The official transition from Arch to its replacement company was agreed at a full meeting of Northumberland County Council this afternoon.
The transfer from Arch to the new holding company, Advance Northumberland, will now take place next Tuesday (November 13).
The council’s Conservative administration, which pledged ‘to scrap Arch’ in its manifesto ahead of last May’s elections, believes a fresh start is required to ‘create a positive future and outlook for the development company and address some of the reputational issues’.
The debate at today’s meetings exposed the fault-lines between the current Tory administration and the Labour opposition, which was in power up until last year while Arch undertook some controversial moves. Serious concerns about spending and governance at the company in recent years have also been revealed publicly.
Conservative and council leader, Coun Peter Jackson, said that Arch was started to manage housing and council properties, but morphed into something involved in risky speculation, with assets worth £350million while owing £300million in loans.
He said that it has not returned money to the council to spend on services and on top of that, there’s the past governance issues.
But Labour leader, Coun Grant Davey, talked through Arch’s last set of published accounts (2016-17), starting with the £1million charitable donation to Active Northumberland that year and the year before.
He also referred to increases in profitability and shareholder value as well as the leverage of private-sector investment into the county and other achievements.
“You are destroying a company that was really successful, just because you put it in your manifesto,” he said.
Coun Nick Oliver, the cabinet member for corporate resources, hit back by pointing out that Coun Davey had not mentioned net profit nor had he mentioned the levels of borrowing. “That’s why it was not safe in his hands,” he added.
Labour did not vote against the transition, but abstained – as did some of the independents, with Coun Davey saying councillors should not make a decision without knowing all of the information, not least the accounts for the past year.
The final vote was 35 for, none against and 21 abstentions.
The cabinet had recently approved the ‘necessary technical steps’ to make the transition, which involves the council buying additional shares in Advance before getting the money back in a dividend when Arch is dissolved.
But while the net cost to the council is zero, given that the process requires an initial outlay of £4.2million which was not in the budget, it had to be signed off at today’s full council meeting.
The process will see the council buy £3.3million of additional shares in Advance Northumberland, which will be used to buy Arch’s subsidiary companies, meaning the least disruption to staff, most of whom are employed by the subsidiaries rather than the holding company.
The council will also buy a further £0.9million of additional Advance shares to enable the new company to buy Arch’s trade and assets ‘at a nominal value’.
Finally, the £4.2 million paid out will be returned to Northumberland County Council via a dividend payment upon the dissolution of Arch (Corporate Holdings) Ltd.
After the meeting, a Labour group spokesman reiterated his party’s calls for ‘a full, independent investigation into Arch and the way it is currently being run’.
“Both Ronnie Campbell and Ian Lavery (Northumberland’s Labour MPs) have called for this investigation and it’s clear there are serious concerns being raised by elected members which are being ignored,” he added.
Ben O'Connell, Local Democracy Reporting Service