To consider reports from Executive Councillors on their respective Portfolios;
i. Councillor Marcus Kravis – Economic Development & Asset Management
3.2 of the Scrutiny Terms of Reference state that the Scrutiny Committee may review and scrutinise and ask questions of the Leader, lead Councillors, the Executive in relation to their portfolios.
The Portfolio Holder for Economic Development & Asset Management provided an update on the status of the Coal Orchard Project. They updated the Committee that the company involved as the Council’s contractor in the Coal Orchard Project, Midas, were filing for administration. This has been in the press and the Portfolio Holder had been interviewed on television and radio about it. Yesterday the Portfolio Holder met with local business surrounding Coal Orchard along with the Portfolio Holder for Transport and Planning. Officers had been working hard and all options were being considered.
The Assistant Director for Major and Special Projects added that Midas would have ten days to appoint an administrator as of Friday 28th January. Their staff had been asked not to come into work, so the Council had taken over the site and had appointed security to secure the site. The Council had already served a default notice on Midas last week due to poor performance. Officers would continue to work with Midas and have discussions, however, officers were also exploring alternatives to ensure that should Midas go into administration or default on the contract then Coal Orchard would still be completed.
During the debate the following points were raised:
· It was asked what could happen to Midas and the implications for the Coal Orchard Project. Officers responded that in terms of the project, if Midas went into administration then the Council would look at alternate options. These options included several contractual options such as employing another contractor, employing an independent project manager to manage the site whilst the Council employed sub-contractors directly or managing the site ourselves. All the options had different risks and benefits.
· It was asked how long it would take to complete Coal Orchard. Officers responded there was approximately three months of work left to complete on site so it would take three months from the remobilisation of the site for work to be completed.
· It was raised that the administration process could take a significant amount of time.
· It was asked if the contract with Midas was a fixed price contract. It was responded by officers that this was the case.
· It was asked if alternative options were being looked at before the administration process. Officers responded that they had begun to speak to sub-contractors who had been working on the site but that some of them had not been paid by Midas. Officers would continue to have conversations with sub-contractors to see if they would be willing to return to site. The contract with Midas would default at the end of this month due to poor performance.
· It was asked when the Council knew Midas was likely to apply for administration. The Portfolio Holder responded that they believed it was from Friday 28th January that the Council knew.
· It was raised that good progress had been made to secure the site and officers were thanked for this.
· It was asked if due diligence was conducted on Midas before the contract was awarded to them and during the contract. The contract award went through the standard two-stage procurement process and checks of Taunton Deane District Council. This process would have included due diligence. Officers
· Midas were meant to complete work on site in May 2021 and it was asked if the delay had not been an indication of issues. It was responded by officers that they whole industry had been impacted by Covid and the pandemic meant work took longer due to limited staff so the delay beyond May 2021 was not unexpected but from August 2021 explanations of delays given by Midas had become less reasonable which was why the default notice was ultimately served.
· It was asked if sub-contractors agreed that the Council owned all the materials if they had not been paid in full.
· It was asked if insurance cover would continue if the company became insolvent. It was responded by officers that the site was still currently owned by Midas as it was not yet in administration, but officers would contact insurers if Midas went into administration.
· It was asked about the notice that was served to Midas last week and whether this tipped Midas over the edge. Officers responded that there were issues across all of Midas’s sites and that Midas filing for administration was unlikely to have been the result of the notice the Council served.
· The Portfolio Holder raised that the delay to the completion of the Coal Orchard Project was impacting upon businesses surrounding Coal Orchard and also those who had reserved flats which were being built as part of Coal Orchard. It was and would continue to be a priority to get the project finished as soon as possible.
· It was asked what the knock-on effect of the continuing delay on businesses near the site would be and how the Council was communicating with those businesses and whether the Council would be providing them with financial support. The portfolio holder responded that they had met with businesses last night and that they recognised the difficulties they faced.
· It was raised that the most important people to communicate with on this issue would be the businesses near the Coal Orchard Site and local councillors in Taunton. The Portfolio Holder responded that they would seek to ensure that councillors whose wards were within the Taunton area were kept up to date and businesses were communicated with.
· It was suggested similar support could be given to workers from Midas as was given to people who lost their jobs at the end of furlough if the company did fold.
· It was raised that there were losses made by Midas in 2021.
· Concerns were raised about the extent to which this was impacting local businesses.
