eight on the agenda.
But I really would like to stress, members, that my view is that this should be as an
absolute last resort and the open and honest discussion will be taking place in public.
For clarity, there have been a pre -meeting of the committee, which we've just completed,
and as the areas of interest were wide -ranging, we have tried to theme the questions into
four areas shown in the supplementary agenda.
There were over 70 questions, so thank you to everybody that has participated in that.
This should help the flow of information, the flow of questions, and hopefully help
us to structure our meeting this evening so we can ensure robust scrutiny of qualities.
Members and members of the public,
I would like to thank you for obviously
attending this evening and welcome our representatives
of QALYST who are also here this evening.
We have Sasha Jevons, who is the managing director
of QALYST, Andy Howarth, who is the group finance director
for QALYST.
We also have QALYST board members,
Councillor Kaufman and Councillor Bassett.
And Councillor Bassett for medical reasons is online.
We also have members of the cabinet and the council's
Executive Andrew Small and Executive Director of Finance and our Council, Section 151 Officer

2 Chairman Announcement

Owen Sparks are also present here in the Chamber. Excuse my long speech. So I now ask for item

3 APOLOGIES FOR ABSENCE

three which is our apologies for absence please. Chairman we've received apologies from Councillor
Bassett, Councillor Church, sorry I got that the wrong way round, Councillor Lucas and
Councillor Lucas and Councillor Sharif.
Sorry, I could say that again,
but it's Councillor Bassett, Lucas and Sharif.
And do we have any substitute members?
We do, and this is why I got confused,
because Councillor Bob Church is substituting
for Councillor Richard Bassett,
and Councillor Brahe is substituting for Councillor Lucas.
Thank you very much.
Do we have any declarations of interest?

4 SUBSTITUTE MEMBERS

I'll look to this side of the chamber first.

5 DECLARATIONS OF INTEREST

No? Okay. So that brings us, anyone online with any declaration of interest? No. So
the next part of our agenda is item six, which is public questions and requests to address

6 Public Questions & Requests to Address the Overview and Scrutiny Committee

the overview and scrutiny committee. Three members of the public have submitted questions
and these are shown in the supplementary agenda.
Question one is J. Smith, who I believe is not present in the chamber.
Is that online?
Okay, so in that case, because the representative isn't here online or in the chamber,
this question will be asked by Laura and will be answered by Jen Gould.
This question, a public question from the Smiths.
Laura Kirman - 0:04:32
EFDC has lent QALYST more than $121 million to fund development and buy investment property.
What do EFDC actually have to show for that money, which was all for development and asset
purchase and not for QALYST property services?
Can overview and scrutiny committee break down for residents in plain English how QALYST
spent $121 million, what capital has been repaired in cash, what assets EFDC has received
rather than purchase this additional cost for its 121 million investment
and the value of those assets.
Jennifer Gould - 0:05:10
The 121 million represents cumulative lending to Qolis
up to 31 March 2026 over a number of years.
Of the 34 .2 million repaid,
19 .4 million is a loan right back relating to Cottice Lane
and 14 .8 million debt repayments.
Importantly, around 30 million of the lending
was used to purchase investment properties,
which remain assets of Qualys
and generate an ongoing revenue return for the company.
This portfolio is fully occupied
and currently generating around 1 .8 million
of income annually.
The remaining lending has principally supported
development and regeneration activity.
This includes progressing the Epping Town Centre regeneration, securing planning permission
for five sites and the new Lege Centre, delivering and transferring the Cottis Lane multi -storey
car park, delivering affordable homes at Roundhills and Springwood grave, and progressing other
development opportunities.
There have also been wider benefits.
QALIS has helped increase income from the Council's commercial estate from around 8
million to around 12 million a year, increasing the portfolio's capital value by circa 26
million, provided development and disposal advice at no or reduced cost, supported the
North Weald land sale to Google, which generated over 90 million for the Council, and established
a community investment fund that has provided 640 ,000 of investment to date.
In addition, the Council has received more than $14 million in interest payments from
QALYST to date.
The investment has created significant value for the district through income -producing
assets, new housing and infrastructure, regeneration and wider financial and community benefits,
whilst recognising that a substantial proportion remains as debt due back to the Council, which
will not all be released.
Okay, do any members have any questions relating to those answers?
Cllr Jaymey McIvor - 0:07:18
There is a supplementary question, so would you like to hear that first or would you like
to ask a question?
Go on, Councillor Murray.
Cllr Stephen Murray - 0:07:28
Could I, because we haven't got the answers in front of us, I don't know whether the cabinet
has, but the people doing the scooping haven't.
Could I just have that last sentence re -read, please, because I think I might have a question
based on that.
Jennifer Gould - 0:07:47
The investment has created significant value for the district through income -producing
assets, new housing and infrastructure, regeneration and wider financial and community benefits,
whilst recognising that a substantial proportion remains as debt due back to the Council, which
will not all be realised.
So we've heard right at the beginning of the meeting that there's a substantial amount
Cllr Stephen Murray - 0:08:08
of debt that this Council will not get back, money that we have lent borrowed from the
Public Works loan and we've been told right at the start of the meeting based on the first
answer to the question that we're not going to see that back. Can we be told the estimate
of what that figure is?
Is there anybody from the Council?
Cllr Jaymey McIvor - 0:08:34
Owen Sparks - 0:08:37
Mr Sparks. So at the moment we've made an expected credit
loss assessment in the accounts. I think to some extent it's about £25 million. That
doesn't mean that's not, we won't get back. That's the accounting assessment. And in the
at the presentation we did, the median term financial plan, and the assessment we did,
we spoke last time, there's provision for around £20 million at the moment reflected
in the financial forecast.
Cllr Stephen Murray - 0:09:12
Thank you, Chairman. Can I just make one point of procedure? As I say, I don't know whether
the Cabinet has got the answers, but I find it quite odd that if they've got the answers,
We haven't got the answers, have clearly been prepared by officers.
I know we may have run out of time, but I did make the point in the briefing that
I feel that if answers to the table questions from outside, and I know you need
to move on, have been prepared, we should have those answers in front of us.
My understanding is Cabinet don't have the answers, however, as in to the questions,
sorry, Ashidar.
Cllr Jaymey McIvor - 0:09:43
But as I said in our pre -meeting, I will repeat this point for everybody in the Chamber.
matter, this is not the first and only meeting we will ever have on QALYST. If we do not
establish information that we would like this evening, there will be further meetings. This
is a very significant matter. This will not be the only meeting we have on QALYST. And
I will make sure that everybody has answers to the questions. And you may pick up other
things in the other elements of the answers to the question. Before we go to the supplementary,
I do just have a quick question on the answer. Mentioned the 90 million income generated
from North World Airfield. How is that linked to QALIS? Because my understanding is we owned
it anyway. We could have chosen to sell it anyway. I don't see how that can be attributed
as a QALIS achievement. But please correct me if I'm wrong. Andrew?
Andrew Small - 0:10:38
Thank you, Chair. It was the staff from QALIS who did the negotiation and concluded the deal
on our behalf and achieved an excellent price as well, much higher than its book value.
We thank the colleagues from Qualis who did that work to enable us to get the sale price
that we did.
Does that suggest that the staff of this council are not capable of selling our own assets?
Cllr Jaymey McIvor - 0:11:01
Why would we have to go to Qualis for that short?
Our own people could do that and achieve a good deal?
Goes back to the whole reason for creating Qualis in the first instance.
Cllr James Small - 0:11:10
I mean, we didn't have some of the in -house facilities.
Andrew Small - 0:11:12
And even if we did, what would be the point of keeping
council officers and QALYST officers capable
of doing the same things?
It made sense to use the resources that were provided
by QALYST to do that type of activity on our behalf,
rather than keeping an officer team and a QALYST team,
both capable of doing the same transaction,
more efficient to have just one team.
All right, okay.
Councillor Shaw.
Cllr Jaymey McIvor - 0:11:38
Cllr Razia Sharif - 0:11:43
Thank you, Chairman. But in response to that, the asset was Lepping Forest District
Council's asset. Therefore, the profit should be with Lepping Forest District
Council.
Cllr Geoff Shaw - 0:11:48
Thank you, Chair. I didn't intend to speak on this point. Northfield is owned by the
Council, okay. Google were looking for a data centre, very complicated negotiation.
The team at Qualis led the negotiation and got a price that would not be repeated
today.
So the negotiations, Google were advised by a central London firm, we need specialist
advice.
Fortunately, the team at Qualis were able to deal with that, and they achieved
a fantastic result.
So owned by the counsel, but the advice and the price achieved was through the Qualis
team.
Yes, but surely they were just acting as a consultant then, weren't they? So they should
just go to consultants fee?
Cllr Geoff Shaw - 0:12:37
We didn't get any fee. We got nothing for it. We did the advice and because of the shareholder
being the client, we didn't get anything for it, but we did the deal.
Cllr Howard Kauffman - 0:12:51
Can I ask a question on the losses?
and we're talking about -
Just so you know, on this particular,
we have a supplementary question,
which I think is going to cover that.
Cllr Jaymey McIvor - 0:13:01
So coming after we've had the next question and answer,
it's related to this.
But I wanted to clarify what -
Oh, it's related to this?
What Owen has just said.
Okay, of course.
Because I didn't quite understand
what Owen just said on the losses.
If I'm misunderstanding, please ask your question.
Because he confused me.
Last year's accounts were 24 point something or other loss
Cllr Geoff Shaw - 0:13:21
in last year's accounts, yes?
And we're presumably forecasting losses on Springbrook Grove
and there must be a forecast of that figure already
and there may be losses on St. John's and the other projects.
So presumably you have an anticipated future loss
that you're expecting at the moment
and can you tell us what that figure is?
Owen Sparks - 0:13:56
So, in the latest provision we are working towards is around £20 million, but that figure
is under constant review based on sale proceeds, time of the sale proceeds and what other operational
surpluses will be available within the college group to support ongoing debt.
So, it is a figure that we are continuing to review.
But at the moment, we're thinking we'll need to have around 20 million, but that will not
be the final figure.
Cllr Geoff Shaw - 0:14:26
So is that an additional 20 million on top of the existing 24, making it – so where
does the 20 million come from?
Owen Sparks - 0:14:36
So it's based on an assumption around cash flows at the moment, but that obviously changes
regularly as you update the cash flow, the timing, the receipts you're going to get.
Obviously, we're getting external tax advice.
So it's a moveable fee all the time,
keeping an ongoing view of it.
But it's not additional to 25 minutes, like total 45.
Thank you.
Councillor Owen, you had a question.
Cllr Jaymey McIvor - 0:15:00
Actually, Councillor Kaufman actually answered my question,
which was what was going to be the fee that was paid?
But I think we need to come onto this later,
because I think Qualis has done good work
and hasn't been rewarded for it,
and that is part of the problem.
Thank you.
Thank you.
Cllr Michael Owen - 0:15:14
We will go to the supplementary question, please.
Thank you, Chairman.
Cllr Jaymey McIvor - 0:15:19
Just before I read the supplementary, as agreed at the pre -meeting, I am just in the process
Laura Kirman - 0:15:22
of trying to send an email to members of the committee so that they will have access to
these.
So apologies, I didn't get that done before the meeting started.
Supplementary question from the Smiths is, will the overview and scrutiny committee do
report to residents explaining how much of the 88 .2 million Google payment has directly
or indirectly been used or allocated in any way for Qols Commercial, Qols Group or Qols
Lending, Development, Asset Purchase, Loan Extinguishing, Risk Management or general
housing activity. For simplicity, please make sure any routine payments to Qols Property
services are clearly separated if they are included.
Jennifer Gould - 0:16:14
19 .4 million was used to fund the purchase of the Cottice Lane car park.
Cllr Jaymey McIvor - 0:16:21
Did you have a question? Yes, I think you can ask my question.
That's come up, and it's come up early in the meeting.
Cllr Stephen Murray - 0:16:32
The price we paid by, and I know we didn't pay money, we wrote off debt.
We're happy as a Council the 19 .4 million pounds is the price that you pay for a car
park in the middle of Eglinton, are we, when we've got a valuation at the end of March
2025.
I apologise if I got it completely wrong because there's so many papers and this is in my field
of expertise.
I think the car park was rated at 3 .25 million a clock and we have effectively, by writing
off debt, paid 19, over 19 million pounds for a car park.
This was rehearsed very well at budget time and or whenever the decision was made and
lots of members expressed their disquiet.
We've had the figure mentioned again early in the meeting tonight.
So can I have some explanation why over £19 million represents good value for the building
of a car park?
Because that astounds me.
Would anyone like to answer that?
Mr Sall?
Cllr Jaymey McIvor - 0:17:41
Andrew Small - 0:17:45
Well, there's a pretty full explanation in the report that went to Cabinet in, I think
around the 15th of January 2025,
and then subsequently considered by overview and scrutiny
I think the following week,
there was a breakdown of that point in time
of how that 19 million pounds was comprised.
Some was land, some was fees,
some was capitalised interest,
and some was the construction cost.
I mean, we continually hear this comparison
between 19 million pounds
and the valuation of 3 million pounds.
I think that is something that does, whether it is done now as part of these questions
or as part of the later debate, is something that we do need to go over again.
Three million pounds is its commercial value for a car park that is charging council car
parking fees.
If you want to charge £1 .50, £2, £3 for a short stay, then it will never cover the
of building a multi -storey car park,
because multi -storey car parks are expensive to build.
There's a lot of steel, a lot of concrete,
a lot of land taken up by that construction pass.
And if you went to somewhere,
I went to Brighton recently,
and I stayed overnight in an NCP car park,
and they charged me about 32 pounds
for the privilege of an overnight stay.
And on top of that,
I know that the NCP went bust last year,
still charging those rates.
So there's a complete difference between a rate
you can charge in a regional or a market town
for a stay in a car park,
and still encourage people to come into that car park
and use the town centre, which is its purpose.
And if you want to charge rates
which are less than market rates,
not rates that you would charge to try and recover your cost,
then there's a difference between the valuation, which is value of that, and the cost to build.
And this goes back to the fundamental reason, and this was explained at some length in the
presentation to cabinet back in January 25, and what the council's role is in building
multi -storey car parks.
It's not to make a profit out of a multi -storey car park.
Otherwise that valuation would be much higher.
The role of the council in building multi -storey car parks in market towns is to encourage
footfall into the town centre, which is part of the council's place, shape and role.
It's to encourage people into the town centre, it's to encourage people into the leisure
centre, and so we do certain things that the private sector would not, because the private
sector couldn't make a profit on it at the prices we charge.
equally, and charging those prices, we are trying to encourage people into the town centre
and keeping the town centre vibrant. So, you know, if you value it at a commercial price,
bearing in mind the prices we charge, you get a valuation for that £3 million, and
that is not the cost to build. So trying to compare a commercial value with our place -shaping
role as a council is a misnomer. It's comparing apples and pears. And so, you know, it keeps
saying that it's worth £3 million. It's worth a lot more to the community, and that's why
councils build car parks, and that's why the private sector don't build car parks in market
towns.
Cllr Stephen Murray - 0:21:18
Thank you, Chairman. I understand now the point about the valuation being misleading,
but we're being told that the £19 million in terms of the construction costs, because
because that's what we wrote off was value for money.
That's all the proper price.
That's what we're doing.
Yeah, I just want to cheque that.
Yeah, thank you.
Are you happy with that as a summary?
Yeah, okay.
Councillor Shaw.
Cllr Jaymey McIvor - 0:21:42
Cllr Geoff Shaw - 0:21:45
From my research and from my experience
in the construction industry,
multi -storey concrete car parks
should cost between 15 ,000 and 25 ,000 pounds per parking bay.
And that comes to a maximum figure for the parking bay
for 330 places of 8 ,250 ,000.
I believe that the initial tender
is not too far away from that figure.
So the question then is, have you got value for money?
Because Epping Forest District Council
could just go out to any number of major contractors who have standard car parking
designs and would give you a standard price, and it would be about 8, 9, 10 million
max to build that car park.
So where has the rest of the money gone?
That's the question.
And that's what the scrutiny people need to look at.
That's what we need to look at.
Why have, why has Qalis spent the difference between 8 .5 million and 19 million
in building this car park.
Would you?
I encourage colleagues to come in
Andrew Small - 0:22:58
in terms of the actual market contractor acquisition process
but have you looked at the cabinet report in January 2005?
Because that does break the costs down
into its component parts and it explains the reasons
was, the £9 .5 million did increase subsequently to, I think it was 12 .5 million, I think,
from memory for the actual final construction cost of that car park.
And then you add on some of the section 106 and some of the fees and the land price as
well, which was our land, which we sold to Qualis and then took back subsequently.
The construction price in itself was about £12 .5 million.
That did go up between a 2001 estimate of the construction cost based upon it.
That was an extremely sourced estimate of the construction cost.
And then when they went to market, there was a procurement process to test the market to
find the contractor who could provide the best value for that.
It came back in in 2022, 23, maybe when the market exercise took place, higher.
And that was to do with some of the worldwide events that were taking place at that point
in time.
And I said, I know you disagree with, but I have to challenge you on that in terms of,
you know, costs have increased.
Does anybody remember, was it Ever Given stuck in the Suez Canal?
Does anybody remember the Ukraine war and the embargo against Russian fuel prices?
And things like steel and concrete are heavily energy, consume large amounts of energy to
consume.
So steel and concrete went, yes they did.
And there is an awful lot of evidence to prove that they did.
And I can quote to you, well, I can find for you that the national statistics
that show construction costs have come up significantly during that phase by a large
amount, which meant that whilst the pre -construction estimate of 9 .5 million pounds
in 2021 of 9 .5 million pounds was the right price then, subsequent prices did go up to
reflect the new costs of materials and labour and finance and everything else that
goes into building a large construction project. And that's a matter of fact.
Councillor Shaw, we've got lots of people on the back.
Cllr Geoff Shaw - 0:25:33
This was nonsense what Abba was saying. The figures I quoted of a maximum of $8 million
were the construction cost indices at that time, which included all the costs of steel
and concrete, et cetera, at that time. The difference between the $8 .5 million and the
19 million, I believe was Qalis' inefficient design process and inefficient pre -construction
process where they were designing cinemas and shopping centres all around there.
At one stage I got a design, because I owned a house in Buttercross Lane, and the first
design came out, had the entrance to that car park going across my front garden, my
back garden.
The problem, the reason why there's a huge increase
in that cost is because of the inefficiencies of Qalis
in doing the pre -construction work and getting their design
and everything sorted out at the beginning.
And if they had done that, they could have got that car park
built for 10 million max.
Okay, would anyone like to answer that
for Councillor Kaufman?
And then just so you all aware, members,
Cllr Jaymey McIvor - 0:26:43
just to communicate where we are on the situation room here.
So we have four members that wish to speak.
I'm gonna do those questions.
then we will move on to question two, three, and four
from the public.
We then have lots of questions
that other people have sent in.
So, Councillor George, you are on the list, do not worry.
But what I just want to make the point
that we have a big, meaty item on the agenda,
which I want to get into, and I fear we may overlap.
So I will do those that have indicated like to speak,
I will do those questions
once we've heard from Councillor Kaufman.
And then we will do the remainder of the questions
that have come in under notice quite quickly,
and we'll move into the media item on the agenda
where we can go in depth and go in any direction we wish to.
Councillor Coughlin.
Thank you, Chair.
I welcome Councillor Shaw.
Cllr Howard Kauffman - 0:27:28
I know he's a nice man.
He might be looking like he's sucking a lemon,
but he is a nice man.
And he's very welcome, as we've offered you before
and offer you again, absolute transparency.
Please come into the office
and pore over the work that we did at that time.
I can't remember the chance of the land price.
There will be finance costs.
We can go through it all with you.
There's no issue at all.
Absolute transparency with you.
You deserve that respect, and I'm offering it.
Just out of interest, because everyone is moaning about the car park.
So just a few things just to say.
The leisure centre in the last six months has had 228 ,000 visitors.
228 ,000 the last six months.
It's unbelievable. Part of the enabling works to enable us to have the leisure
centre was this bloody car park.
