Liverpool council’s housing company failed due to ‘lack of strategic direction’

A housing company owned by Liverpool City Council failed to meet its ambitious targets due to a lack of clear strategy and robust oversight, according to a council report.

Liverpool Foundation Homes built and managed 18 homes on a ‘rent to buy’ basis, although it originally aspired to build 10,000 social rented homes.

The council’s cabinet approved the closure of the company in October 2022. This had been recommended by an external review that followed a damning government-commissioned inspection of the whole council in 2021.

Liverpool then carried out a “lessons learnt” investigation for Foundation, involving interviews and workshops with people involved.

It found that the company’s original outline business plan “generated high expectations that in the end were difficult to meet due to the lack of strategic direction and the need for the council to carefully manage the funding going into the company and individual projects”.

The report says Foundation was created “without a clear policy strategy” and “without robust delivery and business plans to guide how the company would meet its defined objectives”.

The firm’s outline business case was developed by external consultants “on unrealistic assumptions and insufficient understanding of the Liverpool context”, according to the findings of the investigation.

An indicative provision of £350m was included for Foundation in the council’s housing capital programme. But “there was no business case behind the allocation to determine how and where the money should be spent”, and it was later removed.

When Foundation was set up, “due process was largely set to one side”, with council officers rapidly seconded to it “without clarity on the role of the company, what it was expected to deliver and therefore the skills it needed”.

The report adds that there was not “sufficient oversight or scrutiny” of Foundation within the council’s decision-making process.

The exercise’s findings “include the need for clear and robust policy strategies, business cases and delivery plans to create council companies to ensure alignment with council objectives, feasibility and deliverability”.

The report adds that “the allocation of investment should be based on a clear, realistic, evidence-based and strategically aligned business plan that indicates where investment is needed”.