Agenda item

Consideration was given to a report by the LHC Group Director, which provided Members with an overview of the organisation's performance.

The Joint Committee was informed that, while LHC had missed its turnover target in 2019-20, the income target had been achieved, confirming sustained growth for the eighth year in succession despite the impact of covid-19 in March 2020.

Regarding the lockdown enforced due to the covid-19 pandemic, as this had come into effect in March 2020, there had been little effect on the financial year 2019-20. However, a much larger impact was expected for 2020-21, and the challenge was for LHC to respond effectively within a post-covid environment. To ensure business continuity, all staff had been working full time from home.

For 2019-20, 626 new projects had gone live, across a total client base of 279 clients. Turnover was approximately £347.5m, with a resulting income for LHC of circa £8.4m. The value of income and turnover by framework was outlined as per the data within the report, with the importance of the windows and doors frameworks was highlighted.

A review of the health and happiness of LHC staff in December 2019 had shown a dip in staff happiness to a rating of 3.6 out of 5, (where previously scores were around 4). Only 64% of staff said they felt positive about LHC in December 2019. However, a new working from home survey in April 2020 had shown a marked improvement, to 95% positive staff feedback. It was likely that this was due to the confidence engendered by LHC’s strong financial position, which allowed the company to continue to support staff through use of reserves.

During 2020-21, £372k had been invested into 51 separate community projects. In London, Locality had approved 23 projects totalling £118k, with a match funding estimated to be £74k.

In Scotland, LHC was in talks with Link Housing Association to acquire the partnering community investment charity, Lintel Trust. LHC was currently reviewing the legal and governance implications of this acquisition, with the aim of transferring Lintel Trust to LHC’s ownership in September 2020.

Eight framework products had been launched during the year, with five more out to tender or at the research stage. A dynamic purchasing system had been introduced for smaller works, and improved product integration had helped clients to re-engineer their own processes to modernise construction. Due to reduced supplier activity during the covid lockdown, work on the N8 framework had been delayed, with the current N7 framework extended.

A new risk relating to covid-19 had been added to the risk register, to reflect the potential for a prolonged reduction in spending on public sector housing and construction projects. Income was expected to fall by 50% over the next 12 months, but was expected to be made up in the following years, as projects resumed.

Meetings had been held with three Constituent Members with a view to addressing Risk B: a lack of interest in LHC by LHC Constituent Members. From the meetings, it had become clear that different authorities had different procurement routes and strategies for using LHC, which did not impact on their membership of LHC. A range of recommended actions to promote higher levels of interest in LHC by LHC Constituent Members had been produced.

Committee Members sought clarity on how LHC were planning for future areas of focus for the business, and whether climate change and other green issues would be built into future frameworks. Officers advised that LHC frameworks were designed in line with market trends. A three year business plan had been instigated, which took into account political, economic, social and environmental factors, among others, and which then fed into five regional business plans which were aligned to the bespoke challenges and opportunities within those regions. These areas of future focus included energy efficiency and modern methods of construction. Green issues and their incorporation into frameworks was aligned to environmental standards, however, it had been recognised that environmental factors had not yet been embedded within the entire range of LHC offers. Addressing this would be a key area of focus for the company moving forward.

Members requested detail on what the company was doing to address the forecasted 50% (£200m) reduction in turnover. Officers advised that staff were actively pursuing some 1,400 leads, while the business was adjusting frameworks and business in line with the impact on covid-19 in the longer term, with a view to offering new products in a post-covid world. It was confirmed that a new procurement conference was in the planning stages, and invitations would be extended to all Board Members.

Members suggested that the LHC frameworks be reviewed to ensure they were  environmentally friendly in respect of windows. Officers advised that these would be reviewed.

Members suggested that the Community Benefit Scheme was not being advertised sufficiently. Officers advised that more effort was being put into marketing the fund, and further detail would be set out in agenda item 5.

Members requested that LHC officers work to promote the use of LHC frameworks within constituent authorities. Officers advised that work was underway to this effect, with an encouraging response from Lambeth Council in particular. It was agreed that further detail would be supplied to Board Members following the meeting.

RESOLVED: That the information contained in the report be noted.