We had to build the car park because we had to keep the same number of spaces.
So in the car park, in the last six months, there have been 111 ,000 people parking
in that car park in the last six months.
That's up 45 percent on last year, and this month it's up 61 percent.
The car parking is starting to trade its socks off.
And all those people are coming into Epping, parking and shopping or going to the leisure
centre.
It is actually long -term a success storey.
We bumped into a chap in Cornwall on holiday.
He said, you're a counsellor, aren't you?
He said, I park in that car park and I love the leisure centre.
It's a game changer.
The residents have had a game -changing thing done.
Instead of looking at the negative side, look at the health benefits and the public
benefits of the leisure centre.
228 ,000 of our residents have been there.
They wouldn't have been there if we didn't have a car park.
But please do come in.
There's nothing to hide.
Look at our figures.
Delighted to help.
I haven't got the numbers exactly to my fingertips or the costs, but if you come in,
we'll show you.
How many extra car parking spaces have we ended up with after spending all that money?
Cllr Jaymey McIvor - 0:29:35
So we haven't got any extra ones?
So we haven't had any extra parking spaces that we've spent?
I'm sorry, I think it's important.
Cllr Howard Kauffman - 0:29:46
So, I believe, Chair, what was said is with the Epping Centre Town Centre regeneration of the five sites
in order to bring the sites forward, one of the requirements of our planners
was not to lose any car parking.
So we had an open car park with the lights didn't work.
People used to fall over in the car park.
It was a surface car park.
It was pretty grim.
The surface car park's gone, and we've replaced the car parking with the same number
in the multi -storey.
No additional car parking.
The car parking facility that we have is excellent.
People now can drive in Tepping and Park.
It was before they couldn't.
But there's no extra parking spaces.
There's no need for more parking.
We have enough.
There's no extra parking spaces.
Cllr Jaymey McIvor - 0:30:25
There's no need for more parking.
We have enough.
Because if we needed to do that, I think it's important for the public context.
Cllr Howard Kauffman - 0:30:29
If we needed to have that car park because we require it for planning reasons,
we don't seem to require parking provision when we have developments at the moment.
We seem to nod all those through.
Cllr Jaymey McIvor - 0:30:39
So I think it's important for the public context.
It doesn't make sense, which maybe we'll get into later on in the meeting.
So the next person on the list is Councillor George.
Q. Hi, good evening, everyone.
Cllr Mandy George - 0:30:51
Excuse me for start coughing.
I've got my asthma playing up.
Going back to Councillor Murray, your question on the breakdown of the car park, I would
have thought, Andrew, that you would have had that detail there to share with all the
Councillors regarding the breakdown of the 19 .396 million or 396 million.
If my amounts are wrong, no doubt you are there to correct the amounts that I have in
As for the sign about moaning about the car park, that's disgraceful.
People are concerned with the amount of money being spent on this car park.
You know, everyone, you were voted in by your constituents that said,
yep, no doubt you went on doorknocking, said I'm going to do this for you.
Because sit there and say that, I'm disgusted with that, I truly am.
No, you can come back in a minute, I'm talking at the moment, please.
Right, break it down, okay?
So, we got the original estimate cost in 2021 at nine and a half million pound.
Then, following market testing in the 10 -day, it went up to 12 .599 million.
Additional highway utility fees and other costs were 2 .437 million.
Development interest was 0 .675 million.
The land purchase included undeveloped land was 3 .7 million,
giving a total of 19 .396 million.
So why... I've got a question with this as well, actually.
How has it come from 9 .5 million in 2021 to all then increasing to 19 .4 million?
Just under 19 .4 million, I've got my words out in a second.
That's a huge scope.
So where one, we are saying in 2021, it's 9 .5 million,
all of a sudden EFDC are going to buy it back and now it's gone up to 19 .396 million.
So I would like an explanation, please, on that because, yeah.
Andrew?
Thank you.
Councillor George has correctly identified the figures
Andrew Small - 0:32:50
from the Cabinet report and scrutiny report back in 2005,
and those numbers are listed in that report.
The 9 .5 million was the original expected construction cost,
so that compares to the revised or final main construction cost
following tender -stroke cost inflation of 12 .599 million.
So those are the two comparative figures in that context.
Thank you.
Thank you.
Councillor Brougha.
Councillor Shaw.
Cllr Jamie Braha - 0:33:22
Yeah, now the question is what's in that difference?
Cllr Geoff Shaw - 0:33:23
What have you put in there,
in the difference between the nine million and 12 million?
What have you thrown in there?
I'm sure it isn't just the difference
between one tender figure and another tender figure.
For example, the original design included,
with a cinema and shops, you probably spent a million pound on the first design before
you got back to the original design.
Councillor Shaw, may I just politely give you my mum look and ask you to come through
the chair when you want to speak.
Cllr Jaymey McIvor - 0:33:53
Councillor Brahe, you have a question and then perhaps both can be answered.
Cllr Jamie Braha - 0:33:59
It was more of a not so much a question, but firstly I was going to comment, hopefully
this isn't the Councillor Shaw's chair today, because we all want to have our say.
And I also wanted to take some objection to some of the comments about saying this nonsense
about the bill cost claims. You must have been out of the market for a long time if
you're suggesting that the bill costs were not...
No, these were current.
Well, no, they were...
These were the figures from the industry.
I'm sorry, but that's absolute rubbish.
Councillor Brown, do you have a question?
No.
Cllr Jaymey McIvor - 0:34:31
Okay. Okay. Next, Councillor Karen McKylie.
Cllr Karen McIvor - 0:34:38
Thank you, Chair. You did actually touch on my question, which was how many additional
spaces the car park gave, but moving on from that, I can't agree with your success storey.
Cllr Karen McIvor - 0:34:47
All we hear is complaints about the car park, the antisocial behaviour, the blighted views
of the residents in the area, and, you know, $19 million for a car park, what we could
done with that money in this area is unbelievable and I just want this minuted for the people of
Epping Forest. I find it incredible that that money has been wasted with no extra spaces given
in the car park. I hear what you say about the leisure centre but it's a serious amount of money
and I think we need to look at our planning going forward to make sure this never happens again.
Cllr Jaymey McIvor - 0:35:30
Thank you. Do anyone want to answer that or are we happy to move on?
Councillor Coughlin.
Just quickly to Councillor George. I didn't want you to take it out of context.
Cllr Howard Kauffman - 0:35:41
People are – the money is a serious issue. I wasn't about moaning about money. Everyone
is entitled to have an opinion. Like Councillor Shaw, I respect his construction industry
opinion. I was talking about the – we are suffering from antisocial behaviour in the
It is a shame on the people who are behaving poorly in that, but I completely agree it
is a constant source of concern to everyone in this Council, the antisocial behaviour.
I wish it didn't happen.
Councillor Morgan.
Cllr Jaymey McIvor - 0:36:16
Thank you very much, Chair.
Cllr Lisa Morgan - 0:36:23
It is just something that Councillor Shaw and Andrew were saying.
Globally, since 2021, we all know construction costs have increased,
approximately about 30 % globally.
Now they're trading roughly 40 % above pre -pandemic.
So therefore it quakes from 10 million to about 14 million.
I'm a bit confused how we've jumped 90 % more to 19 million from...
They're very proximate because I know originally we looked at 8 .5 million
and being fair that things do go up and we're saying now
that we should have cost 10 million.
So we now own the land, or we own the land that was worth 3 million that we've heard.
It's now still worth 3 million.
Is that correct?
Because as far as I'm concerned, we paid 3 million pounds for land that the car park
is on that we already own.
And if everything's trading for, if construction costs are charging roughly about 40 % more
than pre -pandemic, how does it work out to 19 million?
I'm very confused.
Maybe Mr Small can answer that question for me.
The reason we have questions in the world is because if you don't know the answer,
Cllr Jaymey McIvor - 0:37:28
you answer the question and someone will answer. Mr Small.
Andrew Small - 0:37:34
Thank you. I think there is some confusion. As I said, the report that was presented to
Cabinet and to scrutiny back in January 2025 breaks the numbers down. The two comparable
that we are talking about here is the original expected construction costs, which was estimated
in 2021. And then, I think after 18 months, two years, I can't remember the exact time
frame when Corliss went to the market to get bids from construction companies to build
that car park. And following all of the events that took place in that intervening time,
the construction costs went up from £9 .5 million to £12 .599 million.
So that's the two figures that are actually comparable.
In addition, the car park has other costs such as land,
such as some of the fees and other bits and pieces that go with it,
some of the construction finance.
But the two construction costs, one increased to the other because of global inflation,
was from 9 .5 to 12 .5 million pounds in that time frame.
Okay, thank you. There's the final question on this question, which is Councillor Lee,
Cllr Jaymey McIvor - 0:38:50
and then we will move on.
Thank you, Chairman. It's not a question. I'm listening to it all and they're all saying
Cllr Jeane Lea - 0:38:57
about how can it jump from this to that. Now, I'm just making a comment. I had a bathroom
built and I was quoted £32 ,000 and this was when everything all went bad and it ended
that's costing me over £60 ,000.
Just the electric wire had gone up three times.
I don't know exactly, the guy showed me,
say it was £10 for this role, it was then 30.
So that was just for my one little thing.
So I can understand how this jumped from 8 million
to that when mine was just a bathroom
and that's how much it went,
because it happened all at that time, everything went mad.
So I just wanna make it clear that it's quite possible
it jump that amount of money. Thank you, Chairman, for letting us...
Thank you, Councillor Leo. That's a gold -plated bathroom, I hope.
Cllr Jaymey McIvor - 0:39:44
LAUGHTER
Right, members, we will move on to the next question from S. Eves.
So I'll ask Laura to read the question.
A question from Stephen Eves.
Laura Kirman - 0:39:57
Can ONS establish exactly what each loan requested by QALYST
since 2019 has been used for?
Please go beyond simply identifying the project or site that each loan was for,
although this needs to be done.
ONS should establish what QALYST said the cash loan would actually be used to pay for
by looking at each individual loan request and whether it was used for that purpose.
For example, has EFDC ever lent QALYST money, which was then used directly or indirectly
to make payments back to EFDC, such as Qalis Interest or loan repayments to EFDC,
Section 106 payments or any other sums owed back to the Council.
Cllr Jaymey McIvor - 0:40:46
Jennifer Gould - 0:40:49
The Council's lending to Qalis companies is set out in the Treasury Management Reports
in four principal loan categories.
Commercial loans, development loans, asset purchase loans and a working capital loan.
All lending is governed by formal loan agreements,
which include provisions relating to security
and the Council's rights as lender.
All loans, with the exception of the working capital loan,
have been provided to fund capital.
This includes property developments,
or to fund the acquisition of the three commercial properties
held by QALYS.
The loan requests for property development
are made to the Council
and are supported by relevant contractor invoices.
Commercial loans.
The commercial loan portfolio totals 30 million
and was used to acquire three commercial investment
properties held within Qolis Commercial.
Development loans.
The development loan facility has an approved limit
of 97 million.
As at quarter two, 26 -27, 48 .2 million was owed
to the council.
These loans funded the delivery of a range
of residential and commercial development projects
undertaken by Qualis Commercial,
including Springwood Grove, Roundhills, St. John's,
Verdant Place and Cartersfield.
Asset purchase loans of 14 .8 million relate to sites
transferred by the council to the company
for development purposes in lieu of cash funding.
The working capital loan is a revolving facility
of up to 6 million that supported the establishment
and operation of the QALYST group structure.
Thank you, Chairman.
Matt Winslow - 0:42:36
Can you just answer the last sentence of that question?
Cllr Graham Wiskin - 0:42:39
The question asked, has money been used to make payments back such as QALYST interest
or loan repayments, Section 106, or other such sums?
Is the answer to that yes or no?
Owen Sparks - 0:42:59
All our loans made to the colonists are for capital purposes because they are capital
loans.
So the payment of interest, on which revenue, that's not permitted, so that's for capital
purposes supported by those invoices.
I've got Councillor Murray.
Sorry, is that a no?
We've got Councillor Murray, then a supplementary.
I've got two questions, Chairman.
Cllr Stephen Murray - 0:43:17
as this question is telling with loans, and I accept that we would have had it put
in reports and technical words and so on, but most of us on this committee are laypeople
and we have different skills.
I mean, my skill is controlling 30 difficult teenagers on the case, so we don't have
many of those at school because Robin Valley is a great school.
Why have we never, ever received just a simple spreadsheet of all the loans that were paid
to QALYST and when they were paid and when repayments were received? You know, almost
like a cash book balance. I accept that it's probably going to be a bit more difficult
than that, but I never, ever feel that this, as an ordinary member of Council, I was aware
that we will lend in these huge sums to Qarists.
I mean, Qarists, as far as I'm concerned,
hasn't passed the sniff -chest from the beginning.
And I'm not suggesting anything illegal
or anything like that,
but I've just not been happy from the beginning.
I think members are aware of that.
But why have we never ever received
just a simple explanation?
And to say that it's tucked away in financial documents
and we received this 30 -page report,
you know, that's not real life.
So I just wonder why we've never ever received
a very clear transactional,
these are the payments that we've made,
and this is the borrowing we've had
in the public works loan,
and these are the repayments we've had.
Because I've never seen that.
And then I have one more question.
Yeah, Mr. Sparks.
Owen Sparks - 0:44:57
So the way the lending works is a lending facility
that is agreed for a maximum amount of lending that's allowed, and that's what we refer to
as the facility that is in the loan agreements, underpins the lending.
The categories of the lending is what I just spoke about, and that's reported quarterly.
Beneath that, there are individual loan requests that happen at a regular time.
So what we basically do, when a quality needs some cash flow, they demonstrate they need
X amount to £300 ,000 based on this invoice,
this then this capital project,
and then we forward the money in that way.
So there's a whole schedule of individual loan payments.
It's not a loan for Springwood, a loan for Birdent Place.
There's a whole range of when cash is needed.
If we have that, we can provide it,
but it's a whole list of, I need 330 ,000 or 250 ,000
that comes from that overriding loan agreement.
So it's not a case of X to Springwood to develop it,
it's over a period of time.
That is available, but it is just a list of transactions.
That would be useful.
Cllr Stephen Murray - 0:46:11
And then I do just have one technical question on loans.
I think all the members of the committee
have had lots of information sent to them
by interested parties outside the council,
but genuinely interested parties.
And I've had it reported to me that in October 23, the Qualis Board was told by the Interim
Finance Director that there was a risk that Qualis could technically be in breach of requirements
across all their EFDC loans.
And I'm being told this.
I'm not.
So, you know, is that the case?
That could be part of the answer.
And the question I particularly got was that they were then told that a proposed
waiver had already been shared with EFDC, a waiver on some of the requirements
as regards these loans.
So I would like to know, is that accurate?
Were the quality school told, I've got the precise date, the 4th of October, that they
might technically be in breach of some of the requirements of our own and that a waiver
had already been agreed with EFDC and that obviously also begs the question, was that
waiver ever reported to members?
Because I can't remember that it was, but okay.
So that's the kind of technical question at this stage.
Yeah, Andrew.
Andrew Small - 0:47:50
I mean, specifics aside, and I need to look back on to records,
but I do remember a situation where the...
And Qualys, as a start -up business funded through loans,
is dependent upon sales of assets to generate the cash flow
to enable it to keep its income profile up.
And I seem to recall there was an issue in terms of cash flow enabling repayment of loan
at a particular point in time.
It may be in 2023, I can't remember.
One thing I do know is I'm sure I reported it to Cabinet and scrutiny as part of the
Qolis boards reporting into the organisation.
So, I'm sure it was reported to the organisation at that point in time in one of the Council
reports.
Cllr Stephen Murray - 0:48:43
If it helps in future looking at this, I'm told that the waiver letter is dated 10 October
2023.
Okay, I've got Councillor Shaw and then we're moving on to question three.
Oh, there's a supplement.
Cllr Jaymey McIvor - 0:48:55
Councillor Shaw, we'll hear the supplementary first and then we'll go to your question.
Can you give us a different relationship to the finance?
I would like to hear the supplementary, which is also related to finances,
and we will go to your question.
So, Laura, please. Thank you.
Laura Kirman - 0:49:10
The supplementary public question from Steven Eves is,
can ONS establish how much EFDC itself borrowed in order to lend money to Qualys?
ONS should be able to see this clearly, of the 121 million -plus lent to Qualys so far,
How much of that did EFDC borrow from the Public Works Loan Board, when, at what cost,
and what are the capital and interest payments the Council has to make each year on quality -related
borrowing for the lifetime of each of the loans?
If this cannot be readily broken down and separated from any other PWLB borrowing by
officers or unless should establish, why not?
And ask officers to provide their best estimates.
Thank you.
Cllr Jaymey McIvor - 0:49:58
The council has borrowed 75 .9 million
Jennifer Gould - 0:50:00
from the Public Works Loan Board in relation to Qualis.
Of this, 30 million relates to the investment
purchase assets at 2 .06 % interest
and is repayable on maturity.
At a total interest cost of 618 ,000 per annum,
the remainder relates to development
and working capital activities
at an annual interest cost of 1 .661 million.
Interest rates range from 1 .92 % to 5 .86 %
with capital repayments of 1 .213 million forecast
in 2026 -27.
Okay, Councillor Shaw, then Councillor Whiskin.
Cllr Geoff Shaw - 0:50:45
Sorry, as Qalis was, thank you,
as Qalis is a commercial business,
did they provide Epping Forest District Council
with regular cash flow forecasts?
And if so, at what frequency were those cash flow forecasts?
And how confident and how reliable were they?
Can I ask my colleague Andy Howe to answer that question, please?
Sacha Jevans - 0:51:15
Mr Howard?
Thank you.
Sorry, could you just repeat the question for me, please?
Cllr Geoff Shaw - 0:51:31
Did Qalis provide regular cash flow forecasts to Ebb and Forest District Council?
Were they based upon their business plans?
And as we know, their business plans changed rather frequently.
How frequent did their cash flow forecasts change?
And were they annually or were they weekly?
Not weekly.
Every major reiteration of the business plan was accompanied with a detailed forward look
income and expenditure account, balance sheet and cash flow forecast. So each time we reran
Handan Ibrahim - 0:52:11
Andy Howarth - 0:52:16
the plan, it was accompanied with a presentation and a cash flow forecast. I mean, more recently,
we've been focusing on looking forward to what the position would look like as we approached
local government reorganisation. So we were definitely looking forward to what the 2028
picture would look like. But the background plan has always got a long -term cash forecast in it,
and that has been shared regularly with EFDC.
Councillor Shaw?
Cllr Geoff Shaw - 0:52:46
Yes, I will. In respect to the current cash flow forecast, Springwood Grove,
the new contractor there, 3Aces, started in August, I think it was, of 2024, for just
a short period, presumably, just to finish off the works.
But here we are two years down the road.
The project still hasn't finished.
So presumably, Qualis' cash flow forecast has been changing quite regularly over the
last two years in respect of Springville Grove.
Mr Howard?
Andy Howarth - 0:53:21
We do update it regularly when we get revised financial reports from our external consultant
who monitors the forward cash flows on that particular project. But we've certainly taken
into consideration what the expected cash flows and what the worst case would possibly look like
with regards to Springwood Grove.
The business plan that we presented earlier
in this financial year had to,
because we were still not clear whether we were going to either
receive an offer from EFDC for Springwood Grove
or indeed accept it,
we had a business plan forecast
that showed either a private sale scenario
or a sale to the local authority scenario.
So, those cash flows were forecast and they were shared with EFTC.
Okay.
Councillor Whitsink.
Councillor Whitsink.
Yes, yes, Councillor Whitsink.
Thank you.
Cllr Jaymey McIvor - 0:54:30
This is in response to what Jen said.
Cllr Graham Wiskin - 0:54:32
Did you say it was 75 million being lent, which came from the Public Works loan board?
If so, am I correct in the other 46 million came from elsewhere, such as the sale of Google's
land?
Owen Sparks - 0:54:53
So some of it was cashless debt creation, for example, initial land purchase, that's
14 .8 million.
