It is often said that the best way to understand a local authority’s priorities is to look at what its chief executive used to do before taking over.
In Exeter City Council’s case, Chief Executive & Growth Director Karime Hassan’s trade as a town planner has been reflected in property development projects which have come to characterise the city, including Princesshay shopping centre and St Sidwell’s Point leisure centre.
He is responsible for peripheral development too, including Cranbrook and several enterprise zone business parks which have contributed to the government’s description of the area as the “Exeter M5 Growth Corridor” in its recent Levelling Up white paper.
It is often also observed that the chief executive’s Paris Street tenure has coincided with a reduction in council transparency, particularly where development is concerned.
In recent years the council has convened a series of committees in private to make strategic decisions about the future of the city and its hinterland.
Two years ago this trend reached its zenith (or nadir, depending on your point of view) when the city council agreed his proposal to convene the Liveable Exeter Place Board . He said it would provide “a forum in which to address collaboratively issues relating to housing delivery, place shaping, economic development, clean growth and carbon neutral development at a city and sub-regional level”.
This unelected board also meets in private and does not publish its proceedings. It oversees the Liveable Exeter property development scheme for 12,000 new dwellings, which includes the planned redevelopment of Marsh Barton, the area around St David’s station and the Water Lane industrial estate.
Liveable Exeter Place Board also receives regular reports from Exeter City Futures, which is ostensibly responsible for delivering city-wide decarbonisation but which has been prioritising a development fund, sponsored by central government, which is intended to finance the Liveable Exeter property development scheme.
Exeter City Council Relocate to Exeter promo reel
At the beginning of last month Karime Hassan and Jo Yelland, another Exeter City Council director, both began working for Exeter City Futures. Exeter City Council decided just before Christmas that they should, between them, spend five days a week at the company while continuing to receive their council salaries.
The decision was ostensibly taken to support Net Zero Exeter plan delivery. However neither the rationale nor the risk assessment provided by council leader Phil Bialyk in his report recommending the decision stand up to scrutiny.
His report says that “many councils have shared their chief executive” but cites none in which a local authority CEO has been paid to work in the private sector.
It says that Exeter City Futures “provides a vehicle for the partner organisations to take joint actions on behalf of the city of Exeter” without explaining how the company, which has neither statutory powers nor policy-making authority, might, for example, impose or enforce zero carbon development or a city-wide ultra low emission zone.
It also claims that “Exeter City Futures is a mature vehicle for addressing challenges facing the city of Exeter” despite it not yet putting together a plan that could actually decarbonise the city, let alone enacting one, in the six years since it was incorporated.
Exeter City Futures declared public funding to the end of 2022.
Sources: Exeter City Council, Exeter City Futures.
The council leader’s report also cites the importance of working with what it called the council’s “strategic partners” on the Exeter City Futures board: Devon County Council, Exeter College, University of Exeter and Royal Devon & Exeter NHS Hospital Trust.
However none of Exeter City Futures’ accounts show receipt of funding from these organisations, and no account of their financial contributions, if any, has otherwise been published.
In addition, Devon County Council’s representative on Exeter City Futures’ board resigned three months ago, just before the council’s plan to send its directors to work there was publicly announced, and hasn’t been replaced. (Churn at the company is nothing new: there has been a high turnover of directors since its incorporation and Karime Hassan will be its fourth MD/CEO.)
The council leader acknowledged the company’s operational and financial challenges in his report, saying: “There has been a recognition from the partner organisations that something different has to happen to give momentum and confidence to the programme.”
The company was awarded a £250,000 National Lottery grant, has received more than £1 million in central government funding and the council has already spent more than £350,000 on its activities. It will cost it another £116,785 to pay its director’s salaries while they work there during 2022.
But instead of querying its viability or why it is not recruiting its own staff, the report concludes that “it is easier to redirect the [company] and to give it momentum than to start again”.
Exeter City Council report on Exeter City Futures secondments
The premise on which the council leader’s recommendations rest actually seems to be that the complex networks of multifaceted relationships that make up Exeter’s social and economic fabric can be instrumentally influenced by a single node, namely Exeter City Futures.
If true, it would follow that the only position from which the council’s chief executive could facilitate city decarbonisation is as the company’s CEO.
