Shropshire tenants 'should not be worried' despite closure plans

Despite news that a company set up and owned by Shropshire Council to develop new homes is to be closed, current tenants should not be worried.

That is what the portfolio holder for housing told the council’s cabinet meeting on Wednesday (September 9).

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Cornovii Developments Ltd (CDL) was set up by the then Conservative administration in 2019 to deliver energy-efficient homes and rental properties across the county.

During that time, nearly 200 homes had been built. However, the council – now run by the Liberal Democrats – has decided to wind up the firm.

Leaders at the local authority say the company has no money to fund its own projects, and the council would need to borrow money then lend it CDL for it to proceed with further schemes.

Up until March this year, the council has loaned CDL a total of £35.19 million.

However, the unitary authority is in the midst of a financial crisis that has seen it requiring nearly £200 million in essential financial support (EFS) from the Government.

Last month, an independent report to assess the council’s financial made the position clear – that it cannot afford to take out further borrowing to enable CDL to purchase its land or buildings for development.

A review found the best option was to finish two part-built schemes in Shrewsbury and sell other sites before closing the firm, which would limit losses to the council to about £4m.

None of the six options outlined in the paper would return all the money the council had invested, the report concluded, and this would be the “least disadvantageous”.

However, Councillor James Owen, portfolio holder for housing, said the report should not create uncertainty for the people living in Cornovii properties.

“Their tenancy remains secure, their homes remain their homes,” he said.

“Services must continue and throughout their process, their interests must come first.

“We are making a decision about a company, we are not turning our backs on the people who live in its properties. Nor are we turning our backs on Shropshire’s housing needs.

“Residents across Shropshire – especially young people – still struggle to buy a home. Families continue to face affordability pressures and the demand for housing remains high.

“Those challenges have not disappeared, but we cannot address them by exposing the council to a borrowing risk that it can no longer afford to carry.

“This recommendation is about responsible stewardship of public money, protecting tenants, and ensuring the council can continue to find a financial recovery.

“This administration does agree that a ‘lessons learned’ review does need to occur would suggest this is done through housing scrutiny at the end of the closing period to allow for a full review over the full history of CDL from start to end. The financial model behind Cornovii is no longer sustainable.”

Councillor Chris Naylor, who chaired a finance and improvement overview and scrutiny committee that looked into CDL’s relationship with the council, said he welcomes the progress made.

“I ask cabinet for regular progress report updates to scrutiny, in particular on projected financial outturn, which we are concerned must be contained.

“We express concern over the uncertainty of CDL tenants going forward, the need to keep them informed, and ensure the progress doesn’t negatively impact on them in any way.”

Councillor Dan Thomas, the group leader for the Conservatives, said it is important to recognise what CDL has achieved.

“Since 2019, it has delivered 196 homes including affordable homes, private rented homes and homes for sale,” he said.

“It brought forward sites that were really tricky to develop.”

Duncan Whitfield, the Section 151 officer who oversees the council’s finances, added that CDL has been very co-operative.

“Their business model just does not allow for the main funder of the company to fund it any longer,” he said.

“Clearly, our EFS is stifling us in that sense. The housing market is very difficult at the moment, and Cornovii had to deal with some very difficult sites.”