Some of it was from internal balances at the time, so we obviously only borrow what we
need to borrow.
So it's been a mixture really of how that has been funded.
Okay, Councillor Owen.
Thank you, Chairman.
Cllr Michael Owen - 0:55:12
Just to quickly highlight as well, we do have another committee, the Audit Committee, and
I don't think anything that's been said today has come as any surprise to me.
So just to reassure the public, a lot of this has come to Audit.
Mr Sparks comes to Audit, we regularly grill him.
It used to be Mr Small, he used to come.
So just to reassure the public, this has real interrogation at Audit as well.
Thank you.
Thank you.
That's a very good point.
We'll move on now to question three, which is the last question.
Cllr Jaymey McIvor - 0:55:33
we have Selina Jeffco, who's not in the chamber,
but is online to ask her question, Selina.
Thank you, thank you, thank you.
I have two questions.
My first one is, Councillor Holly Whitbread
previously stated publicly that Springwood Grove
Public Speaker - 0:55:55
is expected to generate a financial loss
and that further lending is being provided
to protect the money already invested.
Taking account of all the money Epping has borrowed or provided for the scheme,
all interest and other costs to Qalis and the Council, the proposed purchase of Springwood
Grove and any Qalis debt that is written off or cleared through transfers, can O &S establish the
overall profit and loss, what the total financial loss to Epping from the project will be and how
that loss is made up.
Cllr Jaymey McIvor - 0:56:35
The projected deficit on Springwood Grove is commercially sensitive and still to be
Jennifer Gould - 0:56:38
finalised. The position needs to be considered in the context of the significant change in
economic conditions since the scheme was originally planned. The assumptions underpinning Qualys's
developments were made in a materially more favourable market. Since 2020, general inflation
has increased by around 27 % and construction costs
by around 30%, alongside significantly higher interest rates
and reduced housing demand, which have placed pressure
on sales values and development profitability.
Springwood Grove has also experienced
specific delivery challenges.
The performance of the original contractor
resulted in Qualys having to secure a replacement contractor
adding cost and delay at a time when the scheme
was already being affected by construction inflation
and weaker demand for new build flats.
The proposed purchase by the council
would result in council receiving 45 completed homes
supported by more than seven million pounds
of Homes England grant,
providing long -term rental income,
reducing reliance on temporary accommodation
and delivering much needed affordable housing.
Councillor Murray.
Cllr Stephen Murray - 0:57:56
One point and two, one point and one question, please.
Can we just make a note that we've not had an answer on the projected deficit on Spingled
Grove because that's commercially sensitive.
So could we make sure that we ask that question in the private part of the meeting, which
we're going to seek to minimise.
But if we're being told that that's commercially sensitive and therefore can't be said in the
I certainly would want it shared in the private meeting.
Councillor Murray, I'm just going to stop you there before I forget.
Can I just confirm, so we have got a bit of time between now and the private session,
Cllr Jaymey McIvor - 0:58:33
that we are going to be able to get that figure for the private session,
because if not, there's time now to get it.
Yeah, is that a nod that we can get it?
Great. Sorry, please carry on.
Cllr Stephen Murray - 0:58:44
And my second question, and my question is on this, which I think is fine in public,
how do we intend making payment for these properties when they're
finished? Is it going to be by actually paying money or writing off further loans?
Owen Sparks - 0:59:10
We haven't yet finalised the detail. It's likely to be a mix of both.
Cllr Mandy George - 0:59:19
I remember the question I asked at the last meeting regarding the 9 .48 million. You sent
me an email, but I still haven't had the particulars and breakdown of the 9 .48. Can we have that
in part two as well, please? Yeah.
Owen Sparks - 0:59:37
I can't guarantee it. I know the guys are still working. They're getting back to you.
Can I ask why it wasn't supplied or even thought of to produce it?
Because the meeting was known this evening and we put our questions in so you would have
known what kind of questions we would be asking.
Cllr Mandy George - 0:59:51
Owen Sparks - 0:59:56
We were working as a follow -up to the OVINs group you previously, so I apologise, but
we're just working through the questions as best we can at the moment.
Councillor Shaw.
Cllr Jaymey McIvor - 1:00:06
Thank you, Chairman.
Cllr Geoff Shaw - 1:00:08
I was told at our meeting with, at my meeting with the QALIS team that the contract for
3 ACs for the completing the project at Springwood Grove was a design and build, JCT design and
build contract.
Can you please tell me what are the conditions of that contract?
Because the original contract period was 19 months.
Davis completed the contract, a large proportion of the contract.
Three Aces have now carried on to complete the project.
And they've been there now for 26 months.
And they still haven't finished.
So what are the contract conditions that Three Aces are working under?
So because we've mentioned, is there an answer to that?
Cllr Jaymey McIvor - 1:01:05
Sacha Jevans - 1:01:09
So the contract was let to 3 -8 on a JCT design and build, and the completion date in the
contract was May 2026.
The delays that we're now experiencing are due to UKPN Essex County Council Highway sign -off
of the two section, the Section 278 agreement, which are the works to the road,
and we've had significant problems with trying to get that sign -off from the county.
And so the further extension has been agreed until September, and we are due to complete
that shortly, although we have had another further delay with utilities companies.
So these were unforeseen delays that were unfortunate, and that's why the contract
could not complete on May 2026.
Councillor Shaw?
Cllr Geoff Shaw - 1:01:56
I visited the site three or four weeks ago and there were men still working on the flats.
They weren't complete.
Sacha Jevans - 1:02:09
The flats I believe have been completed for about a month so you're probably looking at
snagging and the final landscaping works.
Cllr Jaymey McIvor - 1:02:20
We will do Councillor Whiskin, then Ms Jeffcoat has a supplementary question.
So, Councillor Whiskin.
Thank you.
Cllr Graham Wiskin - 1:02:24
On that topic, if it is so close to completion and if not expected to be completed, surely
the costs are all known and there should be very little commercial sensitivity involved
further on.
Mr Sparke.
Sacha Jevans - 1:02:43
Owen Sparks - 1:02:46
The costs are being completed, we're still going for the contractual work,
to make sure the contract's in place, so it is coming to an end,
but obviously it isn't, the contract and works aren't complete.
Thank you. Did you have a follow -up?
Well, surely that's going to be relatively trivial in terms of the overall project,
Cllr Graham Wiskin - 1:03:03
and we should be able to hear what the figures are, again, for the public interest.
Thank you.
I appreciate what you're saying, not necessarily to the correct penny,
Cllr Jaymey McIvor - 1:03:13
but a figure, yeah, I understand.
Okay, supplementary question from Ms. Jeffercote, please.
Yes, thank you.
Public Speaker - 1:03:21
Actually, I do have a, what I have is my second question,
but what I do have first is a supplementary question
that I wrote to my first, which I just won't qualify,
which was slightly touched on.
The commercial interest as to reasons
for withholding information is not by itself justification
and government guidance specifically says that it is not. It is the public interest
that is the deciding factor under section 12A. So can I confirm that officers are saying
that they consider, or that this committee in fact, it is the committee that makes the
decision, considers it is in the public interest to withhold the losses, the figures of the
losses to Springwood Grove and possibly by association, all the other Corliss projects.
Is it in the public interest to withhold those?
Cllr Jaymey McIvor - 1:04:16
Does anyone like to take that question?
Cllr Stephen Murray - 1:04:24
The clear answer is no. It's not in the public interest. The public have a right to know.
Cllr Jaymey McIvor - 1:04:30
Ms Jeffcote, that was your supplementary, so you had a second question as well. Would
you like to ask that now?
Public Speaker - 1:04:45
Yes, certainly. Thank you, Councillor. What did Cottis Lane actually cost to Epping Forest?
And what are the ongoing running costs? Can over the unscrutiny establish the original
value of the site? How much and what qualities pay for it? How much was lent to Qualis? How
much borrowed by Epping, what quality debt was cancelled, what it was worth, so on and
so forth. We're back to the question of what it cost, how much Epping borrowed remains
on that site, the total cost of that borrowing and how much annual income to Epping has been
lost from the interest. Can Overview and Scrutiny also establish a separate profit and loss
for operating the car park, including insurance, maintenance, agents fees, CCTV, etc, since
acquisition and going forward.
Ms Gould.
Cllr Jaymey McIvor - 1:05:38
Jennifer Gould - 1:05:40
This is already a matter of public record and is set out in detail in the January 2025
Cabinet Report, item 87.
I have a supplementary question to that.
Okay, if you'd like to ask your supplementary question.
Cllr Jaymey McIvor - 1:05:55
Sorry, can I ask Ms. Gould to clarify?
Public Speaker - 1:05:59
It was the January 2025.
Yes.
Yes, January 2025.
But that won't have the question.
My question was also a profit and loss for operating car park since acquisition and going forward.
So if you'd like to ask your supplementary now, which can be the one thing you just asked plus what you're about to ask,
Cllr Jaymey McIvor - 1:06:19
because we just have to keep some order to the process.
No, no, no. That's fine.
Public Speaker - 1:06:24
So my question was, what does Qolsys cost to date up to acquisition and the losses on
it, and also what are the running costs since the council acquired it in February 2025?
Ms Gould's answer was that it was all set out in the cabinet report in January 2025.
That's obviously not true.
Okay, thank you.
Cllr Jaymey McIvor - 1:06:48
Councillor Murray and then Councillor Small.
Cllr Stephen Murray - 1:06:54
I would say that can just be one of the decisions we make at the end of the meeting, that we
ask as O &S for a separate profit and loss for the operating of the car park, including
the items that are set out in that paragraph.
And I'm going to suggest that not just because a member of the public has said it, who I
respect, but it's a reasonable question and a reasonable thing for us to have as a Council
so we can make that one of our recommendations.
Yes, please keep note of that for that minute in the meeting.
Mr Small.
Thank you, Chair.
Cllr Jaymey McIvor - 1:07:28
Since the council took ownership of the council,
Andrew Small - 1:07:31
it just becomes another council service
and therefore part of the overall council's
budget development and budget setting process.
But the information is available
and we can make it available
as part of the budget setting process.
As for any other service that the council provides,
it's not hidden that well.
It's just part of the overall budgets of the council.
Okay, thank you very much.
Members, we're gonna move on now.
Cllr Jaymey McIvor - 1:07:57
So we also received two requests to address the public.
Ms. Jeffcoat, I'm aware that you requested
that timeline be circulated to the committee
and I've been advised that it was circulated
on Thursday last week.
So you do have three minutes to address the committee.
Thank you. We're still asking about QALYST because so far there have been few clear answers.
Public Speaker - 1:08:22
I would urge you not to be satisfied with complex accounting reports or vague yet confident
justifications. Instead, follow the money. Find out what the council has to show for
giving over $120 million to QALYST just for its development activity. QALYST takes 10 %
of every loan it receives as an overhead and Roundhills, Cottis Lane, money to QPS, Management
and consult a CVs, they are all on top of the QALYST loans. Hearing about loan margins,
Section 106 money or interest received can sound reassuring, but it can be misleading.
Interest payments are described as vital outcome, but that income is plummeting as QALYST debts
are wiped out while Epping's own debts remain. Does it really make financial sense then to
buy back the very property it has just paid to build? What if those payments from QALYST
could only be made by frequent injections of taxpayer cash. If that lending had been
judged too risky, would Qualis have collapsed by now, like some sort of public sector Ponzi
scheme? The timeline I did for you is important because at times what members were being told
and what was actually happening appear very different. In late 2023, members were told
Qualis debt was peaking, further loans weren't needed and profits from sales would pay off
debts. Yet only weeks earlier the QALYST board had warned the council they couldn't meet the terms
of the loan agreements. Did Epping stop lending? No, they waived those very terms, the very terms
that safeguard public money. After that lending and debt kept rising and those promised profits
did not arrive. By 2024 QALYST was fully leveraged and it owned far more than it owned.
Who authorised waiving the loan terms in 2023 and why, despite knowing the risks, has Council
kept lending to QALYST for another four years? In just the last four months, Epping has borrowed
another $2 .85 million. You've borrowed nothing since 2012, but since December 19, you've
taken out well over $120 million of new Public Works loans board loans. How much of that
was to give to Qalis? Well, we know now, at 70 of million. And at what cost and how is
Epping going to pay that 70 million plus back if Qalis can't pay back what it's received?
So please get the whole picture. Over 120 million was given to Qalis. Where's it gone?
How much was paid back in cash? How much isn't going to be repaid and what assets are left?
and find out once and for all for the public,
how much Springwood, Cottis, St. John's,
Cartersfield and all the other sites
have really cost Epping.
Until officers put that in clear language
that everyone can follow,
no one can understand the true financial impact
of QALYSS on Epping's future finances.
Okay, with any, thank you, Ms. Jeffco.
Members of the committee, you can ask questions
Cllr Jaymey McIvor - 1:11:21
of Selina Jeffcoat on the address.
Do you have any questions?
So, Councillor Murray?
I don't think they answered the question, though,
Cllr Stephen Murray - 1:11:30
but I've got two questions arising from that statement,
and whoever wants to answer,
and if Councillor Jeffcoat from Chigua Parish Council
wants to answer, then that's fine as well.
Again, I've said this isn't my area of expertise,
but we're being told that 10 % of every loan
is regarded as an overhead for qualities, well, to a simple kind of person.
Like me, a card that just runs a letter sheet for his finances, can someone explain
to me is that a reasonable percentage?
To me, that seems extremely high.
So how do you get a 10 per cent of every loan is an overhead to, you know, to meet qualities
of overheads?
And then the other perhaps even more disturbing thing that is said in that statement
is there appears to be a dichotomy between what is, and I'm only responding to what
I'm hearing, a dichotomy to what is being reported to members that the loan situation
is peaking and it's turning the corner, to what the quality school were being told
just a couple of weeks previous.
And I've already mentioned the waiver situation.
So EFDC would have been aware.
And there just seems to be, I don't want to use the word misled because I've got no evidence
for that.
So I haven't said that, I'll withdraw that.
But we have had an apparent dichotomy given to us, haven't we, that members were being
told in papers that the situation was improving when in fact a month, a few weeks before,
a waiver being agreed on, some of the loan conditions, but that rather worries me. So
two points there, Chairman.
Thank you. Would anyone like to answer those points, Mr Chairman?
Cllr Jaymey McIvor - 1:13:21
If I could ask Andy Howe, our Finance Director, to take the first part of the question on
the 10 % margin. Sorry, overhead.
Andy Howarth - 1:13:30
Yes, Mr Howe.
Yes, that was something that was agreed with the former MD of the Qols Commercial and with
one of the finance managers who was formerly at EFDC. And it was to cover the other heads
of Qols Commercial over and above any construction costs that were being claimed at the time.
It was something that was in place for a period of time.
It hasn't been in place recently.
Loan drawdowns at the moment are just purely based on contractor costs.
And they're fully supported with invoices from contractors and consultants.
I'll just ask one follow up on that.
Cllr Stephen Murray - 1:14:23
And I know that is the other question I asked that needs to be answered.
Would that be a reasonable kind of standard percentage that in other scenarios where loans
are being paid, that that's a reasonable amount?
Andy Howarth - 1:14:41
I won't comment on the percentage that was in place at the time. I would have preferred
a more detailed method of claiming, and that's something that we've enacted now. I think
that just the main contractor costs were being claimed and an allowance was being added on
top to meet the consultancy fees and any other costs. I preferred a way of updating that
so that the individual invoices were actually all itemised so that we could claim a reasonable
amount that was justified by invoices rather than arbitrarily saying, well, there must
be a percentage over the parts of construction cost.
Cllr Stephen Murray - 1:15:28
Just a reminder, my other question was the apparent dichotomy in the information the
members are receiving and what Corry's Board was telling officers and asking for a waiver.
I can say something about the waiver if you like.
Yes, please.
Cllr Jaymey McIvor - 1:15:44
Andy Howarth - 1:15:48
The original loan documentation had a number of clauses in it that I don't know if they
were too rigid. For example, they limited what interest could be charged to call it.
They actually also suggested, well, it's embodied in the loans, that interest rates after five
years should fall from 6 % to 3 % and I felt that was a bit harsh on the local authority.
There was also not any opportunity to vary the interest rates. So one of the changes to the loans
that I suggested was a bit more flexibility on the margins that could be charged. For example,
the Cartersfield lending was at 6 .5%, not 6%, and that could only be achieved if we changed some of
terms of the loan agreement. The waiver related to the reporting of financial documents and
the interest cover covenant was not an interest cover covenant, it was a financial repayment
covenant and it required that surpluses needed to cover both the interest and capital repayments
to be made. I just pointed out that in the early years of the College, where we were
not making any money at all, it was ridiculous to have a financial covenant that could possibly
be met. So I think technically we have breached that covenant because it is a covenant that
could not be met. I suggested that we agree, and I have this discussion with Andrews more
the time what the appropriate level of financial reporting should be. And that's the monthly
reporting that shows the profit and loss accounts for each of the smallest businesses and a company
with a balance sheet and some details about what the work in progress figure is made up of.
And that's one of the questions that have been asked, by the way. So that we had a package of
reporting that was appropriate and agreed by the Section 151 officer. We just embodied
that into the revised loan agreement. At the time, the way that was specifically about
dealing with a covenant, it could not have possibly been that.
Thank you. Mr Small.
Andrew Small - 1:18:22
I suppose there is something about asking detailed technical questions on things that
happened over the last six years and my memory is good but not that good unfortunately.
So individual specific, I can't necessarily remember.
But there is something about how Collins was created in terms of its governance framework,
accountable to the Council and the Council paid,
the Council invested in creating a governance framework
that the Council would be cited upon
what QALYST was doing,
the necessary cheques and balances were in place.
And as part of that, there was, still is,
quarterly reporting from QALYST board to the Council
and then through to Cabinet and scrutiny.
So, and that's ignoring the fact that it also looked at every year by audit and governance as well.
So, Qolus was under an awful lot of scrutiny.
And yes, there was a business plan that was constructed back in 2019,
I think, or 2020 when it was first conceived.
But, I mean, as we've already discussed, the world changed on a number of different occasions, really,
fundamentally, in many different respects.
The impact of COVID would really have been foreseen in terms of the change in working
patterns, the change in moving out of office spaces and demand for certain other assets.
The impact of, as we've already mentioned, the Ukraine war.
The whole point is that the quality of business model needed to be dynamic and things, despite
of saying it was going to be, you know, it's all plain sailing from this point in time,
you can't foresee or you can't allow for events which knock or shape your business plan model
and have to be adjusted for.
And the point is that the QALIS business plan model was adjusted and it was reported through
to the Council on a regular basis.
The portfolio holders for Qualys, Councillor Matthews at the time, finance portfolio holder
and Councillor Phillips, reported on a regular basis to the committee, to cabinet, to scrutiny
and introduced to Council on the issues that Qualys was having to deal with and how they
were impacting upon its business model and how the business model has been recast to
allow for it.
So, yes, I mean, you can pick a point in time and take a forecast at that moment and say,
well, it didn't turn out.
No, it didn't.
I mean, I think we wouldn't be here tonight if events had materialised in the way they
were originally intended to.
But the point is they didn't, and nobody's pretending that they did.
that they did.
So I think it has to be taken in context
of the fact that the council was continually updated
through the changes, through the challenges
that Qualys was having to deal with,
and that was really reported back on a regular basis
to this committee, to cabinet, and to council.
Thank you.
So we have now Councillor Coughlin.
Cllr Jaymey McIvor - 1:21:44
Thank you, Chair. Just a bit of context. So money has been lost and I really regret that.
Cllr Howard Kauffman - 1:21:56
I want to be absolutely clear. Money has been lost in our residential development business.
I really regret it. I'm bitterly upset about it. No one is happy. It's a disaster. We've
lost money through Resi Development. The top 10 residential developers in this country,
of the top ten, nine have lost money over the last six years.
Many of them are not in the game anymore.
They don't even do residential development.
It's toxic.
So we've lost money.
I feel really bad about it.
But just to be clear, when Corliss was set up, so I joined it in mid -2020, okay,
it bought, it's only bought five sites.
I'm not talking about the investment properties.
It's bought five sites from the Council.
