URL: https://easthants.moderngov.co.uk/ieDecisionDetails.aspx?ID=421

Decision Maker: Shareholders Sub-Committee

Outcome:

Is Key Decision?: Yes

Is Callable In?: Yes

Purpose: To receive and consider the recommendations in relation to the report.

Content: To receive and consider the recommendations in relation to the report. It was RESOLVED that Shareholders Sub Committee:   2.1     Approve the contract extension             Approved the five-year contract extension between EHDC and EHN for the period 29 March 2026 to 31 March 2031 on current commercial terms, as to be approved by Cabinet at its meeting on 9 April 2026 noting:   (a)    the rolling 18-month notice period exercisable by EHDC from 31 October 2026; and   (b)    the mutual option to extend for a further five years by agreement.   2.2     REJECT the Business Plan 2026/27   Reject the EHN Business Plan for 2026/27 (Version 10, 3 March 2026) and its supporting appendices in their current form on the grounds that: (a)  The financial baseline from which the Business Plan is constructed is unresolved.  The Business Plan may not cover the full core cost of delivering the service and cannot be approved on that basis. (b)  The Business Plan does not fully comply with the requirements of clause 13.3 of the Service Agreement. Business continuity planning is wholly absent (clause 13.3.8); capital and resourcing schedules are explicitly deferred (clauses 13.3.3 and 13.3.6); commercial income is not disaggregated from core service income in the financial model (clauses 13.3.9 and 13.3.10); and the explicit link to the Council’s single integrated plan is absent (clause 13.3.2).   2.3     APPROVE interim operating controls   In consequence of the rejection of the Business Plan, and to allow EHN to continue to deliver services lawfully during the period in which the Business Plan deficiencies are addressed, resolve that the following interim controls shall apply with immediate effect:   (a)    EHN’s Annual Charge for 2026/27 shall be paid at the prior year deemed rate in accordance with Schedule 2 Part 3 paragraph 1.5 of the Service Agreement, pending formal agreement of the Annual Charge through an approved Business Plan. Officers will agree the precise monthly payment figure with EHN and the Section 151 Officer and confirm this to SSC in writing within 10 Business Days. (b)    The EHN Board of Directors shall present monthly operational budget returns to SSC at each SSC meeting during the interim period. Each return shall set out income and expenditure against the prior year budget baseline, identify any variance, and confirm that EHN is operating within its current authority. Monthly SSC meetings shall be convened for this purpose if not already scheduled. (c)In the absence of an approved Business Plan, all Reserved Matters under Schedule 1 of the Shareholders’ Agreement require the prior written consent of both shareholders before EHN can act. This includes any expenditure or contractual commitment that would otherwise have been authorised by an approved Business Plan. The EHN Board is on notice that no Reserved Matter may be proceeded with until shareholder consent is obtained. (d)  No new permanent posts shall be created and no existing service arrangements shall be terminated without prior written confirmation from the Corporate Contracts and Partnerships Manager that the  proposed action does not require shareholder approval under clause 44.2 of the Service Agreement or Schedule 1 of the Shareholders’ Agreement. The on-site fitter proposal (Appendix 4 to the Business Plan) is specifically paused pending this confirmation. (e)  EHN shall provide EHDC with open-book access to its profit and loss ledger in accordance with clause 23.1(g) of the Shareholders’ Agreement. Any access issue shall be notified in writing and resolved by EHN within 5 Business Days.   2.4     REQUIRE a revised Business Plan   Require EHN to submit a revised Business Plan to SSC no later than 30th  June 2026 The revised Business Plan must:   (a)  be founded on a formally agreed and reconciled 2025/26 final outturn position, including full resolution of the variations and the temporary rounds funding mechanism; (b)  set out a resolved position on the two additional temporary rounds, including whether they are to be retained or removed, the funding mechanism for any that are retained, and the change control basis for that decision; (c)  set out a resolved position on the overhead and management charge structure, consistent with the scenarios modelled in Appendix 1 of the current submission; (d)  address all outstanding clause 13.3 compliance gaps, including business continuity planning, complete capital and resourcing schedules, disaggregation of commercial income, and the link to the Council’s single integrated plan; and (e)  be submitted to SSC in sufficient time to allow SSC to consider it at a properly convened meeting before any financial commitment contingent on the revised Business Plan is made.   2.5     DELEGATE authority   Delegate authority to the Corporate Contracts and Partnerships Manager, in consultation with the Section 151 Officer and Monitoring Officer, to:   (a)  agree and confirm the monthly payment figure to EHN under the interim payment arrangement at recommendation 2.3(a); (b)  confirm in writing to EHN the governance position on the on-site fitter proposal and any other operational proposals brought forward during the interim period; and (c)  take all steps necessary to progress formalisation of the contract extension documentation with Trowers and Hamlins LLP.     Reasons for the Decision   The reasons were set out at sections 4 and 5 of the report, under the headings Business Plan 2026/27: Clause 13.3 Compliance Assessment and Financial Concerns.   Alternative Options Considered   In the Officers’ assessment, they were satisfied that endorsing the contract extension and rejection of the Business Plan was the most compliant path available to the Council and that the interim controls were temporary.

Date of Decision: April 9, 2026