HEREFORDSHIRE Council has paid out nearly £3m in financial support to Hereford Futures Ltd (HFL) over the past 11 years.
The council denies that the sum shows HFL as having been “exclusively funded” by the public sector – either directly or indirectly - throughout its existence.
However, in a new report, the council concedes the appearance of it having “wholly funded” HFL since 2012.
That report will go to the council’s overview and scrutiny committee for debate on Monday (March 10).
HFL was set up by the council in 2010 as an “arm’s length” company limited by guarantee to drive redevelopment in the city. It was a successor to Edgar Street Grid (Hereford) Ltd or ESG.
In May last year, the council confirmed HFL was being wound up.
The company – with the council acting as guarantor - was not subject to audit and accountancy obligations that apply to regulated local authority companies, nor was it covered by Freedom of Information (FoI) regulations.
HFL was, however, admitted to the council’s pension fund.
Figures produced for the scrutiny report show the council’s total contribution to HFL from 2004-05 to 2014-15 to be £2,891,556, with a peak annual contribution of £409,405 in 2012-13.
Support in the current financial year is shown as £355,322, reducing to £130,628 in 2014-15.
The directors report and financial statement for the year ending March 31 2013 records the turnover of HFL as £458,084 with administrative expenses of £466,180.
That means an operating loss of £8,096 and an overall loss for the financial year of £7,049.
An appendix to the report sets out the funding for HFL or ESG by the council and Advantage West Midlands (AWM), the former regional economic body.
Those figures show the sums of grant drawn down from AWM between 2004-05 to 2012-13 inclusive.
The total drawn down over those nine years is £13,177,419; with a peak annual draw down of £3,339,377 in 2007-08.
Another appendix shows AWM’s net rental income contributions to HFL from Hereford properties acquired by AWM – a total contribution of £1,490,096 over the nine years to 2013-14, with a peak annual contribution of £308,991 in 2007-08.
The council denies that HFL been exclusively funded by the public sector - either directly or indirectly - throughout its existence.
As “full picture” of HFL funding shows refunded costs were received from external organisations by the council , which then redirected them into the HFL budget - as required by the joint venture
agreement with the council and AWM.
However, the council concedes that since 2012 it appears that HFL has been “almost wholly funded” by the council.
References to the funding of HFL in the council’s Local Investment Plan 2011-2026 state that HFL was established as a joint venture company with AWM; but that AWM funding would come to an end from 31 March 2011; and that, from 1st April 2011, the company would be ‘fully funded’ by the council.
Overall, the council confirms it has provided just under £2.9m of funding to HFL, including refunded costs from external organisations, and AWM provided over £14.5m of direct funding and rental income contributions.
In addition, some £88m of private sector funding is being invested in the old market development – as reported to cabinet in April last year.