It paid $14 .7 million to this counsel of five sites that this counsel already
owned, and this counsel had tried to develop over a 10 -year period prior to Christ.
We tried to do joint ventures.
We tried to sell them.
These sites are very difficult sites.
And so the counsel will have to try and do something different.
We'll try and develop these sites ourselves.
And they've proved very, very difficult to develop for a whole range of reasons,
We've had a contractor fail, which is an absolute disaster for us.
It failed 60 percent through a contract, which is the worst time for somebody
to fail, because you then go back into the market, so that was a fixed -price
contract at tender with a contractor, passed all the procurement, they stopped.
So we had to go back into the market and find somebody else to finish it.
That somebody else, of course, wants three or four times what the original person
agreed to do.
We've suffered that at a time in the highly declining values of demand for flats.
We've not bought, we've not speculated on new resi developments.
These are sites the Council owned.
We correspond them with borrowed money.
There's no new equity put in.
Really, that's daft, but that's what we did.
We tried to find a way out of these difficult sites for the benefit of the Council.
We've lost money.
We're trying to ameliorate the loss as best we can.
We have some commercial properties.
We're actually performing quite well.
We're getting 1 .87 million a year.
We haven't missed a rent cheque for the last seven years of the commercial property
portfolio that we have.
So I'm quite proud of that valuation.
It's down, but the income has been solid.
And that income is paying a margin.
I think we've paid 14 million pounds of interest to this counsel as a margin from
the work that we've been doing.
Plus, we've paid the 14 .7 million to this counsel for these sites which we're finding
so difficult to develop.
Cllr Jaymey McIvor - 1:24:42
Councillor Whiskin, I have got your hand. You are on the list, don't worry.
Cllr Graham Wiskin - 1:24:47
Thank you. I know hindsight is a wonderful thing. It is quite clear that all of the premise
of the set -up of Qalis was on everything going up and the question has to be asked was, was
there any consideration about the markets going downwards? Because I think the sentiment
of what Selina Jeffcoat is saying is, and the public will say it as well and ask, why
don't we just not pull the plug on the whole affair and face up to the public and say,
this has been a huge costly exercise, it's not totally our fault, but the cost is X,
and face the political consequence of it and move on.
So can we understand what the impediments to stop not doing that step is?
Cllr Jaymey McIvor - 1:25:39
Mr Small?
Andrew Small - 1:25:45
With respect, Councillor, I think that is what we are doing really.
The business case, the business plan for Qualis, signalled this I think at least two years ago,
and said that this was a sector that the council could make money in,
and we did an exit strategy, which is what we are currently delivering.
I don't think anybody here is pretending that Qualys hasn't lost money.
I think what we are here tonight to try and explain is that it wasn't because of...
It wasn't because of incompetence, it wasn't because of poor decision -making.
It was market -driven for the most part.
We were caught out and councils, for the most part, haven't got the balance sheets to absorb
losses.
I think there was a degree of optimism, I think, when Qols was originally conceived.
I think everybody was thinking,
Epping Forest, a great place to make money,
really property prices are going up,
and then the world did change,
and it changed on a couple of occasions.
And I don't think anybody in the property sector,
and I don't think just us Epping Forest District Council,
I think either many, many councils,
or indeed many in the property sector,
and Councillor Cawthorn has already alluded to that really,
caught a cold.
The trouble with councils is,
As I say, we are funded by residents, and therefore we can't just take it to the balance
sheet and absorb it.
We have to account to our residents for those losses, which is what we are in essence doing
here, really.
I think the big learning point is, and this has been learnt by a number of councils, because
I saw only last week, I think it was Cambridge County Council, lost about £8 million on
housing development that were reported to its council, and I am aware of many other
councils that have been in the same business that have also lost money.
I think there is a lesson to be learned.
It plays to one of the later questions, I think, whether councils should be in this
business.
We were in this business because the government's reductions in grants almost necessitated us
to be so, because either that or it was to cut services.
So I think we are certainly looking for ways to solve the Council's financial challenges
by growing our way out of it, if you like, with new income.
But as market factors have demonstrated, if it doesn't go the way you anticipated it to,
then it leaves us in a very difficult situation, which is where we are today.
So I don't think anybody is denying that at all.
In fact, you know, I think the Council took the responsible action a couple of years ago
in terms of saying we need to be getting out of this business because we're not going to
make money in it. And today we're talking about the cumulative amount that that decision
is – or the life of Qualys has cost us.
Thank you. Councillor Whiskin.
Cllr Graham Wiskin - 1:28:56
Could you then just give us the benefit of the public some comforts of comfort that we
won't be throwing many, many more millions at the problem? That's really, I think, what
People are asking, I think they accept the fact the money's gone, but they won't be happy
if many more millions, which may or may not be being spent, is on the cards.
So some crumbs of comfort would be required, I think, from the public to say it's done
and dusted.
I think it's been cauterised effectively, and I think the current strategy is exit now,
Andrew Small - 1:29:30
and so it's to get out and return as much money from it as possible without incurring any more
cost other than that required to complete it to maximise the value we get from where we are.
Okay, we've got Councillor Owen. I've got everyone's names, do not worry.
Councillor Owen.
Cllr Jaymey McIvor - 1:29:47
Cllr Michael Owen - 1:29:49
Thanks, Chairman. The debt covenant worries me a little bit as a banker because that is your seat
at the table when someone breaches a covenant, but it sounds like we've put in place a covenant that
We have never tested from day one that would have failed on day one, so that in itself
is a worry.
But who was told about the waiver?
Because as a banker, if I hear someone is getting a waiver on their covenant, that is
then where I am saying, all right, no more, we stopped lending.
But it doesn't sound like maybe everyone was told or maybe they were, if I misunderstood
that.
But this is quite a serious issue for me now.
Cllr Jaymey McIvor - 1:30:22
I was quite an intricate and detailed question and I'm not sure.
Andrew Small - 1:30:28
I think I need to go back to my records and test that one in relation to the waiver.
I mean, I've always, you know, I was the 151 for the Council during a large part of
as his existence.
And my obligation, my duty was always to the council.
And I took it upon myself and took pride in making sure
that I did tell the council everything that the council
should be aware of.
So I would like to think I told the council,
but I'd need to go back through all my records
and all the council reports to evidence that, unfortunately.
OK.
Thank you, Councillor Shaw.
Thank you, Chairman.
Cllr Jaymey McIvor - 1:31:11
Cllr Geoff Shaw - 1:31:14
I must admit I agree with Councillor Kaufman that it has been an absolute disaster.
I also agree with Andrew that it is a business that you should not have been in.
What you have both been saying about the increasing costs of being one of the reasons
for the losses that you've made.
And you've blamed the war and the weather
and inflation and everything else.
My research has shown, and if you look at Appendix A
of my research report, if you take Round Hills project
for example, the three bedroom houses on Round Hills
have got a square foot of about 1350 square foot,
A three bedroomed house, 1350 square foot.
The standard that you need for a three bedroomed house in accordance with space standards is
between 900 and 1000 square feet.
Three bedroomed houses being built down in Thornwood by the developer down there on the
left hand side, are 900 square foot.
A three bedroom house, every estate agent in Loughton
or Epping will know that a three bedroom house
should be less than a thousand square foot.
So the houses at Roundhills are larger than is necessary.
They were designed by Purcell, who's famous for designing
the art gallery in Trafalgar Square, portrait gallery.
they designed the houses in Waltham Abbey.
Not only that, the price per square foot
for the houses at Roundhills
were over 200,
close to 300 square,
they were 280 pounds per square foot to build.
Whereas we were building at 210 to 250,
if you look at the RICS standard prices
for house construction,
should be between 210 and 250.
They're in my report.
And I got current prices all the time from my research.
So the houses were over specified in respect of quality.
If you look at Round Hills, they've got fancy windows.
They haven't got standard windows.
They've got odd sized windows.
They're not standard.
They cost three times as much as standard windows.
So the specifications were over specified.
And that is a result of the Qualis management team
not managing the design process.
When I met with the design,
When I met with Qualis at our meeting in August,
and I asked her who was responsible for the pre -construction management,
managing the design process.
People looked in the sky, they didn't know what I was talking about.
The response was there was no director with specific responsibility for that.
And that is why the costs were so high.
If you look at Springwood Grove, the cost per square foot for those houses
is near 400 pound a square foot. They are way over what we should be paying for the
price of houses. They are way over specified. That is the reason for the extra cost and
the losses. It wasn't the inflation and the weather and the war in Ukraine, because we
were building at the same time as you were at Round Hills and Springwood Grove and we
know and with respect the estate agents in and out, no, the estate agents, I talked to
the estate agents and they and boys, they know the cost of construction and they know
it should have been between 210 and 250 per square foot.
Thank you.
Councillor Shaw, did you have a question with that or I will just allow Councillor Kaufman
to answer.
Everyone is getting a bit emotive about this.
Cllr Jaymey McIvor - 1:35:33
So I am not the...
Of course everyone is very emotive.
Cllr Howard Kauffman - 1:35:40
I'm not the development director as such, so I'm not directly responsible for the specification
of Roundhills, but I'll speak for Qalis.
So the houses are large, they were designed, the 28 houses were designed as private houses.
They were not affordable housing, they were designed as private housing, 28.
They were built on contaminated land, they were built on the site of the old swimming
pool.
So we had contaminated land issues.
They're right on top of the M25.
We had to do an awful lot of, I think it was landscaping
or work to ameliorate the noise from the M25
because their proximity to the M25.
So they are a bit larger, but they were designed as private.
But when the market started to deteriorate,
we took a view that we're better off
getting 28 fabulous affordable homes into our portfolio.
And I'm sure the people who live there are delighted.
They are higher specifications.
They were not originally built as affordable.
They ended up that way.
There were additional on costs from a standard greenfield residential development.
Councillor Morris.
Cllr Jaymey McIvor - 1:36:50
Thanks very much, Chairman.
Cllr Martin Morris - 1:36:53
I think it is very important to go over the history of how we got here and who did what,
when, why, and I think that's a good thing to do, and I think we should continue
with that investigation.
But I think, from my opinion about what ONS should be doing now, they should also be
asking a question about where is the detailed plan for closing out QALYS and putting
it into a sustainable financial position.
In simple terms, Epping Forest District Council has lent over £100 million to a company
that built properties.
The properties that are currently built are worth a lot less than the loans that were
given to it.
The amount, the difference is the unsecured loans.
There has to be a plan about how that unsecured lending will be settled, what will happen,
how much they will get for the properties, what we're going to do when we're no longer
receiving interest payments, for example, from QALYTH.
All this needs to be in a plan for closing it out and putting QALYTH into a sustainable
financial position where it makes no further demands on EFDC's balance sheet and budgets.
So I would like to see ONS asking for a clear plan that can go to ONS, to Cabinet and to
Audit Committee showing very clearly how, when and what, how, when and how much it will
cost to close this whole thing out.
So yes, I agree with the analysis of how we got here and what went wrong, but I think
equally as important for EFDC and its residents
to understand how we're gonna get out of it
and what it's going to cost, who's going to pay it,
and what the long -term result will be.
So that's my question as a statement.
Can we ask for a plan?
Just stick a question mark on the end
and I'll accept the question.
Cllr Jaymey McIvor - 1:38:42
If anyone, let's say, wants to ask about,
what I can tell you, Councillor Morris,
because he wasn't at our pre -meetings on the committee,
is that the next section of the meeting,
that is very much one of the themes,
the looking forwards.
So hopefully you'll be satisfied in a minute.
Councillor George.
Thank you, Chair.
Cllr Mandy George - 1:39:03
I just want to come back to Councillor Kaufman.
You used the term we.
Andrew, you said lessons to be learned.
Now, what's we, what's the lessons to be learned?
And what I'd like to get a clear picture of,
Who actually initiated, authorised, and actioned each project, and who was responsible
for the key decisions along the way? So who are you referring to? We? Who are you
referring to and what are you referring to? Lessons will be learned. Thank you.
That is literally one of the themes of the next section of the meeting, so may I ask
Cllr Jaymey McIvor - 1:39:35
you to ask that in a second, if that's okay? That's literally, literally a whole
item of what we're going to discuss, if that's okay.
And then we can do it thoroughly rather than just as part of a supplementary
question.
So I want that answered just as much as you did.
And then he's got two left, Councillor Rackham and then Councillor Murray.
Councillor Rackham and then Councillor Murray.
Thank you, Chair.
Cllr Sheree Rackham - 1:39:55
This is not my area of expertise at all, but I totally do agree with Councillor
Whiskin and Councillor Morris on what they've said.
What I would like to ask is, do we have a rough estimate of how many other councils,
because obviously that was a did.
We heard about that.
How many other councils have had their own property companies
and have any been successful?
Cllr Jaymey McIvor - 1:40:26
Is there a council that we look to as a model
that we should try and be like?
I have to be very careful here about which councils
I draw into this.
Don't worry about offending the others,
just tell us the best and we'll be modelling ourselves on.
Andrew Small - 1:40:39
I think this is my view, and treat it as such.
I think councils are always very...
think of optimism bias, I think is a term that has been used in local government for some time.
We always look, we don't ever go into anything, it is going to be a success.
And I think investing in properties is a good example of that.
Let's remember that the council has always been an investor in property.
The council has a large industrial and commercial estate that actually generates, I think, in
the order of £12 million for the council each year in income that props up a large
proportion of our service delivery.
And that runs well for the most part.
But when you go into new property investment,
and the government in itself switched off Council's ability to borrow for that a few years ago,
so certainly outside of your own district,
largely because of a large amount of councils that were finding themselves in trouble.
And there are a number that you can point to that are politically in the media, working, spellful.
Thoreau, you know, there are a number of councils,
in fact, probably the majority of councils
that have gone into this area in recent years
have found themselves dealing with
the negative consequences of that really.
I think, you know, if you go around
and do a survey of councils today
and ask them, you know, are you buying property?
I think you'll struggle to find anybody
with one neighbouring exception, perhaps.
that is investing large amounts of money in property.
And this is largely because of what we've seen here,
is that it's fine when the market's on the up.
But as soon as you get an unexpected event,
as we have seen, it's very difficult
for a publicly funded organisation
to account for losses made in that space.
I mean, as I say, if you take property over a long term,
these dips and crests even out.
And all you look at is the total income
that you're taking from those estates.
But in the short term, if you've borrowed for it
and its value declines, then suddenly there's a loss
that has to be discussed, has to be accounted for,
has to be reported.
And I would say, and I've said it before,
as an organisation, there are very few organisations
in the country, very few sectors in the country
who are accountable as we are as councils.
We are accountable to the government, to the residents, to the auditors,
to elected members of the council.
We are under the microscope in terms of everything we do.
Every transaction, every up and every down
is scrutinised by somebody in this place, really.
That makes it very difficult to go into a space whereby you can't guarantee it's always
going to be up.
I think that's one of the learning points really, is that when you step back and realise
that we have to be held to account for our losses, and we are, I think it's something
councils will now generally avoid.
It's all done for the right reasons, originally, in terms of the government taking away 80 %
of our funding and the alternative was to cut our services.
And that wasn't palatable either really,
that's something that everybody wanted to avoid.
So investing in property, investing in commercialization
was the solution, but I don't think I can point
to any single council in the short term
who has been successful in that spaces.
Is that this government or the previous government
Cllr Jaymey McIvor - 1:44:48
your strategy, or was it this government or the previous government you're referring to?
Sorry, Chairman, I stood in the quiet. This government or the previous government in terms
of putting us in this position?
Andrew Small - 1:45:06
I think successive governments, I think it goes back to 2009, was in the government,
The Icelandic banking crisis really 2009, where the government found that it didn't
have enough money and started taking money out of the local government public services
full stop actually.
And local government was one of the sectors within government that suffered the most I
think because I think the government can pass on savings targets to local government and
local government has to balance its budgets.
the NHS, the other parts of the public sector,
if they don't live within their budget,
then the government bails them out.
With local government, we have no choice.
And so local government is always taking the rough end
of government savings targets
because it's a soft saving to make.
And yet we have a duty to our residents,
to the people of Epping Forest really
to continue to provide good quality services.
And it's very difficult to do when our biggest funding source,
which was government grant,
has cut from 12 million down to about three million.
So, I mean, you know, either,
I'm sorry, you can shut me up in a minute.
There are already, there have only ever been
three solutions to balancing your budget.
One is to grow your income, which is commercialization.
The other one is efficiency and trying to do the same things for less money.
And the third one is cuts.
And every council wants to try and avoid making cuts to services because we value what we
do.
And so we look together, we don't have so much efficiency you can do.
And beyond that, it's trying to grow your income base, which is what underpinned a lot
of the commercialisation strategies that councils have undertaken up and down the country, including
investing in property.
and then when I think the government realised
that there was an awful lot of money being borrowed
by councils and invested in property,
and there were some spectacular failures within that,
such as, you know, Woking Inks, for example,
and the government shut that particular route down.
And that happened after Qolis was created, actually.
So, I mean, the Qolis business plan was predicated
on that facility always being available,
some of the profits that were going to be generated
through a quality model that could buy assets outside of the district and borrow to do so,
suddenly cut off very early on in the early days, of course.
And so the fundamental change in terms of the business plan expectations as a consequence
of changes in government policy.
Thank you.
Thank you.
So members, just so you know, it's a state of play.
So obviously I was very aware of the time.
Cllr Jaymey McIvor - 1:47:54
So the next section of the meeting, we have four questions, but I will wrap up all the
questions under this section.
and also I thank Ms. Jeffcoat
for stimulating this conversation.
Then we will obviously look to committee recommendations
and we have one item that needs to be done
in private session.
So, Councillor Murray.
Cllr Stephen Murray - 1:48:14
Yeah, I have a question, but just a few points first.
I realised, because of what we've heard tonight,
money's very tight.
It is absolutely really freezing in here.
I mean, some of us are suffering from ill health
and I have to say I am really cold.
So I don't know whether we can do anything about it.
Thank you for telling us.
Cllr Jaymey McIvor - 1:48:38
Cllr Stephen Murray - 1:48:40
And I also want to use, we're two hours into the meeting, so I think this is appropriate
at this stage.
I do want to thank Councillor Shaw for his detailed report.
I found it extremely useful and I read every single page of it and I think I did respond
in my Jeff, so thank you for that. And I also do thank Councillor Howard Kaufman as a director
for willing to be present here tonight. I have immense respect for Howard as a Councillor
in Loudton. His record stands on its own in Loudton, so I just wanted to put that on record
as well. I have a great deal of respect for you, Howard, and as Councillor Kaufman, I think
It's great that you felt able to be here tonight and answer questions in the way you have.
My question, and I have to say I was surprised I have to ask this, because again,
I have immense respect for the professionalism and the advice that our Chief Officer gives us.
But I think there was a danger of looking at the debt that we've already written off and
the debt that we are likely to write off as a balance sheet issue, because that came across
in one of the replies earlier.
Yes, of course it's a balance sheet issue, and as a local authority we can deal with
that.
But we are also talking about public money, and I want other Councillors, and I'm sure
they do, but I also want members of the public, because there's considerable interest in this
issue to realise that we know that this is public money and we are incredibly, well I
won't be voting for writing any more off, I can assure you, any budget that contains
any more write -offs or qualities won't be getting my support on that basis alone.
Because it's not only the fact that we're writing it off and it's public money, it's
the opportunity cost.
How else could that public works loan board money have been spent? So my question,
though, I want to link it to Councillor Lee, because I think Councillor Lee has a wonderful
way of bringing things down. If I lose 30 pounds, I'm annoyed, and that's important
to me. If, you know, I lose 30 pounds. We're talking about millions here, so I really
want either the officer or a member of the Cabinet, and I find it quite amazing,
actually, we're two hours into the meeting and not a single member of the Cabinet has
answered the question yet. I find that quite incredible, I have to say. Do they realise
the real anger among a significant members of the public about this amount of money
that's lost and going to be lost and the opportunity cost that represents?
Councillor Whitford.
Yes, thank you, Chairman.
