Report attached.

Exempt Appendices A, B, C and D to this Report are not available for public inspection as they contain or relate to exempt information within the meaning of Paragraph 3 of Schedule 12A to the Local Government Act 1972.

This report is in the exempt part of the agenda because it refers to information relating to the financial or business affairs of any particular person (including the authority holding that information) and the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

Report Title: Mercury Land Holdings (MLH) Business Plan and budget update 2026/27

Presented by: Councillor Ray Morgon, Council Leader

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 Strategic Director of Resources, 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 Feb 2025/26 Business Plan to MLH, up to a maximum of £270.1 million, is re-profiled to projects as updated in the Exempt Agenda, through a combination of equity investment and Subsidy Control compliant loans.

4.         Agreed to increase the MLH Working Capital Facility by £900,000 and to extend the term for a period of up 5 years, as appropriate, commencing February 2026, and to delegate authority to the Strategic Director of Resources, in consultation with the Strategic Director Place and the Deputy Director of Legal & Governance to enter into the relevant agreements to give effect to this decision.

5.         Agreed to delegate authority to the Strategic Director of Resources to agree, after consultation with the Director of Legal and Governance, the completion of all relevant agreements and appointments of relevant professionals relating to the provision of debt finance by the Council to MLH

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

7.         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 Title: Mercury Land Holdings (MLH) Business Plan and budget update 2026/27

Presented by: Councillor Ray Morgon, Council Leader

Summary:

This report seeks Cabinet approval for the updated MLH Business Plan 2026/27 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 from the previously agreed funding envelope.

Cabinet should note that the updated MLH Business Plan 2026/27 will, if approved, provide a funding envelope within which MLH can operate. Proposals for individual scheme funding are supported by the production of a satisfactory business case at the appropriate time, which is then subject to further examination and additional governance, 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. Several schemes within the Business Plan already benefit from approved Business Cases.

MLH was formed as 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 including sale and rental opportunities that would support the continued growth of the company.

Sites within the company’s programme include those where the Council has disposed of assets (land/buildings) to MLH at market value. Subject to satisfying appropriate financial criteria the Council will provide finance to MLH through a combination of equity investment and loans for their future development.  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 regulations,   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 Strategic Director of Resources, 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 Feb 2025/26 Business Plan to MLH, up to a maximum of £270.1 million, is re-profiled to projects as updated in the Exempt Agenda, through a combination of equity investment and Subsidy Control compliant loans.

4.         Agreed to increase the MLH Working Capital Facility by £900,000 and to extend the term for a period of up 5 years, as appropriate, commencing February 2026, and to delegate authority to the Strategic Director of Resources, in consultation with the Strategic Director Place and the Deputy Director of Legal & Governance to enter into the relevant agreements to give effect to this decision.

5.         Agreed to delegate authority to the Strategic Director of Resources to agree, after consultation with the Director of Legal and Governance, the completion of all relevant agreements and appointments of relevant professionals relating to the provision of debt finance by the Council to MLH

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

7.         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.