Working group to unpick ‘toxic’ 3 Rivers housing debacle

Four councillors will initiate lessons learned process

A new group will try to identify lessons that could be learned following the controversy surrounding a council-owned housing company.

Four Mid Devon councillors will form the group to delve into losses from 3 Rivers Developments to ensure the authority gains knowledge from its foray into the residential property market.

The council set up and wholly owned 3 Rivers to build houses for sale  in 2017, but decided earlie this year to ‘soft close’ it, preventing it from embarking on new projects but allowing it to complete ongoing schemes in Tiverton ansd Bampton.

Challenging trading conditions in the construction and housing sectors proved problematic for the company, with the firm shutting down projects amid rocketing prices for materials, facing struggles with restricted site availability, and being affected by rising interest rates and their subsequent impact on the housing market.

The company’s latest published accounts at Companies House show that pre-tax losses ballooned to more than £1.9 million in the year to 31 March 2022 compared to a loss of nearly £96,000 the prior year.

It has to published new accounts by 31 December.

Mid Devon District Council’s scrutiny committee tackled the divisive issue this week, with an at-times fractious debate on how to progress.

Councillor Nikki Woollatt (Ind, Cullompton St Andrews) questioned the committee’s chair, Councillor Rachel Gilmour (Lib Dem, Clare & Shuttern), about why some letters had already been sent to people with knowledge of 3 Rivers, seemingly before the entire scrutiny committee had considered them.

“I consider this overstepping your role,” she said.

“When did the committee decide that these letters should be sent? These things are supposed to be decided by the committee.

“I have an issue with the whole agenda item as I don’t think it is clear what is required of us in scrutiny. The wording is a statement with no instruction, and I would have expected us to have to agree and adopt a terms of reference.”

Cllr Woollatt, who is stepping down from the scrutiny committee, added that she was “dismayed” at how possible terms of reference for a ‘lessons-learned’ exercise had been drafted without the committee’s knowledge and that “activities have taken place behind the scenes.”

The council’s chief executive, Stephen Walford, said the draft terms of reference were intended to enable discussion by the scrutiny committee, and were not intended as being set in stone.

“Trying to set the terms of reference with a blank sheet of paper at a scrutiny committee meeting would have been quite challenging, and would have had less structure than now,” he said.

“The draft is a reflection back to you of all the areas of concern that have been discussed previously.”

Mr Walford added that the committee could amend the terms of reference, or the working group could add to it.

Cllr Woollatt proposed that a small working group be set up that could meet more informally and work in a more focused manner before bringing their findings back to the scrutiny committee.

Cllr Gilmour emphasised her preference for a “quick and thorough” process given how long the 3 Rivers issue had dragged on.

“3 Rivers has been hanging around for years and has caused anxiety and there’s been what has been described as a toxic atmosphere,” she said.

“At one point, the Local Government Association had to be brought in to mediate, as councillors couldn’t speak to each other, that’s how bad it was.”

Councillors highlighted the importance of a transparent process to ensure that the council’s integrity was maintained, with some wanting the working group to be made up of members with no formal links to 3 Rivers or previous administrations involved in its creation.

A vote to set up a working group passed by six votes to four, with councillors Andy Cuddy (Lib Dem, Tiverton Lowman), Gordon Czapiewski (Lib Dem, Tiverton Lowman) Rhys Roberts (Cons, Cadbury), and Gill Westcott (Green, Canonsleigh) against.

The working group will report back to the scrutiny committee in December.

A Mid Devon District Council spokesperson said: “The ‘soft close’ process will enable 3 Rivers to finish its two ongoing projects in Tiverton and Bampton and will ensure that all contractors, suppliers and tradesmen are paid in full, and all associated company property warranties will be honoured.”