Cllr Jaymey McIvor - 1:51:41
Cllr Chris Whitbread - 1:51:44
Chairman, we all take this very seriously and first and foremost, we have to be very
respectful of the public's view of this and I think Councillor Calford said it very
well before.
This doesn't make any of us happy in the delivery of these sites.
In addition to what Mr Small has already said, is that these sites are also some of the prime
on brownfield sites within Epping Forest.
And these were all part of our local plan as well.
And that's why it was important to deliver them
because without these you'd be using more greenbelt sites.
And that was part and parcel of the original process.
But am I happy?
No, I'm not.
Should any member be happy?
No.
Do I expect the public to be very cross with this
and want answers?
Yes, I do.
And that's what we're here for tonight.
Cllr Jaymey McIvor - 1:52:38
Cllr Geoff Shaw - 1:52:45
I must admit, I understand and agree with Councillor Morris saying that, with a certain
respect, we have to look forward to find out how we can sort it out in the future.
I am inundated with emails from residents who want to see accountability and who is
responsible for these losses and are they going to be held accountable?
All of us working in public office, there are seven golden rules of working in public
One of them is if one has responsibility, one has to accept accountability to the public.
With respect to the cabinet members here tonight, they were the instigators of setting up this
company.
They actually set it up in the meetings in 2019.
The leader of the Conservative Party, the leader of the cabinet, was the instigator
of setting this company up.
He was then responsible, under the shareholders' agreement, for appointing all of the directors
of QALIS, chairman of the committee, for appointing all of the directors of QALIS.
and that was 18 directors over four or five years.
They were coming in and out like turning over.
They were turning over these directors every six months.
And then he was responsible for monitoring QALYs every quarter.
Under the shareholders agreement,
the chair and the cabinet were responsible for monitoring.
So there are three things there, Councillor Whitred.
you are responsible for setting up the company,
responsible for appointing the directors,
and responsible for monitoring the business.
And the residents of Epping District
want to see accountability.
Are you going to accept accountability
for the losses, the 20 or 30 million pound losses
that your decisions have resulted in?
Thank you, Chairman.
Of course, I take my share of the accountability for QALYST
Cllr Chris Whitbread - 1:55:20
and how it was set up.
It was done through cabinet decision.
It was subject to call -ins and subject to scrutiny as well,
and you have to accept that.
I personally did not point every single director to QALYST.
Indeed, once QALYST was created,
They were responsible for their own board.
That would not come down to myself.
Was we responsible for regular monitoring?
Yes, we was.
Was scrutiny responsible for regular monitoring?
Yes, it was.
The case now is we need to make sure that we put quality in the best condition
it can.
And what we have to remember is there is a large part of quality that has actually
operated successfully around the commercial sector, around its housing repairs.
we hit difficulties with regards to the actual construction of properties as was described earlier.
I do sometimes question your motivation, Councillor Shaw, because it seems to be a personal attack on me
from your first as Councillor. I think there's more than that that motivates you.
Cllr Jaymey McIvor - 1:56:26
I think what will, thank you Councillor Whitbread. So no, it's definitely nothing personal at all
Nothing at all, Councillor Whitbread, nothing at all.
Cllr Geoff Shaw - 1:56:36
I'm a Conservative at heart and in the past I've actually canvassed for you as a Conservative
member.
So it's nothing personal, it's I'm just looking at the facts.
The facts are that under the terms of the shareholders' agreement, you were responsible
and you led the team that instigated this company.
And if you read the shareholders' agreement, this company was huge.
It was doing housing development, commercial development, most of the car park, leisure
facilities.
It was doing commercial investments throughout the country, housing repairs, housing maintenance,
a gigantic company that you set up.
And you agreed and you were an instigator
of approving 100 million pound loans for this company.
100 million pound loan.
You approved and you now are sitting there.
And you were responsible then for this company
throughout the whole five year period
and it has lost 20 or 30, 40 million pounds.
And you are still sitting there.
And I think that's a disgrace.
Okay, so we'll now move on to the next item on the agenda.
Is there any other questions?

7 Scrutiny of Quails Commercial

Cllr Jaymey McIvor - 1:57:53
There are over 70 questions came into the Council relating to this meeting.
So we now have those summarised.
You'll see on item seven on your agenda, it is the scrutiny of Qualis Commercial, as mentioned
in my opening comments.
You can see the four themes of questioning on page four of the supplementary agenda,
which members should have.
And I would like to explain the intended approach for tonight
is for each of these themes to be addressed
rather than have 70 separate questions.
One of them of course is related
to what Councillor George has already raised.
And responses will be given to these
from the relevant parties that the questions relate to.
After this, more detailed questions on the theme
can be sought, but we have obviously had lots of questions
relating to this item already.
So I will ask members if they have a really serious question
relating to what's been discussed, by all means ask it,
but I think we should stick to the four questions we have
and then look at the way forward from after this meeting.
And as usual, members of the committee
and then any other councillors present
are invited to ask questions.
Now the four themes are, the first one is
governance oversight and accountability.
The second theme is financial performance,
borrowing and risk exposure.
The third is delivery of major development projects.
And the fourth is future arrangements and lessons learned.
I would like to ask members to consider which theme
their question obviously falls under,
but as I've mentioned, we've already had lots of questions.
So we obviously are all here tonight
discussing this particular matter
because of the work that Councillor Shaw has done
independently as a Councillor.
So before we explore those themes,
I would like to invite Councillor Shaw
for a limit of five minutes just to set the scene
as to why we are doing this off the back of his research.
And then of course we will proceed into the four themes of the meeting.
And Councillor Shaw, I will time you and I will stop you,
because we have got a heavy four questions to then have answers from.
Cllr Geoff Shaw - 1:59:53
That's all right? Take your time.
Sorry, yes, thank you. Thank you, Chairman.
So very, very briefly, when I became a Councillor, I became very concerned about the QALYIS issue
and started research.
And I've spent six months researching.
I've read every cabinet package, information package since 2019.
I've produced this report.
I've sent it to every Councillor.
And I've had no comments or criticism from any Councillor
that's actually questioned the facts
that I've presented in my report.
So the report is nonpolitical,
it's purely facts based upon the evidence in the reports.
Now before I mention any further,
I'd like to remind everybody here
of two principles.
The first principle is that there are seven basic rules
of people working in public office.
And one of those rules requires accountability.
If you have responsibility in public office,
you are accountable to the public, and that is important.
The second is under UK company law,
that if you are a director of a company,
you are responsible for the business of that company
and achieving the company's objectives.
In this case, the company's first objective
was to make a profit.
Qualis's first objective,
if you read the shareholders agreement,
is to make a profit.
And company directors are responsible for that.
And the company's,
the company law states that yes,
directors can employ consultants or managers or in person
or others, but ultimately they are still responsible
for the business.
And so I believe we're looking for accountability,
both of directors and of councillors.
The principal parties that are responsible
for the management of QALIS were the cabinet,
the directors and the section 105, 151 officers.
And they have got specific responsibilities
that are written in the shareholders agreement
and written in the other documents that were,
it was a cabinet meeting in early 2020,
which set out the rules of how QALYST
was going to be governed and their responsibilities.
The responsibilities of cabinet,
the responsibilities of directors are clearly set out in the shareholders agreement and
in those documents.
And we should be looking for accountability there.
And I think my research demonstrates that as far as cabinet is concerned, they failed
in respect of setting up the company, in appointing the right directors that were competent for
that company and then for failed in monitoring the business
during the course of the period.
If we look at the directors again,
the fundamental objective of the directors
was to make a profit.
And every year of the whole period since then,
they have made a loss.
And in any director, in any private commercial company,
those directors would be asked to move on.
I mean, one of the issues on the directors of Choilis
and their performance was that in July of 2020,
they produced their first business plan,
and the first business plan confirmed that in the first year,
So 2020 to 21, they were going to make 350, 360 profit.
That was in July, and that business plan was approved by,
it was approved by the Cabinet and approved by Council.
In September 2020, two months later,
they reported a million pound loss.
Now, how can a company's directors report,
in one month in a formal business plan, they're going to make 350 profit. Two months later,
go back and say they're going to make a million loss. It's beyond belief.
And finally, the 151 officer, 151 officer, can I make one more point?
Just to wrap up, Councillor CUNNINGHAM.
Yes, 151 Officer.
I've got really, regarding Springwood Grove,
throughout 2024, the reports from the 151 Officer to Cabinet
were that the Springwood Grove project was proceeding,
all no problems, and profits with sales would be coming along
as programmed and profits would be coming in,
and everything was going to be rosy.
And that was reported in July of 2024
and in September of 24.
Now during that period,
it was well known by the directors of QALIS
that there was serious problems on that project.
And that information was failed to report,
to be reported correctly to Cabinet and to Council.
Thank you, Councillor Shaw.
Thank you very much.
Cllr Jaymey McIvor - 2:06:00
So we now move on to the four questions,
but first of all,
Councillor Bassett has got a statement he'd like to read.
Councillor Bassett, thank you for joining us.
Thank you, Jamie.
I do apologise not being there,
but I'm struggling to walk at the moment.
Okay, I do apologise not being there.
As you know, I always would have been there otherwise.
On behalf of the quality sport,
Cllr Richard Bassett - 2:06:26
I want to respond clearly and directly to the issues raised in Councillor Shaw's report
and questions from other members and the public. The Board does not seek to argue that everything
went to plan. Qualis Commercial experienced significant financial and delivery challenges,
particularly at Springwood Grove and the returns originally anticipated from direct residential
development were not achieved. Those outcomes deserve proper scrutiny and there are important
lessons to learn. However, the Board believes it will be wrong, totally wrong, to judge
quality solely by the development losses. Without considering why the company was established,
the wider benefits it has delivered to the Council, the governance and controls that
in place and the extraordinary economic conditions in which the development programme was delivered.
QALYST was established by Epping Forest District Council as a wholly owned company to make
better use of the Council's land and assets and bring forward difficult regeneration sites,
and I do emphasise difficult, to improve the property services and generate long -term financial
benefits to the Council. It was never simply intended to be a speculative house builder.
Its remit extended across regeneration, housing, the Council's commercial property portfolio,
and property services. Importantly, the Government structure was specifically designed
to ensure that the Council, as the only shareholder, retained control over major decisions,
business plans and reserved matters.
It's in the wider purpose that matters when assessing what qualities are achieved,
the group has delivered substantial benefits to the Council.
And these include 14 .7 million for the transfer of a number of development sites,
and that has gone into obviously the Council's own development funds.
14 .2 million of interest margin benefit
and an increase in commercial property income
from approximately 8 million to 11 .8 million,
which is an increase of 3 .8 million per annum.
And then total so far has added 10 million to EFDC
during that period and will continue to generate
close to 4 million in the future. Plus we've sorted out a lot of these properties, we've got proper
contracts in place, we've got proper repair systems in there, and everything else. As part of this,
it has been recognised as we've increased the value of the commercial portfolio between 2023
and 2026, and this is externally checked from 148 million to 182 million, which has been
recognised in the EFD accounts as an increase in the assets of the council of 34 million,
which is quite substantial. We have also delivered 73 affordable homes. We have, through QPS,
approximately 350k of community investment and section 106 contributions to the district's
infrastructure. QALYST also progressed the five Eppingtown Centre sites through planning and that
was not an easy thing I can really say. We delivered the multi -storey car park required
to facilitate the new leisure centre and supported the council's north -willed Google transaction which
achieved an exceptional almost 90 million into the Council's funds. These benefits do not
cancel out the development losses, but equally the development losses should not cancel out these
wider benefits. Both need to be considered if members are to reach a balanced assessment of
QALYIS. The Board also robustly refutes any suggestion that QALYIS operate without appropriate
governance, scrutiny or transparency. There have been 54 occasions where we've reported our progress,
business plans and finances to the Council. There was a defined process of project monitoring,
financial and risk reporting, investment and development committee scrutiny and board oversight,
with significant matters escalated to the Council as shareholder. Development reporting
specifically identified cost overruns, programme delays and planning, legal and contractor risk.
Significant decisions, financial matters, development proposals and emergent risks
were reported through the agreed governance arrangements to the Council.
The proposition that QALYST did not have sufficient development expertise is also not
supported by the evidence.
Senior appointments were made through
formal recruitment processes involving
specialist executive recruitment consultants,
technical assessment, psychometric evaluation,
and structured reviews.
The Qualis Development Director was a qualified member
of the Royal Institute of Child Surveyors.
Board appointments were subject to the council's
senior appointments panel,
and the final decision on board director appointments
It should be stated, development delivery did not rest with one individual.
Qualis maintained a dedicated development team supported by specialist project planners,
architects, quantities fliers and other professional advisors.
Development and project manager roles required substantial residential, commercial and mixed -use
development experience and professional qualifications at MRICS in level or equal to the
equivalent. The board also rejects the suggestion that the contract appointments were made simply
on the basis of lower price. The documentary record demonstrates the use of pre -qualification
assessments, competitive tendering, specialist quantitative evaluation, financial and commercial
cheques, health and safety assessments, tender interviews, post -tender clarification and
reconciliation and formal board approval of major contracts.
The process included assessment of financial standing,
organisational capabilities, contractor experience,
and local supply chain arrangements.
Due diligence, reduced risk,
it cannot eliminate the possibility that a contractor
subsequently encounters difficulty
or unprecedented economic circumstances,
fundamental after the viability of the development.
And that the wider economic context is critical.
Most of Qolis's development schemes
commenced construction between 2022 and 2024,
during one of the most challenging periods
experienced by the UK construction and housing sector.
COVID disrupted global supply chains
followed by exceptional material inflation,
with timber and steel prices rising by at 79 %
and 77 % respectively in 2021.
And we've got the bills to prove that.
And overall material inflation exceeding 15 % per annum
in 2022 and 2023.
This was compounded by labour shortages,
rising energy costs, contracted financial distress,
higher interest and mortgage rates,
and weakening housing demand.
The combined effect was that construction
and borrowing costs increased at the same time
as sales demand and development values came under pressure.
These conditions do not remove responsibility
for the financial performance of the schemes,
but they are an essential context
with the majority of QALYST's development programme
moving into construction precisely when these exceptional
and overlapping economic pressures were at their most severe.
The programme was delivered through arguably one of the most
challenging periods for UK construction and house building
in recent history.
For development companies,
sustain teeth not working,
substantially founded through debt,
the combination of increased construction costs,
programme delays, contractor underperformance,
higher interest rates and weaker housing conditions
had a significant impact on development viability.
Qualis was not immune from all those forces
as are most other development companies
with several failing and others
in severe trading situations.
So, Chair and members of the board,
the position is quite straightforward.
We acknowledge the development challenges
and financial losses.
We accept that lessons need to be learned and we do need to get a plan to sort out where we go forward from here.
But we robustly reject the proposition that these outcomes demonstrate that qualities lack professional capability,
governance, transparency, scrutiny or appropriate procurement disciplines.
The evidence demonstrates a much more complex picture, a company established by the Council to unlock difficult assets
and deliver wider public value.
A professional development structure
supported by external expertise
established governance and shareholder oversight,
structure procurement and due diligence,
and the development programme undertaken
during extraordinary economic
and construction market destruction.
Our request to members is therefore simple.
Consider the performance of quality in the round
and judge the evidence in its full context,
We have both worked on where we have overcome fell short and the substantial financial regeneration
and public value benefit for QALYST as delivered for its shareholder and the residents of Epping
Forest.
The board will focus now beyond completing the remaining commitments, protecting the
Council's financial position and ensuring that the lessons learned strengthen the future
relationship between the Council and its wholly owned companies.
Thank you.
Thank you, Councillor Bassett. The reason I didn't do the five -minute rule is because
I never told Councillor Bassett he had five minutes and we had a pre -written statement,
Cllr Jaymey McIvor - 2:17:31
so I don't think I'm biassed in any way. Thank you, Councillor Bassett.
So we will now move on to the four questions that members have put together. Can I please
ask Councillor George to read the first question?
Cllr Mandy George - 2:17:48
Thank you, Chair. When I read this last collector of everyone's questions in a theme, Chair,
Can I then read out my questions?
So I should just let the cabinet and the QALYs and board
and whoever wants to answer,
then we can come back with our questions.
So I just read it out first, yeah?
Okay.
All right, this is theme one,
governance, oversight and accountability.
So the questions put together,
was, is the purpose, governance, oversight
and accountability arrangements for QALYs
clearly defined and effective,
including the council's role as shareholder
and the identification, reporting and management of risk.
Who would like to answer that question?
Councillor Lippard.
Thank you, Chairman.
Cllr Chris Whitbread - 2:18:35
Qualis was established by Upping Forest District Council
through the Council's formal governance
and decision -making arrangements
to provide a more commercial delivery model
for a range of Council objectives.
These objectives were broader
than simply generating profit and included making better use of the Council's land and
assets, delivering housing and regeneration, creating economic activity, improving service
delivery and generating a long -term financial return to support Council services.
The Council established the Strategic Purpose and Governance Framework, while the company
for delivering the agreed objectives and managing the company's day -to -day operations.
The Council commissioned a respected legal firm to design a robust governance model,
and it was presented to Council in detail and subsequently agreed.
The governance model was deliberately structured to maintain Council control over key strategic
matters while allowing the companies to operate through their own boards.
Significant matters were reserved to the Council as shareholder and the Shareholder Agreement
established responsibilities around business planning, financial information and matters
requiring shareholder consent.
The Rector's and senior staff were appointed to provide relevant skills and experience
supplemented by specialist professional advice where required.
Oversight was exercised through several complementary mechanisms.
Qualis was required to produce an annual business plan for Council, consideration and agreement
setting out its proposed activities, financial position and strategic direction.
Quarterly financial monitoring provided members with information on performance and financial
risk. While significant matters were considered through the Council's established decision -making
arrangements, the Council's shareholder representative also attended the Qualis board meetings.
There is therefore a clear history of formal governance monitoring and member reporting.
The Council's external auditor also considered the governance arrangements relating to QALYST
as part of its value for money work and concluded that no significant weakness had been identified
in the Council's governance arrangements in relation to QALYST, notwithstanding the
significant financial and delivery risk associated with the company.
That does not mean that every aspect of the arrangement produced the outcomes originally
anticipated.
In particular, the commercial development activity did not achieve the forecast level
of profitability and changing construction costs, borrowing costs and wider market conditions
affected the assumptions underpinning the development model.
The Council has consequently continued to review and strengthen its company governance
arrangements as the activities and risk profile of the companies have changed.
The recent company review has provided an opportunity to build on the established
governance and shareholder arrangements, reflecting the changing activities,
priorities and risk profile of the companies.
The revised framework further strengthens consistency and clarity in shareholder oversight,
accountability and escalation, alongside business plan oversight, financial and performance
reporting and annual assurance.
It will also provide closer alignment between company performance and the Council's wider
corporate reporting cycle.
Overall, Qualis was established for legitimate strategic service and financial objectives
within a carefully defined and robust governance framework, with distinct responsibilities
between the council as shareholder and the company board and management. Four more arrangements
existed for business planning – financial monitoring, risk reporting and member oversight
throughout. While the financial performance of the development activity has demonstrated
that elements of the original commercial model did not perform as well as anticipated, this
should be distinguished from the effectiveness and existence of the governance framework
itself. The Council has responded to the changing position by reviewing the company model, building
on and further strengthening its established governance and shareholder oversight arrangements,
ensuring that they remain appropriate for the company's future direction.
Thank you, Chairman.
Thank you.
Cllr Jaymey McIvor - 2:23:52
Councillor George, did you have a question?
And then I've got Councillor Murray.
Thank you, Councillor Whitworth.
Cllr Mandy George - 2:23:56
That was quite in -depth and I'm trying to catch up and keep up with what you were saying,
but maybe you've covered what I'm going to ask now.
Now, do I need to go back to when I said to you,
Councillor Kaufman, that you said we collectively,
and then Andrew, you said lessons will be learned.
Councillor, that's it.
Sorry to interrupt.
That would be under question four in a minute.
Cllr Jaymey McIvor - 2:24:23
And I promise I've got your name written next to it,
and I'm going to come to you on that moment.
It's about looking ahead.
Question.
