To inform Members about Hereford Futures Limited (‘HFL’); the council’s financial and other support for HFL; council liabilities going forward; HFL’s achievements; and any matters of general applicability to companies established by the council.

The Vice-Chairman introduced this item by noting the length of time it had taken for the Committee to receive a definitive report on Hereford Futures Limited (HFL) and thanked the Solicitor to the Council for preparing it.

The Solicitor to the Council provided an overview of the different sections of the report, the principal points included:

Company ownership

1.         HFL was a company limited by guarantee.

2.         The HFL Chief Executive had confirmed that all directors of HFL were also members of HCL.  Therefore, the directors of HFL owned the company.

3.         The company was not a ‘regulated company’ for the purposes of the Local Authorities (Companies) Order 1995.  This meant that HFL was neither a ‘council controlled company’ nor a ‘council influenced company’.  It was noted that the company had been a vehicle through which the Council had taken forward its economic regeneration of Hereford City.

Funding of HFL

4.         Appendix 1 set out the funding of HFL by the Council and Advantage West Midlands (AWM).

5.         Although it appeared that the Council had provided just under £2.9 million of funding to HFL, £845,000 of this figure had been ‘passported’ through the Council; £165,000 from Sanctuary Group and £680,000 from Stanhope PLC.  Therefore, the net funding from the Council was just over £2 million.

6.         AWM had provided over £14.5 million of direct funding and rental income contributions.  In addition, some £88 million of private sector funding was being invested in the retail quarter development.  It was commented that there was, therefore, a high rate of return on Council investment, alongside other benefits such as job creation and increased income.

Council’s future liabilities in relation to HFL

7.         Reference was made to a letter dated 30 May 2013 from the Council’s former Chief Finance Officer to the directors of HFL to confirm the Council’s funding commitment and to record that the Council has requested HFL to continue to trade and then wind down the business and affairs of the company.

8.         It was identified in the letter that the Council would ‘provide funding of a maximum value of £695,000 … during the financial years 2013-14 and 2014-15’.  The HFL Chief Executive had advised that the maximum liabilities of the company were unlikely to exceed £525,000.

9.         Assurance had been sought from Worcestershire County Council Pension Fund as to whether there were any residual liabilities arising in respect of the HFL Chief Executive’s pension.  A definitive answer was awaited but this would be circulated by email to Committee Members and to Mrs. Morawiecka once it was received.

HFL’s achievements

10.      The report identified some of the key achievements.

Matters of general applicability to companies established by the Council

11.      The Committee had discussed matters relating to the Freedom of Information Act and the Local Government (Access to Information) Act at previous meetings.

Further to minute 71 above, the Solicitor to the Council drew attention to the supplement to the agenda and commented as follows:

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