Wheatley Board approves JV repairs plan with City Council
Wheatley Group’s Board today confirmed it will progress plans to deliver its repairs and maintenance service through a new joint venture (JV) with Glasgow City Council.
Heads of terms have been agreed that will lead to Wheatley - parent company of Scotland’s largest social landlord Glasgow Housing Association (GHA) - becoming a 50-50 joint owner and partner in City Building Glasgow, the council’s wholly-owned subsidiary.
As well as delivering a £33 million a year (excluding VAT) repairs service for Wheatley, the JV will be responsible for GHA’s £27M annual capital investment programme and the City Council’s own repairs, worth £30 million annually.
Gordon Sloan, Chair of GHA and a director of Wheatley Group, said: “Our number-one priority is to ensure our tenants and factored homeowners continue to receive in the years ahead an outstanding repairs service and the new JV gives us the best opportunity to do that.
“GHA and Wheatley have a strong and productive record of partnership working with City Building and Glasgow City Council and we look forward to building on that excellent platform in the years ahead.”
City Building won what was then GHA’s five-year repairs contract, with an optional four-year extension, in 2009. The extension was exercised by Wheatley, GHA’s (new) parent organisation in 2013.
Last year, with two years of the contract to run, Wheatley’s Strategic Development Committee commissioned an independent options appraisal, looking at everything from procuring a new tender and bringing the service in-house to exploring the possibility of a JV.
Campbell Tickell, the UK’s leading independent consultants specialising in housing and regeneration management, were appointed to lead the review, supported by a panel of advisors, comprising:
- top UK property managers Savills, who appraised repairs service delivery and the commercial environment for repairs contracts in Wheatley’s operating area;
- Big Four accountants PwC, who conducted a complete financial assessment;
- leading Scottish law firm Shepherd and Wedderburn, who focused on all possible legal issues;
- and respected corporate advisors Spence and Partners, who studied all pensions matters.
In December, Wheatley Board approved a recommendation from Campbell Tickell to take forward two options - taking the service in-house and forming a JV with City Building - for further examination.
At its Board meeting on Wednesday (February 24), Wheatley Board then accepted the Campbell Tickell recommendation, accepted by Wheatley’s Strategic Development Committee, to “proceed to detailed due diligence and negotiation of the joint venture with GCC”.
Campbell Tickell’s report and risk analysis concluded a JV offered Wheatley a range of critical advantages, including its ability to:
- build on an established record of strategic and working relationships with City Building and the existing high level of operational integration;
- lower the overall risk of failure or an adverse impact on the quality or continuity of service delivery;
- avoid the need to incur millions of pounds in start-up costs;
- provide opportunities to incentivise the workforce and develop a culture that would lead to further improvements in performance and efficiency;
- benefit from cost pooling and management efficiencies;
- introduce state-of-the-art systems, reduce overhead costs and move towards a multi-skilled workforce;
- and benefit from City Building senior staff’s commercial skills and experience.
Wheatley Group Chair Alastair MacNish said: “The independent review concluded a joint venture was the best means of providing a truly top-class service to our customers and communities. We are totally committed to improving an excellent repairs service that is already achieving 93% customer satisfaction, whilst gaining maximum value for money.
“In the months ahead, we will work through the detail of how the JV will operate, aiming to have everything in place to proceed in 2017.”
Thursday, February 25, 2016