Is there any question?
No, I'm lost on which one of the questions I was going to ask.
Cllr Mandy George - 2:24:33
Let me go to Councillor Murray and then I'll come back to you if there's one related to
Yes, please do, because there's so much to be said.
Sure.
Do not worry, your name is next to the one I know you want to ask about.
Cllr Stephen Murray - 2:24:41
Councillor Murray.
Yes, thank you, Chairman.
I'm going to try and cover slightly different ground than we've already covered.
In that answer, we were told the cabinet oversight was an important part of the accountability
for quarries.
I think the Leader of Council would accept that I am quite a regular attender at Cabinet
over the years.
Yes, it has been more online in recent months, but that is for good reason.
What has actually always struck me, whether it has been in part one or part two, is how
little debate there is in Cabinet on anything to do with qualities.
If it wasn't for non -majority group councillors being present and asking questions, it would
have just gone through on the nod in most of the meetings.
So I'm not sure that that's accountability, but it also then raises the question, and
this is what I really want to ask, is was the real cabinet discussion and the real cabinet
scrutiny of QALYs taking place in private? Because it certainly wasn't taking place
in public, because, you know, people can see the webcasts. Yes, there was sometimes the
odd question, but there was never any real discussion of anything to do with QALYs at
the Cabinet meetings I attended. So I suppose my question is, where did the real scrutiny
take place? Was it in private, and why was it in private?
Councillor CUMMING.
Councillor CUMMING.
Yes, thank you, Chairman, and thank you, Councillor Murray.
Cllr Chris Whitbread - 2:26:20
And yes, you are the most regular non -Cabinet member of Council who attends Cabinet sites,
except the points you make.
But of course, we had a Cabinet member for QALYST, so we have responsibilities for QALYST,
who would observe the board and attend on that basis, so they were aware of that.
When we have cabinet briefing before the cabinet meetings, we discuss all the reports that
are going to cabinet, and of course cabinet members are briefed on a regular basis.
Cabinet – often members have discussed the reports previously, but there is opportunity
for more questions.
In fact, we welcomed on numerous occasions other members outside of the cabinet making
their concerns known.
I always go back to the point with Qualis, and I think it's really important to remember
this.
There were 54 separate occasions when Qualis was debated, whether it be at cabinet, whether
it be at council, or whether it be in scrutiny.
And that's on top of that.
There are the questions asked at full council such as well.
So I would say that Qualis was always well scrutinised, and certainly, Councillor Murray,
you would never have a soft hook on anything.
Okay.
Councillor Owen.
Thank you, Chairman.
I don't really buy this tricky asset comment,
to be honest.
We chose the assets for Qualis to do,
Cllr Michael Owen - 2:27:46
so we gave them some tricky assets.
If they were tricky assets,
maybe we shouldn't have had them do it, to be honest,
given they were a start -up
and we're trying to make them successful.
We should have given them some really nice assets
they can make a nice return on,
not the tricky ones like the car park,
where we were never going to quite frankly make any money.
But that aside, I think there needs to be looked at
who chose the assets and why.
Cllr Michael Owen - 2:28:05
But I actually have a question for Councillor Shaw
if he's up for answering it.
What does he think accountability looks like?
Because I am not of the opinion that anyone has done this
on purpose or tried to mislead anyone.
So I'm not sure where we go from here
in terms of accountability.
Because I've heard Councillor Whitbread say
he took accountability for what he did
in the information of the company.
But what does he think accountability looks like?
unconstitutional, but I'm very happy to answer it if you want to.
I may respond to that.
Cllr Jaymey McIvor - 2:28:33
Cllr Geoff Shaw - 2:28:35
There is provision within the documents that if the, if Qalis considered the, did a business appraisal,
a project appraisal, and they found that the project wasn't going to be profitable,
then they could have returned that asset to Epping Forest District Council.
The assets, they are difficult projects, I agree with you, some of them were difficult
sites, but Qualys' team produced a business plan knowing the problems.
They knew the sites, they had a design team designing those sites, they knew the finance
arrangements and the interest rates they had to pay and they knew the price that they had
to pay for the sites.
They had all the information available to them.
They then did their appraisals, their project appraisals of each of the sites and then they
came up with their business plan.
So the team at the beginning considered that they were going to make a profit on all of
in the knowledge of all of the information.
And then they went ahead with the projects
and lost the fortune because they didn't manage
the design process and contrary to what somebody
has said here, the cost per square foot was far higher
than the cost that everybody else in Epping was paying
for square foot for their construction.
The specifications were over -designed, over -specified, both Springwood Grove and Roundhills. The design
was over -specified, which is why the costs were so high.
The question was what does accountability look like for you? Because obviously you have
Cllr Jaymey McIvor - 2:30:31
been the orchestrator of... What does accountability look like for you? Because of course you have
coordinated this report, that is one of your conclusions.
Councillor Owen was asking what has happened tonight.
My conclusion is that the directors of QALYSS
Cllr Geoff Shaw - 2:30:42
were not competent enough to know
that you had to do pre -construction management.
You had to manage the architects.
If you leave the architects to design your kitchen
or whatever, they will come up with a fancy design,
which is what they've done.
They came up with over -specified designs.
When I was running Gatwick, North Terminal,
that was a 250 million pound project.
I had a team of planners and quantity surveyors
visiting the architects and the mechanical
and electrical engineers' drawings.
They would visit them at least once a week,
checking that the drawings were being produced on programme,
but also that the designs were coming along
in line with the budgets.
So that when you go out to tender,
you don't get a surprise when you go out to tender
and find that when it came back to tender round hills,
the square foot cost was over 250, 300 pound a foot.
You manage it during the design process.
You have a design, they call it
pre -construction design management.
Okay.
Thank you, Councillor Shaw.
Jen, you wanted to...
Thank you, Chairman.
Cllr Jaymey McIvor - 2:31:58
It just might be worth reminding the committee
Jennifer Gould - 2:32:01
that we are here to scrutinise the business of QALYS tonight, including governance and
finance, not to scrutinise individual officers, which would be an appropriate and potentially
defamatory and put the Council at risk of legal proceedings.
Thank you.
Councillor Maliki.
Thank you, Chair.
Cllr Chidi Nweke - 2:32:20
Well, it is clear to me that everything did not go well according to the plan for QALYS.
and listening to the debate tonight, I have heard the word used,
let's say a little bit less, used by Councillor Bussett a few times.
And the leader as well mentioned strengthening of governance,
which is what we are looking at at the moment.
My question in that area is what independent safeguards
I will be considering now to – or introduce to ensure that the mistakes that have been
made did not repeat again.
And secondly, will there be a regular transparent – I mean transparent report, reporting to
elected members in terms of performance and financial indicators and accountability of
financial decisions going forward.
Thank you, Councillor Noueky.
That very much comes under item four in a second.
So may I ask that we get to that when we get there very shortly?
I appreciate you wasn't at the pre -meeting, but we're going to be onto that topic, which
is very much what Councillor George wants us to talk about as well.
So we're going to move on to the second question.
Councillor Shaw, I'm afraid we're going to do that.
So the next question is for Councillor Murray to ask, please.
I've been asked to read this and can I suggest because of the previous conversations and
questions we've had around the earlier questions from the public, I'm quite happy and I feel
the Committee would probably agree that you, whoever is going to answer this, you don't
repeat the information that we've already heard tonight.
What factors have influenced qualified financial results?
What is the Council's current financial exposure through its lending and borrowing arrangements
and how will the financial position be managed sustainably going forward?
I think it's the last part on the basis of what we've heard earlier tonight is the key
part of that theme.
Thank you.
I will just say to whoever is answering those questions, I'm going to request that the committee
get sent the answers in writing anyway.
So very happy if you want to provide a summary of the answer
rather than, you know, read it line by line.
Thank you. So slightly shorter answer.
So I will read it just for accuracy and for the public here this evening.
Qualys's financial results have been influenced
by a combination of significant changes to external economic conditions,
which, of course, we have been discussing this evening,
and the performance of individual development schemes.
The development programme was established in a very different economic environment.
Subsequently, COVID -19 significant construction cost inflation, supply chain disruption, higher
interest rates and changes in the housing market have affected development costs, financing
costs, delivery timescales and anticipated sales returns.
These factors have been experienced through the building and construction sector and there
is widespread evidence to support this.
This is probably the main reason that the development programme has not delivered the
level of financial return originally anticipated.
However, the financial position needs to be considered alongside what the Council's investment
has delivered.
QALYST has supported housing and regeneration activity, including Springwood Grove and Roundhills,
Cllr Holly Whitbread - 2:35:59
where affordable housing contributes directly to meeting housing need locally, and commercial
development on Cartersfield Road.
The Council's lending has also supported the acquisition of investment assets with around
30 million advance for investment asset purchases that continue to generate income for QALYST.
Alongside this, QPS continues to deliver important operational services to residents and tenants,
including housing repairs and grounds maintenance.
The Council's financial exposure principally arises from loans advanced to the QALYST group
to fund development and investment activity.
Those loans should therefore be considered alongside the assets, income streams and the
development value remaining within the group, rather than viewing the gross outstanding
loan balance in isolation.
The Council has also received significant interest through its lending arrangements.
The Council has taken a prudent approach to recognising and planning the potential financial
impact, and expected credit loss of 26 .5 million has been recognised in the 2025 to 2026 accounts.
This is an accounting assessment of potential impairment and is not the same as writing
off 26 .5 million of debt.
The eventual level of repayment and any ultimate loss will depend on matters including future
asset values, disposals, income generation, development outcomes and repayments.
Importantly, the Council has also planned ahead for the risk for its median -term financial
plan, which includes provisions for a potential £16 million reduction in QALYST debt.
This provides financial capacity within the Council's forward plan for a potential reduction
in its recoverable debt.
It does not mean that six million pound
has already been written off,
or that this will be necessarily be the final amount.
The Council's objective remains
to maximise repayment and recovery.
The position going forward is therefore focused
on protecting the Council's financial interests
and reducing future risk.
Further development activity has been paused,
avoiding additional exposure to new development risk,
while attention is focused on the existing
investment portfolio, successful operational services,
and the managed conclusion of existing
development commitments.
Cash flow, asset values, income and loan repayments
will continue to be closely managed as part of the approach.
Overall, while the development programme has not generated
the financial returns originally anticipated,
the council's lending has supported tangible assets,
housing, regeneration and operational services,
including producing investment assets
that remain within the QALYST group.
The potential financial risk has recognised transparently
for the 26 .5 million ECL and planned for prudently
for the 16 million pound provision within the MTFP.
The focus is now on maximising recovery,
protecting the council's financial position
and ensuring that Qolis operates a sustainable basis going forward.
Thank you.
Councillor Murray.
Yes, two follow -up questions on that, please.
Cllr Stephen Murray - 2:39:25
Would the portfolio holder accept that twice in the answer we've heard the phrase hasn't
delivered the financial return expected?
We heard that twice in that answer.
Would she agree with me that in fact the residents in my ward, if I went around on the board
way and gave them that phrase, which is say, oh, you're talking about a massive loss, because
that to me is just hasn't developed the financial return expected. Yes, okay, but that makes
it sound very nice. We're in fact talking about a massive loss. Perhaps that might have
been a better terminology to use. So what would you say about that? And however well
we manage the wind down, I think we've got to accept we're talking about millions, aren't
We might not be able to put a precise figure on it, but we are talking about millions.
Thank you, Chairman.
Thank you, Councillor Murray, for that question.
Cllr Holly Whitbread - 2:40:24
I mean, we wouldn't be here this evening if we weren't talking about losses.
I mean, I think we've spoken this evening about the regret around those losses and some
of the reasons why those losses have occurred, which none of which have been intentional
and the consequences of the economic circumstances
that Qualys has found itself in on the commercial side.
And actually in terms of decisions,
I certainly from my perspective as a councillor,
as a cabinet member,
you deal with the information presented to you at the time
and make the best decision that you can
with that information.
And I always feel as though as a cabinet
and as a full council as well,
when we've looked at these decisions,
that all members would have looked at these decisions
with that in their mind.
So certainly there are losses
and we want to try and minimise those losses
to the greatest extent possible.
And hopefully that loss will be as little as possible
through the management and the final kind of wrapping up
of the commercial side of Qols.
Thank you.
Councillor MURPHY, was that all your questions?
Oh, okay.
Cllr Stephen Murray - 2:41:30
Can I just ask, I mean, for members of the Cabinet, does anyone sort of regret dismissing
Cllr Jaymey McIvor - 2:41:37
earlier concerns, you know, a few years ago when members were actively raising questions,
asking questions? Is there any sort of regret for maybe not taking some of those concerns
more seriously in the earlier stages?
The original concerns covered a whole range of areas some would listen to. There was none
Cllr Chris Whitbread - 2:42:00
at the time to my memory, because it's a long time ago now, which said you shouldn't do
Springwood Grove or you shouldn't do the Wolf Mabie swimming pool site. They were difficult
sites and I think there's lessons there to be learned with contaminated land and that
type of issue. But that to my knowledge wasn't what was raised at the time.
What was raised at the time was around technical issues in many cases, around whether or not
we should have quality at all.
I wouldn't have thought that I'm sure Councillor Cuthlin might be able to rewind if there was
a direct challenge on those particular sites.
If I'm wrong, I'm wrong.
But I don't believe that was the case, that people thought they were wrong.
And I go back to the point with those two sites in particular.
Again, they all made up part of our local plan.
If they hadn't been in the local plan, more greenbelt would have been under threat.
So those that were challenging sites, but they had to be tackled.
And in many cases, normal developers wouldn't want to do them because they were more difficult.
Thank you.
Okay, Councillor Morgan.
Thank you.
Just come back on what Councillor Hollywoodbread said.
Cllr Lisa Morgan - 2:43:23
She said, we made decisions with the information that was given to us at that time.
Does that mean if we were given more information, we would have come out with different decisions?
Because it sounds like from what she just said, it was very limited what we were given,
or is that just the way you said it?
Sorry.
Thank you, Chairman.
And thank you, Councillor Morgan.
I think it may be a misinterpretation.
Cllr Holly Whitbread - 2:43:43
I think what I mean is we don't have crystal balls.
And, you know, we make decisions based on the best information we have in front of us
at the time.
and we make a decision based on what we think is best
according to that information.
And unfortunately, we can't see into the future
and how some of the economic circumstances might change.
I couldn't have predicted the war in Ukraine.
I couldn't have predicted the pandemic.
So, you know, these factors are all things we can't see
when making decisions.
Councillor Morcah.
Thank you very much.
Yeah, it was just a, yes, we did get all the information
Cllr Lisa Morgan - 2:44:12
on that, we didn't, but thank you very much
for clarifying that.
Councillor Shaw.
Sorry, could you just explain exactly what the figures are showing in respect of losses?
Cllr Geoff Shaw - 2:44:23
We had 24 point something million last year.
Can you disclose what we are expecting that figure to be this year in respect of losses?
Thank you.
I pass to Mr Stark.
Cllr Holly Whitbread - 2:44:37
So we are working closely with Qolis.
Owen Sparks - 2:44:41
We're working closely with QALYST reviewing that on an ongoing basis.
It is dependent on the sales proceeds, the timing, some of the other sites obviously
still going through the commercial sites, so St John's for example.
The last MPFP iteration has originally got a £20 million provision within it, but we
are monitoring on an ongoing basis and we will update that and that will form part of
the MPFP that we bring from members as part of that process over the next few months.
But it will be ongoing until all the commercial activities are finalised.
If you will ask the question, Councillor Shaw, then we will move on.
Cllr Geoff Shaw - 2:45:25
Presumably for this financial year to 26, there are probably no major extra losses because
everything is still in work in progress on Springwood Grove and St John's Road?
So the assumptions at the moment for the monitoring are consistent with the business plan that
Owen Sparks - 2:45:43
members approved in February.
So it's still the business plan is something consistent with that at the moment.
Okay, thank you members.
I'm going to move on now to the next theme's question, which is to be asked by Councillor
Shaw.
Cllr Jaymey McIvor - 2:45:58
Thank you.
Cllr Geoff Shaw - 2:46:03
Thank you, Chairman.
This question is regarding the delivery of major development projects.
How effectively were QALYIS major development projects governed, managed and delivered,
including the decisions taken when risks and delivery issues emerged, the management of
contractors and professional advisors and the resulting financial and value for money
outcomes for the Council.
Who will be answering that question?
Thank you.
Qolis's major development projects were undertaken through established governance and project
Sacha Jevans - 2:46:47
management arrangements supported by a broad range of external professional expertise.
To say, Qolis board had a responsibility for governing and overseeing the day -to -day operations
of the business.
And to assure you, we looked at every single development scheme in great detail at board.
We looked at the cost appraisals and we looked at the performance of each development in
terms of its spend against budget.
We also looked at the risks that were emerging with each scheme and we had detailed discussions
around how to respond to those.
So, for example, when Davis Construction was poorly performing, there was a great deal
of discussion around how we assessed as a board the right exit strategy for Davis and
the options that we had in terms of moving to a new contractor.
So that level of detail was overseen at a board level.
We also had in our government structure to strengthen the work of the board, an investment
and development committee.
That was specifically set up with a smaller group of members that looked up to provide
additional level of challenge and assurance between the management and the main board.
The work included the development, monitoring arrangements, tracking approved budgets, spend,
forecast out -term, programme milestones, and scheme -specific tasks.
We looked very carefully at each scheme.
As we've heard a lot this evening, there were many challenges that came through on those
developments.
Just to say that the development team, what we operated was a small, multidisciplinary
development team with professionally qualified development and project managers.
So we had about three in the team that were reported into a development director.
They provided expertise in the appraisals of each development scheme, the viability,
the procurement, the contractor management, planning and programme delivery.
This in -house capacity, because we were small, was supplemented by specialist architects,
project managers, planning consultants, quantity surveyors and commercial advisors.
In that total package, they provided the professional support throughout the development of the
life cycle of the scheme.
So our development managers and project managers that were in -house within QALYST, they had
overall responsibility for moving a development from the start through to completion, and
and they utilised professional expertise to help support them.
Because we were small, we wouldn't have that size,
we wouldn't be able to afford the size of a huge team.
So, in terms of procurement approach as well,
we adopted a structured competitive procurement process
supported by our professional consultants
that I've just talked about.
Contractures were assessed through a comprehensive PQQ,
which is pre -qualification questionnaire,
covering experience, financial standing, insurance,
health and safety, capacity and resources, contractual matters, supply chain, social
value and sustainability. So we went through a very detailed process each time we selected
our contractor and those final recommendations via the expert report were presented to board
for approval. I think I'll leave it there if that's okay, Chair.
Thank you, Councillor Murray.
Yes, thank you, Chairman.
Cllr Jaymey McIvor - 2:50:08
Cllr Stephen Murray - 2:50:10
I always acknowledge when I've been approached by a member of the public, so this is a question
that a member of the public has asked me to ask, and it's to deal with Cartersfield Road,
proposed as four industrial units.
According to the information I've received from the questioner, the amount qualities
recorded against the project rose from £205 ,000 in May 2023 to almost £7 million by June
2024. Could I, on behalf of O &S, establish why that change took place? What was the final
cost and what were the sale proceeds?
Thank you, Chairman.
Cllr Jaymey McIvor - 2:50:59
Sorry, I'm going to ask my colleague, Andy Howard, to just answer that question.
Andy Howarth - 2:51:08
Mr. Howard, please. Yes, thank you.
Essentially, Carter's Field was a development project. The site was bought from EFDC, developed
by Christ and sold on the open market.
So obviously the investment in it did grow over time.
Final development cost $8 .6 million,
sold for $10 .35 million,
so $1 .7 million profit was made on that scheme.
Thank you.
Any other questions, remember?
Councillor Shaw.
Cllr Jaymey McIvor - 2:51:43
Thank you, Gio.
Cllr Geoff Shaw - 2:51:46
Basically, you were saying that you've used consultants for almost everything that you
do from selecting contractors to managing the contractors.
Clearly those consultants haven't delivered very well because you use a specific quantity
surveyor for selecting the contractors you used.