Apart from the reductive oversimplification that this entails, it also implies that the council has so far been unable to realise its decarbonisation agenda because it is unable to play a city-wide facilitation role while its chief executive works in-house.
However the council already does just that with a much wider range of stakeholders than sit on the Exeter City Futures board.
Its chief executive justified the creation of Liveable Exeter Place Board on precisely these grounds. And the place board is just one of seven strategic collaboration mechanisms the council lists in its authority monitoring report, while it sends councillors as representatives to no fewer than 43 outside bodies.
The council also has governance-level representation at Exeter College, Devon Climate Emergency Response Group, Devon and Torbay One Public Estate Board, Devon Place Board, the Heart of the South West Joint Committee and the Local Enterprise Partnership (overseeing the Local Industrial Strategy), and it owns and controls Exeter City Group, Exeter City Living and Exeter Canal & Quay Trust while having significant influence over Exeter Science Park and Monkerton Heat Company.
The activities of all these organisations, as well as others in which the council has interests, are all directly relevant to Exeter’s response to the climate crisis.
What the council leader’s report does do, however, is obliquely refer to the true focus of the staff secondment: Exeter Development Fund. It says: “In the original report on Net Zero Exeter the chief executive sought, and was given, authority to begin exploring opportunities to bring investment to support the city in this ambitious programme. This remains the task but requires a wider remit beyond the city council.”
This emphasis was echoed in the council’s promotion of the secondment proposals. Referring to the cost of decarbonisation, the council leader said: “The money needs to be found in private and institutional investors.”
Exeter Development Fund investment outline. Image: Exeter City Futures.
To the extent that it addresses the risks associated with the secondments, the council leader’s report correctly identifies the potential “impact on the city council in losing the capacity of two key members of the Strategic Management Board for significant periods of time while they head up this programme of work.”
However it fails to adequately explain how this impact will be mitigated, instead simply allocating some of the chief executive’s responsibilities to his deputy and adjusting management reporting lines.
It doesn’t, for example, explain whether the deputy CEO’s capacity to fulfil her existing responsibilities will be compromised by the additional workload, whether she will take over the chief executive’s statutory role as Head of Paid Service, or whether the changes will have an impact on council service delivery.
The remaining risks the report outlines are all related to operational viability. None are adequately addressed either.
While the council leader’s report acknowledges that “a wide range of options” exist other than those it proposes, it considers only what it calls “the obvious two”: to focus primarily on the council’s own carbon emissions as “there is no statutory obligation to lead a city wide net zero agenda” or to fund a temporary secondment “to lead the programme under Exeter City Futures” which it says “was tried in the past and made progress but clearly has not proven to be the complete answer”.
The council is not, of course, obliged to lead Exeter’s decarbonisation, although it did decide to do so in July 2019. And it’s not clear why Exeter City Council paying Exeter City Futures’ staffing costs now will yield better results than it did last time.
The decarbonisation agenda “would be much better served if this work was carried out within the council rather than in a stand-alone, secretive, company that we don’t have access to”.
Conservative councillor Andrew Leadbetter
The existing Net Zero Exeter plan lacks basic carbon accounting mechanisms, including baseline emissions measurements which include (and distinguish between) all three scopes, annual reduction targets necessary to meet defined decarbonisation goals and reporting mechanisms to measure progress against those reductions, which is partly why it fails to address around a million tonnes of greenhouse gas emissions for which the city is responsible.
But this is not because Exeter City Futures was unaware that this approach was necessary. It was originally commissioned by the council to conduct a full audit of the city’s carbon emissions and assemble an expert team to produce a delivery framework but only later admitted that it did not have the “resource capacity” to follow through.
The plan’s resulting shortcomings are a reminder that procurement processes which consider alternative approaches and draw on authoritative expertise for assessment often produce better results. Simply rubber-stamping a document which has been prepared under wraps then seeking to impose it as policy is surely no-one’s idea of how to facilitate social change of the magnitude necessary to deal with the climate crisis.
Proper processes are also required by the legislation under which local government operates.
The council’s account of the secondment proposals nevertheless failed to supply a value for money assessment of their impact, the Section 151 Officer did not set out their financial implications or outline secondment terms including legal agreements, performance indicators and review criteria, and the Monitoring Officer said the report “raises no issues” (other than changes to Strata committee representation arrangements).
