Northwood Group Limited

Some of you may be familiar with the name Northwood Group Limited. The company is behind the proposed planning development of 197 homes off Ankerbold Road, Tupton.

If you dig a little deeper, you’ll find that the company is a Joint Venture Company – set up by North East Derbyshire District Council. There’s nothing untoward in that – it’s a common enough practice which allows local authorities to generate additional income. Albeit, like any business proposition, not without risk.

On 19 February 2018 [pp.10-11], in a debate which the Council voted to hold with the public and press excluded (Liberal Democrat Councillor David Hancock being the sole opponent both to hearing the debate in private AND to the motion itself), the Labour-run Council put forward the motion that North East Derbyshire District Council:

  1. Approves an investment of up to £963,000 in shareholder equity funded from Prudential Borrowing.
  2. Approves up to £7.7m commercial loan as outlined in the report and commercial terms benchmarked from the HCA or alternative commercial source, to be funded from Prudential Borrowing.
  3. Approves the revised Capital Financing Requirement, Operational Boundary and Authorised Limit to reflect the additional prudential borrowing required.
  4. Delegate authority to the Joint Strategic Director with responsibility for property and development to enter any such agreements to facilitate the shareholder equity and loan investments outlined in the report.
  5. Should external support be needed, agree that this will be funded through the arrangement fee and monitoring fees as detailed in the report.
  6. Ring fence income arising to the Invest to Save Reserve for future transformation projects.

In short, the Council is borrowing around eight million pounds – which it will then lend to Northwood Group – to enable Northwood to build on land which the Council already owns.

As a business plan, it’s a dubious one. We saw all to clearly back in the mid-noughties the dangers of increasing debt and house-building. There is already evidence that the economy is slowing and, typically, house-building is one of the earliest casualties of a downturn. There’s an added concern in that the Council is borrowing such a huge sum of money to lend to a third party for which, realistically, the primary security would be land which the Council currently owns.

So, even before the ethical question of the planning decision, the business model is flawed and the people who will be picking up the tab, if it all goes wrong, are the council tax payers of N-E Derbyshire.

On top of that, all decision making will be taken away from elected councillors and allocated to an unelected council employee.

The planning application is a whole other ball game. We have the morally ambiguous situation of a Council, that is presiding over a planning application submitted by its own nascent Joint Venture Company. In our opinion, the Labour Council want to use Tupton as a guinnea pig on which to test the viability of its new project.

Lib Dem Councillor for Tupton, David Hancock, has been vocal in his opposition:

“It is nothing more than a vanity project for N-E Derbyshire District Council. There has been no proper public consultation over what is a huge development that will dramatically increase the population of Tupton. The village simply does not have the infrastructure to support a development of this size and the proposal fails to address the needs of both existing and future residents.

“Like many people, my concern is that it this is a ‘done deal’ simply so that the Council can prove just how good they are at running their new business. The business model is flawed. Although, without doubt, it has the potential to work; but the decisions they’ve made already in terms of financing the project and the choice of location reduce its economic credibility. Despite this, the Labour group rejected a request to delay while further information was provided to elected members and passed the motion anyway.”

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