Out of the two contractors he used, one failed.
They were both small contractors.
You've both, everyone has said tonight
that these projects were very difficult,
very complicated projects.
Yet you chose Davis Construction, a small contractor,
who had previously only done projects up to 10 million.
You awarded him a project of 15 million,
and then you're surprised that he failed.
I just wonder whether these consultants or what these consultants, who they were and
what they were doing, I've asked you for permission to speak to the consultant, Quanti
Svea, about this to find out exactly how and why he chose these contractors, and you haven't
allowed me permission to do that.
I wonder if you would now allow me to speak to that consultant to find out how and why
he ended up choosing these small contractors to do, as you describe, very complicated projects.
I think that Ms. Evans?
Sacha Jevans - 2:53:20
If I could just say that the Davis Construction passed all of the qualification criteria through
that procurement process, so on hindsight we couldn't have known that they wouldn't
perform.
But what I would say is that all of the other contracts that we let, so the car park, Round
Hills, Verdant Place, they have all successfully completed on time. They have all successfully
completed. So it is actually the one project, Davis, and we went through the same procurement
process for all of the other schemes, all of which did successfully complete with those
contractors. So I don't think I can answer the comment on whether or not to contact our
external consultant directly, I think that's maybe a matter for the council to decide.
Cllr Geoff Shaw - 2:54:13
So can I speak to the quantitative surveyor who you used, who ticked all these boxes that
you're describing?
Can I speak to him to find out how did he find Davis Construction?
I mean, they're not a local contractor, they're a small contractor from Leon's Sea.
How did he find this small contractor, never worked for Epping Forest District Council
before, not a local firm, only employed 10 people, and he put them on your list, selected
them to do this £15 million, very complicated project.
I'd like to find out how and why he put him on the selection list, please.
Can I speak to this consultant?
because the consultant who you used,
if he didn't perform correctly,
then perhaps we should be going for his PI insurance
because he's obviously been negligent
in the contractor that is selected for us.
Okay, and it's this one?
Cllr Jaymey McIvor - 2:55:12
I mean, I've been working with Qualis' board
Andrew Small - 2:55:15
and Councillor Shaw to try and reassure Councillor Shaw
that all is fair and above board in the selection process.
And I have shared information that Colis have provided
through me, the selection process.
And there were a number of names,
including large companies on that list,
names that members will know,
who have a particular history in working in this area.
They were all invited to submit tenders.
A number declined because of their other work commitment.
at this point in time.
But it was, I mean, it's a fallacy to say
that they just went to a single local contractor
with no record.
There was a detailed evaluation exercise.
I've seen that matrix, as have you.
There was financial cheques as well.
There were lists of previous projects
that they've completed, which you've seen as well.
I mean, I'm not an expert in this field
and I wouldn't claim to be so,
but I've seen a significant amount of information
which I've shared with Councillor Shaw,
which kind of points to me that there was a robust exercise
to find a contractor.
Yes, they failed.
I mean, that's not disputed.
And as Sasha has pointed out,
one project out of five, the contractor failed.
Does that mean that the process was flawed?
I'm not sure it does,
but I mean, that's obviously the actual conclusion,
but I'm not sure necessarily I agree with you.
And the contractor, sorry, not the,
the consultants that you refer to
simply don't want to be involved in this exercise
or drawn into it or their name pulled through that process.
So we have asked them and they've declined.
Thank you.
Councillor, I'm gonna move on because we have got to,
we have got other items.
Cllr Jaymey McIvor - 2:57:09
But, so the next question.
The fact is, sorry, sorry, Chairman.
And the fact is this contractor had only done a 10 million.
Cllr Geoff Shaw - 2:57:15
The maximum project he had done before was 10 million.
And we awarded him a contract for 15 million.
And as Counsellor Whitenad has said, Whitbread has said, it was a complicated
project.
And I can't understand how we awarded this small contractor, who only employed
He didn't have audited accounts.
I can't understand how on earth, how on earth did we award that contract to that firm?
And okay, I've seen these analyses.
I've seen these forms that you've showed me.
They're tick boxes.
They've just ticked the boxes.
Now, I can't understand how we got through this process.
It seems amazing to me that nobody used common sense.
You looked at these forms and yes, he ticked the box
that he had got a good health and safety record.
He had a good health and safety record
because he didn't do very much work.
Right, I think we're gonna move on to theme four,
but Councillor Shaw, I think you said it was obviously noted
Cllr Jaymey McIvor - 2:58:20
and also perhaps there might be some further information
in writing that could be provided to Councillor Shaw.
I do think a 20 % failure ratio is probably not
what our ambition would be.
So I think that's very important
if there could be some further information there.
And I don't understand why a client of Qualys
wouldn't want to help us do a post -mortem on a failed project.
That should concern us moving forward.
So theme four is Councillor Rackham.
Thank you, Chair.
I'd just like to give thanks to you,
Cllr Sheree Rackham - 2:58:52
because I think you've chaired this meeting brilliantly tonight.
So thanks for that.
So theme four is about future arrangements,
lessons learned and value for money.
So, taking account of both the financial position and the wider benefits delivered by QALYST,
what value has been achieved for the Council and residents, and what lessons have we learned?
And what arrangements are we now going to put in place to maximise the recovery of public
funds, strengthen governance, and secure a sustainable future for the company?
Thank you.
Thank you. Have we got time to answer that?
Councillor Balcombe.
Thank you, Chair. Thank you for the question.
Cllr Raymond Balcombe - 2:59:39
QALISH was established to deliver a combination of financial, strategic and community benefits
for the Council. Its objectives were deliberately broader than the commercial return alone and
included making better use of the Council land and assets, supporting housing delivery
and regeneration, improving services for residents and tenants, contributing to the local economy
and generating income for the Council.
Against those wider objectives, QALYST has delivered tangible benefits. These include
new housing, affordable housing, regeneration and infrastructure, investments assets that
generate an ongoing income stream and important operational services through QPS, including
housing repairs and grounds maintenance. The Council has also received significant interest
income through its lending arrangements with QALYIS.
The development programme has not generated the level of commercial return originally
anticipated.
This reflects the performance of individual schemes alongside a very significant change
in the economic market environment, including construction costs, inflation, higher interest
rates, supply chain pressures and changes in housing demands. These factors materially
affect development costs, financing costs delivering timescales and anticipated sales
returns. The Council has responded positively and pragmatically by resetting the further
direction of QALYS. New development activity has been paused, reducing exposure to further
development risk. The focus is now on completing existing commitments, realising value from
remaining development and investment assets, maintaining successful operational activities
and maximising the resource available to repay the Council lending.
The Council is also taking a prudent approach to financial exposure that remains.
The potential impact has been recognised through the expected credit loss in the Council's
accounts and through provisions with a medium -term financial plan for potential reduction in
QALYST debt.
These are prudent measures which recognise potential financial risk, which is subject
to ongoing review, the Council's objectives remain to maximise repayments, realise values
from assets and income streams with the Group and protect public funds.
Alongside this financial reset, the Council is further strengthening the governance and
shareholder oversight arrangements, building on arrangements already in place. This includes
a clearer accountability and decision -making, closer strategic alignment between the Council
and its companies, more consistent financial performance and risk reporting, and a stronger
focus on longer -term financial sustainability. The experience gained through QALYST, particularly
from delivering a substantial development programme through an exceptionally challenging
economic period provides a valuable basis for further strengthening the Council's approach.
This includes maintaining close oversight of financial forecasts and emerging risks,
ensuring commercial activity remains proportionate to the Council risk appetite, and maintaining
clear arrangements for escalation and member oversight when circumstances change.
These changes represent a strengthening of the governance model, reflecting the changing
activities and risk profile of QALYST.
The move away for significant new development activity, together with the focus on completing
existing commitments, reducing debt, maximising assets, values and maintaining successful
operational service provides a clearer and lower risk direction for the future.
Value for money should there be considered in the round.
The Development Programme has not achieved all of its original financial expectations,
but Qols has delivered housing, regeneration infrastructure, income -producing assets and
service that provide a wider and continuing value to the Council and its residents.
The appropriate focus now is on maximising the value of those benefits while reducing
financial exposure.
The experience of QALYST has been repeated in numerous Council -owned development companies,
with losses being reported nationally.
Almost all councils sought to expand the commercial activity
in response to hard -hitting funding cuts,
to avoid massive cuts in service to balance budgets.
Cllr Raymond Balcombe - 3:05:16
There was optimism in strategy based on a stable
or growing economic outlook.
What councillors did not adequately factor in
was the severe economic shock events,
such as COVID -19 or the Ukrainian war,
to accommodate the downside losses.
Whilst large private sector companies have the balance sheet strength
to absorb these shocks,
small -scale developers and councils are less able to do so.
This sector's wider reflection has led to significant reduction
in local authority development companies and the complete exit by many.
Overall, QALYST has delivered substantial housing, regenerating assets, services and
a wider community benefit, although its development programme has not achieved the financial returns
originally anticipated.
The Council has responded by resetting business model, reducing future development exposure
and further strengthening governance, risk management and shareholder oversight.
The approach is going forward is firmly focused on maximising recovery of public funds,
protecting the Council's financial position,
retaining the benefits of successful operational activities
and ensuring that qualis remain financially stable and appropriately governed for the future.
Thank you.
Thank you, thank you, Councillor Brougham.
I've got Councillor Murray, Councillor Morgan,
Cllr Jaymey McIvor - 3:06:59
Councillor Nui, Councillor George.
This was your question that related to your question.
So hopefully you feel that you had an answer
from cabinet members answer.
Councillor Murray.
Yes, thank you, Chairman.
Cllr Stephen Murray - 3:07:15
I deliberately waited till we had the fourth question
answered till I made this point.
I'm quite happy to have had offices with rise
because that's essentially what we listen to, unless I'm wrong, but it sounded as if
obviously they'd written those replies.
I would have been just as even happier if we then had had some political reply from
members of the Cabinet.
I don't mean party political reply, but speaking as a Councillor, we've put these
questions as ordinary members.
I would like to hear answers as ordinary colleagues across the chamber who haven't told cabinet posts.
Yet again, to me, that answer seeks to minimise the financial consequences of going down the Scottish Road.
Something that quite a lot of us didn't support from the very beginning.
I can only speak for myself and I certainly didn't support it from the beginning.
So it's not hindsight.
And just because other councils did it,
doesn't mean it was the right thing for us to do.
I mean, I get that quite a bit in my...
Oh, well, Johnny did it, so I'm OK to do it.
No, we made the decision to do it.
It was an absolutely wrong decision.
Local authorities should not go down the street.
They're not very good at it.
This proves it very clearly.
And what annoys the public,
certainly the members of the public, to speak to me, is you're still trying to kind of minimise
the losses. It's a balance sheet issue. If you look at it in the round, yes, there are
good things that QALYST have done, but those could have been done in other ways. I never
ever thought our own estates team, and these are officers that have long since gone, did
very well on our estate management, but that was because of the officers we had imposed.
I'm sure if we had appointed the right officers, they could have got the same amount of assets
out of.
So a lot of the positive things that QALYs have done could have been done in other ways.
I've got, you know, you can talk about grounds maintenance.
I don't think that's any better under QALYs than it was under the DLO.
And I just think it's an attempt to kind of ameliate the loss.
Just take it on the chin.
You made a wrong decision.
The consequences is a massive loss.
We haven't had what I would consider an apology tonight in any of the answers,
and I wouldn't expect officers to apologise.
That's the leadership of the council issue.
Take it on the chin, apologise for what has happened, and yes, we have to move forward.
My precise question is, yes, we've now learned the lesson that you don't do any more
developments to try and make up for the previous losses, but surely somewhere down the
timeline we could have come to that conclusion a lot earlier than we have, and the development
arm should have stopped a lot earlier than it did.
Thank you, Councillor Murray. I did just, I would just like to add to that. And I obviously
Cllr Jaymey McIvor - 3:10:45
see this meeting very differently from the chair, but we've had a newly elected member
go do some very independent research, which I think should be commended and encouraged
of all members. It hasn't been a straightforward, there hasn't been a straightforward path to
that great research making its way to Council. But I would like to thank officers who have
enabled it to find its way to open scrutiny
and have a good hearing this evening.
If I had known that we would produce four questions
and there would be a written reply which gets read out,
then I would have asked them just to be circulated by email.
I share your frustration, I feel it's frustration
that there hasn't been just some more anecdotal contributions
from the cabinet this evening.
And I think there was an opportunity to do that.
So as we move forwards, I'd like to encourage the cabinet
to be more anecdotally inputting to these meetings.
I don't know if you've had any instruction not to,
I don't know, but I feel that there could have been
more interaction from the cabinet
because ultimately lots of these have been
matters of cabinet decision.
So I appreciate what you're saying there, Councillor Murray.
We're on the important bit of the meeting now,
which is what do we do?
Where do we move from here?
We've heard lots and I'd like to thank everybody
who has contributed.
So really it's for the committee to decide what they want to do.
We still have something to hear in private, but I think we can hear that after we've decided
the way forward.
So the way forward here from our pre -meeting, I want to cheque that position hasn't changed.
So from what we've discussed previously, members, what do you consider to be an appropriate
way forward?
I mean, I'm happy to, Councillor Shaw.
Cllr Geoff Shaw - 3:12:29
My first request for the way forward is that I have asked Andrew Small for financial information
regarding the projects. They were meant to be JCT, the Joint Contracts Tribunal design
and build where the design is from the architects and abated over to the contractor.
And that formal contract is principally a lump sum contract.
So there shouldn't be a variance between the tender figure and the final account figure.
And I want that scrutinised on all of the projects.
I would like the project appointments, as I questioned before, why did we appoint these
small contractors?
I would like that scrutinised.
So it is the financial arrangements of the financial documents of all of the contracts.
Springwood Grove is a major issue.
a major issue. I've had to sign a non -disclosure agreement regarding the information I've been
told, but the public information is that Davis had a contract for 15 million, and as we've
said, they worked through to August, I think, of 2024, and they've completed a large proportion
of their work and I've been told the valuation that they had when they completed their work.
I've been told of a figure that a PQS said that was the maximum extra cost to complete
the project and I've also been told of the contract sum that three ACES were given for
awarded for completing the project.
And having given those three or four figures,
it's essential, crucial, it demands scrutiny.
It demands scrutiny.
How do we get to these figures?
And especially now with three ACs
having overran their contract period,
we need to know, we need to scrutinise their programme
and their financial arrangements.
We need to go through all of the accounts of those projects.
Thank you, Councillor Shaw.
I have put some wording together based on our pre -meeting and what we've discussed this
evening.
Cllr Jaymey McIvor - 3:15:08
Councillor Murray, is there anything you wish to add to that?
Cllr Stephen Murray - 3:15:15
One request that's arisen from the meeting, and you asked me to remind you, is can the
committee be furnished with a separate profit and loss for the operation of the car park,
including insurance, maintenance, 18 .3s, CCTV, since acquisition and going forward.
So that's a very precise request and decision.
And then the issue I – and I know Councillor George has got some wording because she showed
me a piece of paper to get on, but the issue I raised at the pre -meeting is I actually
think we have reached a stage in terms of lack of public confidence in this authority
on this issue, where we need a comprehensive, transparent, independent investigation into
all the QALYST loans, payments received, QALYST related decisions and the likely loan
write -off of, let's say, for want of a phrase, approximately £26 million of public money.
I think we have reached that stage.
We can't do that as ordinary Councillors.
We can't do that as a committee.
We've done a good job tonight, I think, within our constitution, but I just think that's
what the public deserve now.
And yes, it will cost them money,
but in the scheme of the amount of money
we've lost on Corliss, it will be minimal.
So that is what I'm suggesting.
I would hope that the O &S, school to the offices,
could suggest the best way forward.
I think probably we need a smaller group
to work out the terms and terms of reference
for that investigation, if you don't just appoint an independent firm to carry out an
investigation without terms of reference.
But I seriously do think we have reached that stage, Chairman Anner, and it will be for
the benefit of everyone, because I am a lover of every Forest District Council.
I wouldn't have spent so long on it if I wasn't.
So it is done with a positive benefit for all involved.
but that's where I want us to move to tonight, Chairman.
Thank you.
Before I come to you, Councillor Shaw,
so I've put some wording together
based on what we've discussed.
Cllr Jaymey McIvor - 3:17:44
So a possible recommendation from this committee
would be that the council to report to QALYST
that Ovi and Scrutiny would like an independent
investigation into QALYST activities since establishment.
Ovi and Scrutiny to meet separately
to discuss parameters of the report and terms of reference,
and to establish potentially an annual
scrutiny meeting specifically for QALYST. Just looking at the committee for some feedback
here. Councillor George and then Councillor Shaw.
Okay, I didn't get to ask my questions, which I thought were in Theme 1, but now we're moved
Cllr Mandy George - 3:18:18
on, so I'll forget about that. So we'll go on. But as for this, yes. Listening to my
asking previously for evidence, it hasn't come about. And it is concerning when you're
speaking of a certain amount of money,
and it's not your personal money.
I know if I've got X amount of money,
I know what I'm gonna spend it on.
I have that put aside, but this is public money.
So there is a great concern.
We haven't been given any evidence yet
to see where the transactions were,
what risks were assessed, what governance was overseen.
So I support my colleague here,
But I do think that we need an external someone to come in and look at the transactions
between Collis, the counsel, and how it was set about where the money was spent,
basically. Pound for pound, I want to hear.
How was this money accounted for? There's a lot of money that she has gone, and,
okay, you can say it's all variables.
But at the end of it, who was the person?
Who was the guy that actually we and lessons learned?
So going back to my question, I will say it now, actually, that what are the respective
roles of qualities then and now? Is it board or directors, the council section 151 officer,
the cabinet and the chief executive? Who approved the original schemes, the projects,
significant changes to budgets or contracts and decisions that led to additional cost?
Also, I do have a question, but I'll limit it to this one.
Who, I need to understand,
I think a lot of people here do as well.
It would be really helpful to understand
what approval and oversight arrangements are in place,
who was responsible for monitoring progress
and financial risk and how concerns were reported
and escalated to the council.
Now you can blame it on A, you can blame it on B,
you can blame it on C, but there's variables in businesses.
But the person, the we, the lessons learned, who is it that you are speaking
of? Who is accountable for those decisions? I know it wasn't me, even though I'm
on over with scrutiny. I'm not in a Cabinet. I'm not in Qualys. I'm not one of the
directors. So I haven't got that insight. But I want to get to the crux, and I think
it would be really good to get to the crux, how this arrangement came about, where
the money was spent.
So yeah, I'll leave it at that for now.
Thank you.
Cllr Jaymey McIvor - 3:20:53
I've got Councillor Patel, then Shaw,
Councillor Shaw then Councillor Rackham,
then Councillor Neat.
Whiskey and then meat.
Oh, whiskey and then meat, okay.
Oh, Councillor Morgan is indicated.
Councillor Patel next, thank you.
Thank you, Chairman.
Cllr Smruti Patel - 3:21:10
I just want to address a couple of moments ago
when you've said about cabinet
I don't think that has happened.
We have already heard from three cabinet members this evening.
All the callers were set up before my time.
I feel like I am a lot less knowledgeable about the details, which is why we have had
the officers here, callers, board members here, and we have heard from other members
like Councillor Bassett and Councillor Kaufman as well.
So I think a lot of people have provided responses to a lot of the questions.
But what I've noticed, quietly observing as well throughout the procedures, is every time
any one of them has spoken, people who've asked the questions haven't actually been
paying attention. They've been wondering what are the next question can I come up with,
as opposed to listening to what's been told. Same goes for a lot of you in scrutiny committee
members where they've repeated questions that have already been asked. If they'd only just
listened to the question before, they would have had that answer.
Having said that, I completely get the sentiments
of the evening, it's not lost on me,
but I felt compelled to speak right now
because I was triggered or whatever you want to call it
by saying other cabinet members have been told
not to speak, et cetera.
But what else did I write down?
So also like in terms of asking questions
and saying, oh, I wonder if this has happened,
I wonder if no one is allowed to talk.
Let's stick to the questions.