Exeter City Council Executive meeting discussion of Exeter City Futures secondments
The recent Report in the Public Interest concerning Croydon Council’s “serious corporate and governance failings” over its failed Brick by Brick development company should give Exeter city councillors and officers pause for thought. (Croydon is on the lengthening list of local authorities which have found themselves unable to deliver their commercialisation programmes without putting their finances in jeopardy.)
They include “a lack of an assessment of the real or perceived conflicts of interest” entailed by the same person simultaneously playing four related roles around a redevelopment which cost more than double its £30 million budget.
Exeter City Council’s chief executive, even before becoming CEO of Exeter City Futures, of which he was already a director and whose board he chaired, had begun to elide his multiple roles at the November Executive meeting that considered his secondment. During a discussion of retrofitting he said:
“The retrofit issue is an interesting one, because that’s exactly what Exeter City Futures will do. So, wearing another hat of mine, what we will be doing, is looking at vehicles for how we will deliver retrofit to the non-council housing stock and we will be exploring how we may do that.
“We haven’t taken a decision on a retrofit company simply because, at the moment, our housing HRA is delivering the standards, probably more efficiently and more cheaply than the private sector is doing, and therefore we don’t need to do that.
“But what we need to do, I think, is learn from Housing Revenue Account in terms of the efficiency of delivering at a level which is, I think, an exemplar for what we can do in the private stock.”
When he says “we”, who does he mean?
Phil Bialyk, Tony Rowe of Exeter Rugby Club, Karime Hassan and Paul Thomas of Marriott International at the Sandy Park hotel development site (right to left). The city council contributed £1 million to a £2.7 million redevelopment of the A379 junction alongside the site. Photo: Exeter City Council.
The council’s decision to send two of its directors to work for a private company should have been based on more rigorous analysis.
Apart from the distinction between issues raised by their secondment and wider issues around decarbonisation, the council leader’s report did not explain how the council would oversee, scrutinise or hold Exeter City Futures to account, or whether Exeter City Futures would itself begin to operate at the levels of transparency and public accountability commensurate with local authority partnership.
Conflict of interest and risk management and mitigation (especially regarding financial liabilities), decision-making mechanisms and legal frameworks for relationships with partner organisations (and other stakeholders) should all have been addressed in detail.
Nor should Net Zero Exeter plan delivery have been conflated with promotion of Exeter Development Fund.
The plan to gamble Exeter’s future on a property development financing scheme which has never been tried before entails very significant risks, both to the council’s finances and the city’s prospects. Its focus is not the many unaddressed issues which make decarbonisation so difficult.
Basic questions remain unanswered, such as how a decarbonisation strategy for Exeter can reconcile the structural changes that are needed with the statutory responsibilities (and accompanying constraints) which determine the scope within which relevant authorities (many of which are not members of Exeter City Futures) can act. Then there’s the rest of civil society, citizens and all. The current Net Zero Exeter plan offers no system-wide theory of change.
And while this is not surprising, as many policy-makers around the country are only now realising that our existing governance arrangements are unfit to tackle the climate crisis, it does not mean Exeter decarbonisation plan-makers can ignore such questions. If they are left unaddressed, the plan will fail.
There should nevertheless be no doubt that a financing scheme driven by central government interest in exposing public sector property assets to private capital will not provide the answers. To think that it could is to misunderstand the transformation of society that decarbonisation entails and to misconceive the means of enabling it.
The council leader’s report should have made clear that Exeter Development Fund is Exeter City Futures’ primary strategic project, on which it has been working since 2017, and for which it has received the lion’s share of its funding. Not from local organisations but from central government.
The report should also have accounted for the amount of time each of the council’s directors is expected to spend on city decarbonisation, rather than the development fund, when they are working under Exeter City Futures’ roof.
“Exeter City Futures is not proving to be transparent and it is not democratically accountable.”
Conservative councillor Anne Jobson
Green Party councillor Diana Moore sought to address many of these issues at the November Executive meeting, where she asked questions about missing secondment assessment criteria and the impact on council finances and services.
She also asked about due diligence regarding Exeter City Futures’ competency, capacity, financial viability and funding sources, governance and staffing arrangements and conflicts of interest.
