Cabinet

1.       Approved the Mercury Land Holdings Limited Business Plan Update (see Exempt Appendix 3).

2.       Agreed to delegate authority to the Cabinet Member for Regeneration & Development, in consultation with the S151 Officer, the Strategic Director of Place and the Monitoring Officer, to approve the detailed business cases, related viability assessments and funding requirements for the individual schemes noted within the Business Plan as they may be presented during the business plan period, including the authority to enter into all relevant agreements to give effect to the schemes.

3.       Agreed that the previously allocated funding in the July 2023-2026 Business Plan to MLH, up to a maximum of £270.1 million, is reallocated to projects as updated in the Exempt Agenda, through a combination of equity investment and Subsidy Control compliant loans.

4.       Noted that the individual schemes are subject to detailed business cases to be approved under delegated authority, as set out in Recommendation 2.

5.       Agreed to delegate to the Strategic Director of Resources, in consultation with the Assistant Director of Regeneration and Place Shaping, and the Deputy Director of Legal and Governance, the authority to determine the principles and processes by which any assets shall be disposed of and the terms of disposal to MLH.

Report: Mercury Land Holdings (MLH) Business Plan and Budget Update 2025/26.

Presented by: Councillor Ray Morgon, Leader of the Council.

Summary: (response to Overview &  Scrutiny comment, at end of this summary)

This report seeks Cabinet approval for the updated MLH Business Plan 2025/6 and its associated financial commitments. The Business Plan includes an update to the development programme and re-profiles the existing approved funding envelope, which was previously provided by the Council, to projects set out in the Exempt Report & Appendices. The updated Business Plan does not seek any additional funding commitment.

Cabinet should note that the updated MLH Business Plan 2025/6 will, if approved, provide a funding envelope within which MLH can operate. This is because every individual proposal for scheme funding must be supported by the production of a satisfactory business case, which is then subject to further examination and additional governance, at the appropriate time, before the Council can place MLH in funds. This, in turn, is regulated by legally binding funding agreements between the Council as lender and MLH as borrower.

For those not familiar with MLH, and why it was formed, Cabinet resolved to establish a commercially focused company that would deliver housing for private rent and sale in May 2015. Mercury Land Holdings Limited (MLH) was subsequently incorporated in November 2015. MLH is wholly owned by the Council. Since its formation, MLH has established and manages a portfolio of private rented sector (PRS) homes. It has also developed and sold properties for private sale and affordable rent. 

The MLH Business Plan seeks to reaffirm MLH’s commitment to significant schemes that are critical for the long term success of the company such as Como Street, but also to new schemes which would deliver additional PRS and sale opportunities, that would support the continued growth of the company.

It is proposed that the Council will dispose of assets (land/buildings) to MLH at market value and that the Council will provide finance to MLH through a combination of equity investment and loans. This will constitute capital expenditure for the Council within its approved Capital Programme, to be financed through Council reserves and/or borrowing. The overall financing arrangements will be subject to an assessment of Subsidy Control (State Aid), long term affordability, risk and return on investment by the Council.

The reallocated funds have been modelled and their impact on the Medium Term Financial Strategy (MTFS) is addressed in the exempt part of this report. This seeks to inform Cabinet of the expected outputs from MLH, as well as advising of any changes in the financial position of MLH and the Council’s financial commitments to MLH as an investor.

Cabinet

1.       Approved the Mercury Land Holdings Limited Business Plan Update (see Exempt Appendix 3).

2.       Agreed to delegate authority to the Cabinet Member for Regeneration & Development, in consultation with the S151 Officer, the Strategic Director of Place and the Monitoring Officer, to approve the detailed business cases, related viability assessments and funding requirements for the individual schemes noted within the Business Plan as they may be presented during the business plan period, including the authority to enter into all relevant agreements to give effect to the schemes.

3.       Agreed that the previously allocated funding in the July 2023-2026 Business Plan to MLH, up to a maximum of £270.1 million, is reallocated to projects as updated in the Exempt Agenda, through a combination of equity investment and Subsidy Control compliant loans.

4.       Noted that the individual schemes are subject to detailed business cases to be approved under delegated authority, as set out in Recommendation 2.

5.       Agreed to delegate to the Strategic Director of Resources, in consultation with the Assistant Director of Regeneration and Place Shaping, and the Deputy Director of Legal and Governance, the authority to determine the principles and processes by which any assets shall be disposed of and the terms of disposal to MLH.

Overview & Scrutiny Board – Comments To Cabinet on Budget & Related Papers

Following its meeting on 29 January 2025, the Overview and Scrutiny Board submits the following comments to Cabinet and requests that Cabinet responds to these at its meeting on 5 February 2025.

Mercury Land Holdings (MLH) Business Plan and Budget Update 2025/26

1.     The possibility should be explored of MLH homes being used as temporary accommodation or to otherwise assist with the housing shortage.

·        Response: With regard to the suggestion of using MLH homes as temporary accommodation or to otherwise assist with the housing shortage, this proposal does not align with the MLH model. MLH was established to deliver high quality, private-rented stock, but in so doing sometimes provides opportunities for the HRA to purchase homes which are used to help meet demand for affordable housing (such as Crow Lane and Quarles). Other initiatives are in progress to mitigate temporary accommodation pressures faced by the Council.

2.     That MLH be formally requested to make a list of used contractors available to Members. 

·        Response: MLH have been requested by O&S to make a list of their contractors available to Members. MLH are a separate company, albeit wholly owned by the Council, and as such are not required to make commercial information available in this way. Officers are seeking legal advice on this issue.

I would respectfully suggest that this recommendation falls outside of the scope of the Business Plan being reviewed at O&S.

3.      That the governance structure of MLH be reviewed to ensure that it is still fit for purpose, in line with a re-assessment of whether it is being utilised in such a way as to maximise the impact on the General Fund.

·        Response: Cabinet is satisfied that the governance structure for MLH, as set out in the Business Plan Update, remains fit for purpose and that MLH continues to support the Council’s financial interests