Let's not try and insinuate what else could have been happening in the background.
I think that's quite derogatory for the other people that are sitting here as well.
And yeah, I mean, that's all I have at the moment, but I just, I get it.
And I think you have heard apologies as well from several people.
But what we need to do as a council on a recent LGA course I've been on,
we had an example given to us about Seven Oaks Council, for example.
I wasn't going to mention this, I did have my hand up again and I thought, you know what,
no one's listening here, what's the point?
I'm not going to say anything.
But I will say, I will share this experience that I've literally just had the weekend gone.
Seven Oaks Council did a car park, exactly a car park example they had, where the costs
were estimated to be 6 million, turned out to be 12 million, because of the amount of
costs it took in terms of going underground and all the extra expenses that nobody had
I think it is all of our responsibility to come up with ways of maybe revenue building.
I might be talking out of terms in terms of what everyone else is thinking here.
But I feel like we need to work together to go forward as opposed to just building a new
I think we have to constantly go,
we haven't heard an apology, we haven't heard this,
we haven't heard that.
And I really think we just need to talk normal,
not just hide behind big words and just come up
with some solutions and find nice ways of like going forward
for our council and I think Forest does a fantastic job.
And I think all the officers work really hard.
Everyone's admitted that no one's deliberately gone out
and done something wrong.
So I'm sorry, I've said my piece and I,
whether people agree or not.
Thank you, Councillor Patel.
We've got lots of people who want to ask questions,
but I just want to make very clear,
I don't know who said Cabinet have been told
Cllr Jaymey McIvor - 3:24:41
not to say anything.
Well, okay, well, let me just be very clear,
because I didn't say that.
What I said was, I think it's very strange
that nobody has anecdotally had input,
and I wasn't sure if you'd been told not to,
is what I said, that's what I said.
But also, just to reiterate my point,
a lot of things this authority is doing,
a lot of things Qualis are doing,
are not passing the public sniff test,
and many councils have been raising this for a long, long time.
What doesn't help with the public sniff test
is when you have a committee that compiles 70 questions
and then cabinet members, their contribution in the evening,
their only contribution is reading a really long double -page A4 answer.
That doesn't pass the public sniff test,
and that's the point I was trying to make.
And I agree we all need to work more closely together, I completely agree,
and that's why I think it should be very commended,
what Councillor Shaw has done, to get this on the agenda.
Okay, Councillor Rackham.
Cllr Sheree Rackham - 3:25:42
Thank you, Chair. It has been a very long evening, as we can see. What comes out of
this for me is accountability and transparency. This is all our responsibility at the end
of the day because we have to face our public and they ask us questions. And as I said,
We do need to work together on this and we need to,
I don't know, we've got to come up with a strategy
where we can talk to our residents, be confident,
talk to our residents and be honest.
Thank you.
Thank you.
Councillor Meade.
I'm just wondering regarding external investigator,
how much is that going to cost
Cllr Louise Mead - 3:26:20
and how does that help us move forward?
Because we've had quite a few answers tonight.
We have looked at the issues that were happening around the time that
Qualis was set up, which Councillor Shaw, you seem to ignore in your report.
But the fact is that there was COVID.
There has been the issues we have discussed that would have made a
difference to how much things cost to build, etc.
So if we pay for an external investigator, which is tonnes more
money, I'm sure, and they come up with the same answers that we have
up with tonight that there were other issues that were happening around the world that could have
affected how much money has been spent, losses, and how does that help us moving forwards?
It's a great question. One of the things that will have to be established is obviously what
Cllr Jaymey McIvor - 3:27:11
the cost of that would be. That's why I think I worded what I worded earlier the way I did.
But I also think, don't often quote Margaret Thatcher much, but as she said during the
Falklands War, not sure we should worry about money at the moment, because as we can see,
there's been a huge tonne of money lost.
And if an investigation is an investment
that stops losing many, many more millions
of our residents' money,
then I think that would be money well spent.
And I think, certainly the residents I represent
would support such an initiative.
That's my view.
Councillor Whiskin.
Thank you, Chairman.
One consideration I think going forward is,
Cllr Graham Wiskin - 3:27:41
and please give me clarity, someone.
I'm sure I heard that the existing projects
and development sites were paused at the moment.
That rings a few alarm bells with me,
if that's my correct understanding.
I believe that we should be cutting and running,
getting rid of this whole entity,
and seriously looking at the future of the whole portfolio
in terms of do the garden maintenance
and property services go back in house
and scrap the property completely.
The worrying thing, of course,
is that if these sites which are still undeveloped were very difficult, how attractive are they
going to be to the developers and the dangers of the seldom offered of pittance just to
make the books look a little bit rosier. So we need to really scrutinise what is planned
going forward.
So I've got Councillor Morgan and Councillor Murray. Councillor Coughlin, is that in response
to that question? Yes, please.
Cllr Jaymey McIvor - 3:28:40
I think it's a very good point that Councillor Wiskin has raised. I do have a suggestion
Cllr Howard Kauffman - 3:28:44
because, um, Councillor Milgrom kindly asked, who is we? And you were desperate
to answer that, and I was desperate to answer. So in 2000, um, 2020, um, I was asked
to join the Board of Qualities to be, I'm the local council I was elected, could
you join the Board of Qualities? And I, everyone stood back and I stood up and said,
yes, I'll join. And I could have resigned ages ago, could have resigned two years
I've stuck with it because I don't run.
I've stuck with it to the best of my ability, okay?
Not pleasant, actually.
That's personal abuse.
I would suggest that Counsellor Shaw, who's done a great job, who has got great experience,
he should join the board of qualities because we do have issues going forward.
We have sites that are St. John's is not capable of development.
It's not viable.
We bought the site in good faith from the Council.
We managed to get a consent.
I can't remember exactly, 145 apartments or whatever it is.
Come up with the number.
We've got consent.
Very difficult.
Cost us a lot of money.
We got the planning consent.
Very difficult job to achieve.
It's a complex site.
But it's not viable.
It's not viable.
So we've come back to the Council, and all the time we are spending 60 ,000 pounds
a month as QALYST, funding the interest on this site that is not capable of being
developed.
What do you do? So we have talked to the planners, and we've suggested we could do a housing
scheme, 45 units.
There's more demand for houses.
There is no demand for residential flats, unfortunately.
No demand.
Whether that's a COVID thing, there's been a paradigm shift in the demand for flats
generally.
So what's the point of putting more good money after bad and building 147 flats
that are going to be a struggle to sell? The planners don't want 45 houses.
It doesn't meet the housing numbers that we need to deliver. We have a site that's
costing Qolis 60 ,000. We are stuck with that site.
We do have interest from a major retailer, and we could possibly put a hotel on it.
But it's not going to deliver the money that Qolis paid for it.
The world has changed.
So I would well, I'm more than happy, and this is a genuine offer, that Council
Shaw should join the board, help us make these decisions.
I'm happy to step aside from the board now.
So, you know, you should join the board, your experience.
We have sites that we need.
We've got one in Pearls Lane, incredibly complicated.
We spent a lot of money.
It doesn't make sense to develop it.
We have St. John's, very important site for everything.
It's a brownfield site in the heart of our town.
Something material has to be done with it.
It's not viable currently for development.
So hard decisions to be made.
We're facing this out.
We have some hard decisions.
And I would welcome your input.
Thank you very much.
But I'm more than happy to come along and have a look at the sites.
Cllr Geoff Shaw - 3:31:55
I don't think – I'm getting old now, and I don't know whether I'm – and I've
I've got a sick wife, so I don't really know that I can actually contribute as a board member.
But I'm more than happy to come and look at the sites and tell you what my view is. But I
agree with you totally. We've just sold a flat in Centre Drive, and we bought it about six years ago,
and I've sold it for, I think, five grand less than you bought it for. There's no demand for
flats. I know people that are building flats all over the country and they're not selling.
But yeah, more than happy to come and look at it.
I was just really clear,
there are lots of members who want to speak.
If it's about the lovely lucrative opportunity
for Councillor Shaw,
Cllr Jaymey McIvor - 3:32:37
perhaps that can be taken up after the meeting.
I'm gonna move on the list.
Who's Councillor Murray?
Councillor Murray.
Yes, onto two contributions.
Cllr Stephen Murray - 3:32:45
I think Councillor Meade's made a useful point
and cost is a consideration
and that is something that we can look at
when we look at the finer details, but I just reiterate the point.
I think in terms of public opinion, we have reached a stage where an independent
eye is necessary, and I think you can't put a price on that.
Well, you don't put a ridiculous price on it, but you know, you can't put.
So that would be my main motivation.
And I rarely take things personally, and I've got a great deal of time for the portfolio
holder for housing. In fact, I have sometimes been accused of being the President, Chairman
and Secretary of her fan club all rolled in one. So I do have a great deal of time. But
I have to say I can't talk for other members of the committee, but I actually resent considerably
the remarks you made. I shouldn't really be here if I judge myself on the basis of my
health, but I have come here tonight because I understand the importance of the meeting.
I have done my utmost to listen to the answers that other members have had to their questions
and particularly to the questions I have.
And to be fair, I think if she listened to the webcast archive, she will see that a lot
of my follow -up questions have been based precisely on a really careful listening to
the previous question.
In other words, the answers.
So I have to say, and maybe I'm overreacting because I'm not feeling very well, I do resent
greatly the accusation that I wasn't listening to people's answers because I did my utmost
to do that throughout the whole of the meeting.
Thank you, Councillor Murray.
Councillor McCann is next.
Thank you very much.
I'll be brief, Chairman.
It's a long evening.
Cllr Craig McCann - 3:34:42
I don't think anyone would have reasonably expected this evening to hear a job offer
for Councillor Shaw to join Cottesball.
So I was impressed by that.
I think just, I suppose we as a committee,
we are not a decision,
we don't occupy decision -making function.
We make recommendations for others to consider.
And I suppose I'm just reflecting on one of the things
that we've been discussing so far.
I think building on Councillor Neill's point
around the necessity for some kind of external body
to do a review or post -mortem of what's gone on with Corliss.
I suppose I'd invite the Cabinet to obviously make that recommendation to consider it,
but I suppose to also consider what do we want that body to do.
And I'll go back to something that Mr Small said earlier on.
This is about cauterising the wound in many ways, and the plan is in place to do that.
If we were talking years back when this was all still in train,
I could see the necessity for an independent body to come in and do a review, because one
of the things I would want them to do is to provide a roadmap as a path forward. I think
as a Council we have heard pretty clearly we know what that roadmap is. So one of the
things for Cabinet to consider is in terms of the merits of having an independent inquiry
or review by an independent body, I think being really clear as to what it is we want
to achieve by doing that. So I think that is just something we should reflect on. Thank
Thank you.
Thank you, Mr Small.
Cllr Jaymey McIvor - 3:36:14
Thank you, Chair.
Andrew Small - 3:36:18
I think it is a good point that Councillor McCann makes, really, and Councillor Murray
and Councillor Meade.
I think it will be expensive if you are not clear what you want to get out of this, really.
So I think it is really, you know, if it is the will of the committee that it should be
investigated, then you need to be very clear what it is that you want to know that you
don't think you already know.
And if you set your parameters and brief for this too wide, then it will cost you a lot
more money.
So I think you need to be clear what it is you want to know that you don't already know,
and there's a real risk that all you'll end up being told is something you already knew,
that it's made a lot of money and you probably wouldn't do it again.
So it would be absolutely clear that you do do that.
The other thing that I am aware of is that if a review is undertaken, it is going to
be time -consuming for officers.
It will take a lot of officer time.
We are already spending a vast amount of time responding to questions that are being raised
by members of the public, members of the Council.
I make a plea, really, that if you want to follow the route of investigation, can we
limit it to just that, please, and not stop all of the other requests for information
rather and just concentrate on that one investigation piece so that we have some chance of delivering
the rest of the Council's work at the same time, please?
Thank you.
So I really am conscious of time now.
So I've just got one question for a member
Cllr Jaymey McIvor - 3:37:57
and then I will be probably looking
to do the recommendation and go.
So I've got Councillor Morgan,
he's been on there for a very long time.
Councillor Church hasn't asked a question.
All right, so Councillor Church
hasn't asked a question at all meetings.
Cllr Mandy George - 3:38:10
So I'm gonna go to Councillor Morgan and Councillor Church
and then I'm going to call time, I'm afraid,
because we need to do the recommendation.
We also need to go into private session to get a figure.
Cllr Jaymey McIvor - 3:38:17
So I think that's fair.
I'm really sorry.
I don't like saying no, but it is quarter past 11.
Councillor Morgan.
Thank you, Chair.
Most of this has actually been answered now.
They are going to make it a quick answer.
I am going to make it quick.
Cllr Lisa Morgan - 3:38:32
So first of all, thank you for bringing this to,
allowing it to come to ONS and for allowing the other councillors
to talk on behalf of their residents,
especially if you are not on the committee.
And as Councillor Rackham said, thank you so much,
because you have chaired this meeting so well this evening.
When I invest in financial investments, property or anything else, I look at the pros and cons
of each project I look at with a suitable contingency fund for downturn in the market.
When I invest in these things, I look at everything. You can't go into a project blind with only
pound signs on the horizon. It seems that EFDC needs to look at both sides of the coin
when doing the quality projects. We all know there is a whip of discontent amongst our
residents and as you can see now, there are now huge waves of distrust from our residents
throughout the whole district. It seems the residents believe, and this is what the residents
from emails have been receiving and messages this evening, there is a level of bad management
and financial mismanagement of QALYST and EFDC using public money to allow this to happen.
Residents believe that QALYST charged back the construction interest under the loan costs,
construction, finance, EFDC loans. The question is, we would like this to carry on in the
private sector and if the answer is no, would we allow it in the public sector using our
residents' money? One of our fellow councillors said that we needed an independent external
audit of QALYST and I totally back that and I would like the assurance of this committee
that they will recommend to Council that they will do that
and make it available for residents to see the results
with complete transparency.
Councillor Morgan, do you have a question?
Yes, I do.
I would like this committee to put forward the proposal
that we do have an external order of qualities
and that that shows that we do have accountability,
honesty and transparency for our residents
and that Councillor Mead said that it's the money.
Well, I'm sorry, at the end of the day,
it shows that we're facing these things head on
for the growing gap for members of the public.
So I would like it to be put forward.
Thank you.
Thank you.
Councillor Church.
Thank you, Chairman.
Cllr Jaymey McIvor - 3:40:54
I am concerned with the costs
Cllr Bob Church - 3:40:56
that could be generated by this proposal.
We don't know the questions we're going to ask
and I think we could tease out these questions
by putting this first to Audit and Governance Committee.
Thank you, Councillor Church.
So, what I've got here in writing,
Cllr Jaymey McIvor - 3:41:14
I've had some support from officers
just to get the wording right.
So it would be two recommendations this evening.
Recommendation one, outside of this meeting,
an agreed group of Open Scrutiny members
to meet to craft the purpose and scope
of an independent inquiry
with a view of recommending to Cabinet,
Commission and Inquiry.
recommendation two, to include QALYSS as an annual item
for over -in -scrutiny work programme as a dedicated meeting.
The idea we're talking about costs at the moment
when we don't even know what exactly the investigation is,
we need to get a price for that.
So that's why that has been recommended.
But ultimately, the message to the public is
we have listened, we understand your concerns,
we share your concerns, we have done everything we can
as a committee and therefore we have a recommendation.
Now, the cabinet choose to, because Councillor Church
or Councillor Mead's point, choose not to
because of costings, we are a cabinet authority.
But the recommendation from the members here,
we've all done our job in that we have looked at it in detail,
we've gone as far as we can at this meeting
and that is our recommendation.
So effectively, in a nutshell, the recommendation is,
we believe there needs to be an investigation into QALYST
done by an external organisation
So it's truly independent.
I take the point about audit and governance
and Councillor Owen was at our pre -meeting
who is a member of audit and governance,
but clearly much of these matters have not been picked up
or certainly brought to the attention of members
through audit and governance as it stands.
So that's why I think it does need to be
completely separate and independent.
Can I get the committee's reaction to that
so we can do that, get the figure and go home?
Okay, thank you.
So we will now go into private session
so we can get the figure relating to one of the projects.
So I have to read this.
There are several, there is a point that the committee would like further detail on,
and it needs the meeting to go into private session on the grounds that it would involve
the likely disclosure of exempt information as defined in paragraph 3 of part 1 of the schedule 12A of the Act as amended
or are confidential under section 100A2.
Can members please agree for us to go into private session for that figure?
Agreed?
Cllr Raymond Balcombe
District councillor for Rural East ward
Conservative Party
View profile Cllr Raymond Balcombe
Cllr Richard Bassett
District councillor for Roydon and Lower Nazeing ward
Conservative Party
View profile Cllr Richard Bassett
Cllr Jamie Braha
District councillor for Grange Hill ward
Conservative Party
View profile Cllr Jamie Braha
Cllr Bob Church
District councillor for Buckhurst Hill West ward
Conservative Party
View profile Cllr Bob Church
Cllr Mandy George
District councillor for Epping West and Rural ward
Liberal Democrats
View profile Cllr Mandy George
Jennifer Gould
Strategic Director - Chief Operating Officer
Epping Forest District Council
View profile Jennifer Gould
Andy Howarth
Group Finance Director
Qualis Group
View profile Andy Howarth
Handan Ibrahim
Licensing Compliance Officer
Epping Forest District Council
View profile Handan Ibrahim
Sacha Jevans
Managing Director
Qualis Group
View profile Sacha Jevans
Cllr Howard Kauffman
District councillor for Loughton St John's ward
Loughton Residents Association
View profile Cllr Howard Kauffman
Laura Kirman
Democratic Services Officer
Epping Forest District Council
View profile Laura Kirman
Cllr Jeane Lea
District councillor for Waltham Abbey North ward
Conservative Party
View profile Cllr Jeane Lea
Cllr Craig McCann
District councillor for Chigwell with Lambourne ward
Conservative Party
View profile Cllr Craig McCann
Cllr Jaymey McIvor
District councillor for Ongar ward
Reform UK
View profile Cllr Jaymey McIvor
Cllr Karen McIvor
District councillor for Rural East ward
Reform UK
View profile Cllr Karen McIvor
Cllr Louise Mead
District councillor for Loughton Fairmead ward
Residents 4 Loughton
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Cllr Lisa Morgan
District councillor for Grange Hill ward
Epping Forest Independents Group
View profile Cllr Lisa Morgan
Cllr Martin Morris
District councillor for Waltham Abbey North ward
Labour Party
View profile Cllr Martin Morris
Cllr Stephen Murray
District councillor for Loughton Roding ward
Independent
View profile Cllr Stephen Murray
Cllr Chidi Nweke
District councillor for Loughton Roding ward
Loughton Residents Association
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Cllr Michael Owen
District councillor for Loughton Forest ward
Loughton Residents Association
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Cllr Smruti Patel
District councillor for Buckhurst Hill West ward
Conservative Party
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Cllr Sheree Rackham
District councillor for Loughton Roding ward
Loughton Residents Association
View profile Cllr Sheree Rackham
Cllr Razia Sharif
District councillor for Epping West and Rural ward
Liberal Democrats
View profile Cllr Razia Sharif
Cllr Geoff Shaw
District councillor for Theydon Bois with Passingford ward
Reform UK
View profile Cllr Geoff Shaw
Andrew Small
Chief Executive
Epping Forest District Council
View profile Andrew Small
Cllr James Small
District councillor for Buckhurst Hill East and Whitebridge ward
Reform UK
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Owen Sparks
Interim Strategic Director / S151 Officer
Epping Forest District Council
View profile Owen Sparks
Cllr Chris Whitbread
District councillor for Roydon and Lower Nazeing ward
Conservative Party
View profile Cllr Chris Whitbread
Cllr Holly Whitbread
District councillor for Epping West and Rural ward
Conservative Party
View profile Cllr Holly Whitbread
Matt Winslow
Planning Director
Epping Forest District Council
View profile Matt Winslow
Cllr Graham Wiskin
District councillor for Loughton St John's ward
Loughton Residents Association
View profile Cllr Graham Wiskin