Investigation launched into collapse of council owned housing company
An investigation is being launched into the failure of a council owned property business which has collapsed with debts of £21m.
Mid Devon District Council has launched the investigation following the collapse of Three Rivers Development Company.
The council’s cabinet, led by the Liberal Democrats, has voted unanimously to recommend that the full council agree to stop trading with Three Rivers.
The chair of the scrutiny committee Rachel Gilmore announced the investigation and said the aim was to learn from the past and prevent similar mistakes in the future.
She added: “Those who do not remember the past are condemned to repeat it.”
She added: “We are not here to assign blame, rather to ensure that the blameless – our residents – are not left to pick up the bill for similar failures in the future.
“There may not be any single decision that led us down this path. We may find a series of well-meaning and otherwise informed decisions that stacked together poorly.
Or we may not. We must look at those decisions objectively without regard for political affiliations.”
The company was formed by Mid Devon District Council in 2017.
The aim was to deliver high quality homes in Mid Devon, while providing a financial return to the council.
The council has admitted that after six years it is clear these long term aims have not materialised and set against a back-drop of high interest rates, high building costs and a changing housing market the future of the firm has been uncertain for some time.
Councillors have been told the authority had loaned the company more than £21m and an annual sales turnover of around £3-3.5m is needed just to cover overheads.
While 3Rivers has delivered housing projects in Mid Devon since it began, including the Orchard, Halberton, Threwstones, Tiverton and a development of social housing in Burlescombe, the council decided in March that it would not start any new projects.
Following this decision the Council’s Cabinet met in August and has recommended 3Rivers undertake a “soft closure”, which in effect means the business would be wound down and ultimately cease trading.