She asked whether the council’s directors would focus on Exeter Development Fund when working for Exeter City Futures, and called for independent assessment of the council’s exposure to risk related to the fund as it is expected to shoulder a significant share of the required £200 million initial investment.
She also queried whether councillors should decide the proposed staff secondments before being fully apprised of the fund’s nature and risks.
Labour councillor Rachel Sutton responded: “These are things that can be and will be dealt with. Risk assessments and conflicts of interest and secondment are all the kinds of things that major organisations are involved in all the time.”
She said that what she described as “a knock-on effect” from the proposals had been “taken into consideration” and was “actually backed up with proper research”, adding: “I’m quite certain that if you talk with officer colleagues they will be able to give you that reassurance.”
She did not explain why requisite risk, governance and conflict of interest assessments had not been carried out in advance or even outlined in prospect in the report.
Labour leader Phil Bialyk added: “All decisions that impact on Exeter City Council that come under our auspices, and that we are responsible for, will be reported to the Executive committee. They can be scrutinised by the scrutiny programme board. If they want to scrutinise it they can do, they have every right to. I don’t interfere with that process, they can tell us what they want to do.”
The council’s scrutiny programme board, which does not meet in public or report its proceedings, is comprised of five councillors. The majority Labour group hold a majority of the board seats including the chair.
Labour councillor Rachel Sutton comments on Exeter City Futures secondments
Councillors from all opposition parties then sought to overturn the Executive’s decision at a December meeting of the full council that was held just eleven working days before the secondments were due to start.
The Conservative group proposed that the city council take responsibility for Exeter decarbonisation instead of Exeter City Futures, with the chief executive to remain in-house to work on its delivery and regular progress reviews (including target updates) to be reported to public scrutiny committees. It also proposed the inclusion of the Net Zero Exeter plan in the council’s corporate risk register.
Conservative leader Andrew Leadbetter said the decarbonisation agenda “would be much better served if this work was carried out within the council rather than in a stand-alone, secretive, company that we don’t have access to” so “it would be open to proper scrutiny from members of the council”.
He added: “You need to explain why we can’t have that transparency, why scrutiny is not examining it, why we wouldn’t be setting key milestones and key targets, and why it has to be put out to a third party organisation.”
Conservative councillor Anne Jobson said: “Exeter City Futures is not proving to be transparent and it is not democratically accountable. In 2019 it received £200,000 from central government, and a further sum of £840,000 was received from central government in 2020.
“The latter concerns the proposal for Exeter Development Fund, which sets out, in its Expression of Interest for that bid, that it was to do with housing and planning on nine identified major brownfield sites and the delivery of 12,000 homes on those sites. Those are all matters that fall to this council to determine, not to a public limited company. Housing being built is a planning matter which should be dealt with by this council.”
She added: “Neither grant is referred to in the accounts published on the Companies House website. Has the 2020-21 money been spent? What has been achieved with this money? How is next year’s money to be spent? What will be achieved with the money? There simply is no accountability.
“The last meeting [of the Exeter City Futures board] was held on 24 November 2020: over a year ago. There are no published minutes after that date. The minutes do not provide accountability for the voters of Exeter. They are nothing more than a record of decisions made. There is no scope for those decisions to be challenged.”
Despite unanimous opposition, the Conservative group proposals were rejected by the ruling Labour group. The city council’s official record of Anne Jobson’s speech omitted all mention of Exeter Development Fund and everything she said about property development.
Exeter City Council discussion of Exeter City Futures secondments
The Progressive group of Independent, Green Party and Liberal Democrat councillors then attempted to refer the decision for further scrutiny to consider its implications more fully.
Liberal Democrat councillor Michael Mitchell said: “The [November] Executive meeting highlighted many of our concerns: risk assessments, governance and conflict of interests, but with no clarity that these have been explored or that mitigation factors are in place.
“The report on which this recommendation is based has not come from an externally appointed body. We have not conducted a review of our senior management team and found some have time on their hands.
”The issues surrounding this policy have not been sufficiently critically examined. If this proposal goes through this evening unamended we feel that we will be doing a disservice to the citizens of Exeter.”
The Progressive group proposals were also rejected by the ruling Labour group.
“The issues surrounding this policy have not been sufficiently critically examined. If this proposal goes through this evening unamended we feel that we will be doing a disservice to the citizens of Exeter.”
