Five board directors resign from Bolsover council’s development company in row over its future

Bolsover District Council’s Executive formally noted during a recent meeting an Options Appraisal from advisers Local Partnerships which highlighted the most favoured preference for the council, following a recent review, would be to take services provided by Dragonfly Development and Dragonfly Management back in-house under complete council control.

But despite complaints from the company board that there has not been a fair and full assessment of their success the board feels there is nothing to be gained from remaining in position after accusing the council of unacceptable and unbecoming behaviour.

Dragonfly Board chairman, Coun Deborah Watson, stated: “We are utterly disappointed with the unequivocal desire of the leadership to accept a review, proven to contain inaccuracies, in order to disestablish Dragonfly without seeking further information and undertaking robust impact assessments on both the council’s finances and more pertinently, the people involved – specifically the staff and the residents we represent.”

She added: “Sadly, it appears there is now nothing productive to be gained from us remaining as directors. The council has made it exceedingly clear that it will not just ignore Dragonfly directors but also go further and denigrate them in the public domain, repeatedly.

“This behaviour is unacceptable and unbecoming of the council and therefore our resignations are now tendered with immediate effect.”

Bolsover District Council’s Dragonfly was established by the former council leader Stephen Fritchley when Edwinstowe-based Woodhead Construction fell into administration in 2022 while working on Elmton-with-Creswell Parish Council’s costly Creswell Heritage and Wellbeing Centre project which Dragonfly subsequently completed.

The Labour-controlled council currently has two wholly-owned Dragonfly companies – the Dragonfly Management company representing the services that used to be run by the authority and the Dragonfly Development company which is involved in construction like council properties and developments for third parties.

But Dragonfly has attracted concerns about possible conflicts of interest with the mixing of a commercial company with a public authority’s work.

And the council-commissioned Local Partnerships’ review criticised the authority’s relationship with Dragonfly identifying – what it claims to be – a lack of good governance, a lack of a business plan and a conflict of interest between the roles of the organisations.

However, Dragonfly Development’s board of directors – who have received no remuneration for their work and include four Independent councillors – has suggested they are being made ‘scapegoats’ by the council for its own lack of governance and shortcomings and that Dragonfly has been profitable.

And Coun Watson, has claimed the council’s review could have ‘serious catastrophic, reputational and financial consequences’ for Dragonfly which she also claims has made considerable profits for the council, built homes for residents and that the council has put the company into disrepute by releasing the review and not preparing an action plan.

Coun Watson argued the council has not presented an updated business case and considered a full assessment of the companies’ performance and more information was needed to be considered before any decision on Dragonfly’s future and that the review contains ‘inaccuracies’.

But Coun John Ritchie, who presented council calculations on Dragonfly’s finances, told the latest meeting that by looking at profit from external schemes the cost to the council to generate this income far exceeds the return and raises questions about value for money for the council.

He stated the governance of the Dragonfly companies started to cause concern over the last two years and the Shareholder Board decided to have a review due to ongoing debates around conflict of interest, appropriate business planning, costs and value for money.

And council leader, Coun Janes Yates, said that from Coun Ritchie’s presentation the council is not financially better off having Dragonfly and she argued the council is worse off.

However, Coun Watson claims the review contains ‘inaccuracies’ including a claim that Dragonfly did not undertake more than 20per cent of external work for the council but she has argued this is because the company is not legally allowed to undertake more than 20per cent of external work for the authority.

The board of directors has also claimed that Dragonfly has proven extremely profitable and it has provided information from the company board to demonstrate its position.

It claims that when the council was working out the profitability of Dragonfly, it used figures that joined both companies together and this did not reflect Dragonfly Development’s performance from the start of it becoming a wholly-owned company.

The board claims since becoming a wholly-owned company, taking into account estimated savings and profit made, Dragonfly Development has returned a positive financial benefit of £4.2m, and since looking at profit alone after becoming a wholly owned company, Dragonfly Development has returned a post-tax profit of £2.7m.

It also claimed that taking account of tax and additional council costs of £112,000, Dragonfly Development has made a clear profit of £2.6m, and that it is on target to make a profit of £1m this financial year, taking the total pre-tax profit for the company since becoming a wholly owned company to approximately £4.2m.

Coun Watson stated: “We know first-hand that the staff of Dragonfly are fantastic – they have a culture of working together as a team to find solutions for every challenge, enabling them to bring forward some exemplary schemes.

She added: “Residents who are now living in houses built by Dragonfly, are all incredibly happy with their new homes and the schemes currently under construction at Alder Close and Woburn House will also provide wonderful quality lifetime homes for the people we represent.”

Coun Yates agreed Dragonfly was originally set up for the right reasons and it enabled projects to carry on and it saved jobs and she does not dispute the quality of the work but she claims the end cost for social housing – which the council is keen to promote – has been higher than options involving S106 infrastructure arrangements with outside developers.

She also explained independent advice was not followed and instead of recruiting independent directors to the board councillors were appointed in those positions including the former council leader Cllr Fritchley as board chairperson which she claims created a conflict of interest and left vital skills and experience off the board.

Coun Yates has stated: “I saw the review as an opportunity to see the state of the companies and see where improvements could be made as well as highlighting good practice. The Dragonfly Board did not agree a review was necessary which I found disappointing.

“I wanted to ensure myself and the council were being open and transparent, so with the support of the Cabinet, we published the report in full and unredacted.”

She added that the majority of Bolsover District Councillors have been fully behind the review and have welcomed the findings and that there are no planned job losses for current Dragonfly staff.

Coun Yates has also stated that communication with the Dragonfly board has broken down and she cannot see how that situation can be resolved.

The review has advised that If the council decides to bring the services back in-house and to dissolve the companies it will need to ensure that it is capable of doing so and that there is capacity to support a working group to lead the transition, and that it is aware of its limits and that there is sufficient financial resource to cover TUPE implications and staffing implications.

Bolsover District Council will also need to understand, according to the review, that it has the resources and due diligence for the transfer of contracts from company to the council with a clear stakeholder and staff plan and that any adverse financial implications are understood.

The Dragonfly Board of Directors including Independent Couns Watson, Janet Tait, Emma Stevenson and Anne Clarke, and Reform Coun Carol Wood formally tendered their resignation from the board in correspondence to the council dated July 23.

Bolsover District Council’s Executive Committee already voted at an Emergency Meeting on June 16 to replace the Dragonfly board with a new interim team while it considers the future of its two related companies.

It is due to meet again on July 28 when a potential decision on the future plans for its wholly-owned Dragonfly companies is expected.

Prior to the publication of the review, a separate Auditor’s Annual Report for the 2023-24 had identified ‘significant weaknesses’ and ‘risks of significant weaknesses’ in Bolsover District Council’s governance and efforts to establish value for money arrangements with its development company Dragonfly.