· It was raised that prices had gone up which was likely why Midas were in trouble. It was suggested that the Council took the project in house to ensure the project was delivered. The Portfolio Holder responded that this was an option which officers were looking at.
· It was questioned about Midas still owning the site but the Council having put security in place on the site. It was responded by officers that as Midas were in administration, they no longer had any workers, including security workers, on site. The Council had therefore placed 24/7 security on site to secure it and ensure materials were not removed from site.
· It was asked if this would cost the Council any more money and if it did, whether it could be recovered through insurance or legal processes. It was asked what was being done to minimise losses. The Portfolio Holder responded that due to the increased labour costs if contractors other than Midas had to be used it would likely cost the Council more than initially planned as labour costs and material costs had increased since the fixed price contract was agreed with Midas. However, the project was in the end stages with only the finishing touches left to be done. Officers added that they were taking advice on what the Council could and could not do.
· It was asked if any payments to Midas from here on could be withheld if work was not completed. Officers responded that work was only paid for once completed, if no further work was done no further payments would be made.
· It was raised that there were very specific tax rules regarding contractors and that this would need to be considered if the Council took the project back in house.
· It was asked what the status of documents for safety checks which were the contractors responsibility were. Officers updated that certificates for checks had already been received for work that had been completed.
· It was asked about the quality of work completed thus far. It was responded by the Portfolio Holder that there had been no issues with the quality of the work completed thus far. Officers responded that quality of work was good.
· It was asked about inward investment and the plan mentioned in the report and whether this would be made accessible to councillors in full. The Portfolio Holder responded that the plan was currently a draft but would be made available to councillors when ready. A date would be provided to councillors after the meeting as well as information about the impact of any Levelling Up funding the Council may or may not get.
· It was asked about the Levelling Up white paper issued today by government. The government was looking to increase funding for research and development by 40%. It was asked how the Portfolio Holder intended to tap into the extra 40% funding and how they sought to reduce the gap between top performing areas and Somerset West and Taunton. The Portfolio Holder responded that this was covered by the Council’s Economic Development Strategy.
· It was asked why feasibility studies regarding innovation had focused only on certain geographic areas. The Portfolio Holder noted that this had been responded to previously. The Portfolio Holder raised that the Council were currently planning for the Innovation Conference to be held later in the year and looking to attract some funding for the conference so that good speakers and attendees would be interested in participating.
Cllr Buller left the meeting at this point, 7:35pm.
· It was asked what the budget for Community Employment Hubs was and whether 34 live cases represented value for money or not. The Portfolio Holder responded that the work was valuable as it was changing lives and they would supply further information after the meeting.
· It was asked why only two of the twelve Community Employment Hubs were open. It was asked what the costs associated with this were. The Portfolio Holder would provide a response after the meeting.
· It was asked who was on the Innovation Group and who the lead officer was. It was responded by the Portfolio Holder that a strategy had been drawn up for the Innovation Group.
· It was asked what the cost of the Innovation Conference would be. The Portfolio Holder responded that there was money in the budget for the conference and that sponsorship would also be sought.
· It was asked about the West Somerset Employment Land report which was due to come to a meeting of the Scrutiny Committee. It was responded by the Portfolio Holder that the report had been delayed due to Local Government Reform and the need for decisions to be taken by the new Council. It was added by officers that both the issue of unitary and there being some outstanding work to be done meant the report could not proceed at the planned time. However, work was still continuing on the business case and once the governance arrangements were in place regarding unitary it could be brought forward.
· Concerns were raised about Employment Land being looked at in Minehead due to climate change. The portfolio holder responded that in regard to Employment Land consideration was and would be given to West Somerset as a whole, not just Minehead alone.
· An update was requested on the bus station. It was responded by the Portfolio Holder that the Council was still awaiting the Changing Places application outcome. Officers responded that Somerset County Council had put in a bid for funding to make the bus station a working bus station again. The outcome of this bid would not be known until April or May. Somerset West and Taunton were considering creating a car park on site, but this would depend on the bid outcome. Options for the buildings were also being considered.
· It was asked why a short-term lease to a business such as a restaurant had not been considered for the bus station building. It was responded by the Portfolio Holder that the building had not been in a lettable state when the Council took it back over.
· Using the bus station sites for car boot sales to generate temporary income was suggested. The Portfolio Holder assured the committee that uses for the bus station were being looked into.
· The Chair thanked the portfolio holder.