Liberal Democrat councillor Michael Mitchell
The December meeting then turned to discussion of Labour’s unchanged proposals. Diana Moore said none of her questions concerning risk, oversight, finances, funding or governance had been adequately addressed.
She said: “As Exeter grows it is fundamental that there is clarity and transparency over the roles and relationships between citizens, the council, developers and potential investors. Citizens need to be taken with us, to understand what is happening and why.”
“I agree with the fundamental proposition that is set out in the report that the council should be working with other institutions to bring greater resources to shared goals, to achieve net zero, that they wouldn’t be able to do by themselves.
“But other councils are using their leadership role, their powers and status as the council, to work with partner organisations and communities to ensure transparent and inclusive action on the climate emergency. Not least so that residents can see, understand and be active participants in the urgent changes that we need to see.”
“So I’d be grateful if the leader would answer this one question: why are we outsourcing our leadership, our responsibilities, our relationships and powers that we do have, as a council, to a private company?”
“Why are we outsourcing our leadership, our responsibilities, our relationships and powers that we do have, as a council, to a private company?”
Green Party councillor Diana Moore
Phil Bialyk denied that the city council was outsourcing anything, saying: “We are not devolving our responsibilities, our influence, our power, to somebody else.”
Referring to the need to bring the city’s principal organisations together to address the climate crisis, he said: “Leadership is about collaborating and listening, and we’ve been listening and we are collaborating with those organisations”. He added: “We need to get them together, round the table, and we’re slowly but surely doing that.”
He nevertheless also said: “Using Exeter City Futures and asking the chief executive to spend up to two days of his time, and to allocate another director for three days to be working on specific designs within that, is the best way forward.”
Labour councillor Duncan Wood then rehearsed the same contradiction, citing the council’s convening power in support of its chief executive working elsewhere.
He said: “What we can do is mediate, what we can do is bring people together, and for that we need to be seen as a trusted friend, as somebody that can facilitate effectively, and that is what this proposal is about.
“It’s about putting somebody into the seat that can actually steer people, bring people together, help people to work together. What we can give to make this happen is the skills and the trusted leadership to bring together as many partners as we can.”
Nothing was said that supported the idea that Exeter will only collaborate around decarbonisation if the council’s chief executive, and a second council director, both work for Exeter City Futures.
Karime Hassan, who had led the discussion of his secondment at the November Executive meeting, speaking for eleven of the 33 minutes spent on the issue, left the room this time.
Local Government Association report on Exeter City Council
Notwithstanding the way it was made, perhaps the most extraordinary thing about this decision is that the Local Government Association had already concluded that Karime Hassan’s twin posts as chief executive and growth director at Exeter City Council should be separated into two because of the difficulties of fulfilling both at the same time.
Its December 2017 assessment of Exeter City Council’s “leadership, governance, corporate capacity and financial resilience” said the “focus of attention for the chief executive will, by necessity, change in coming years from outward looking growth to major internal transformation programmes. These will require the post holder to give these programmes leadership and personal involvement.”
It added: “Now is the time to separate the two posts with the Chief Executive to continue with a strategic role on growth and partnership working but balanced to devote more time to leading and driving internal change.”
It also raised governance concerns around Exeter City Futures, in the context of the development fund, on which work had then begun. It said: “The council is proposing that Exeter City Futures be mainstreamed into the council during 2018 to lead on city-wide transformation.
“However, in doing this it will be important that the council defines Exeter City Futures’ role and how it will be integrated within the organisation.”
Despite this, when the chief executive took the Local Government Association’s assessment to the city council Executive in March 2018 he recommended that its findings should simply be noted on the basis that “a subsequent report would be brought back with an action plan which would address capacity issues”.
Neither report nor action plan were brought back. We asked the council what happened. A member of its management team said: “I was very much involved in the corporate peer challenge process at the time but for some reason, which I cannot recall, there was no follow-up report to Executive or Council.”
We also asked whether another Local Government Association assessment would take place this year, on the usual five year cycle, and were told: “At present there are no plans for another peer challenge, but I anticipate discussions will be had with the Local Government Association in 2022.”
Should such an assessment take place, as the council’s chief executive has also since been appointed to work at the University of Exeter Business School, we look forward to its findings with interest.
