Council won't state if it plans to sell off Cornwall's airport

The future of Cornwall Airport Newquay, which is running at a loss, came under discussion at Cornwall Council yesterday, with officers refusing to respond to a question asking if it could be sold off.

The council's customer and support services overview and scrutiny committee met in Truro to discuss the Corserv group of companies' four-year business plan ahead of it going before the council's Cabinet in September.

Corserv delivers many different services on behalf of the council, ensuring the council can meet its statutory obligations in areas like adult social care and highways maintenance. It also carries out private work outside the remit of the council, which last year saw it carry out £23m of external business, with a turnover target of external work of £28m this financial year.

The most prominent proposals in the interim Corserv Business Plan 2023-27 relate to the restructure of the group (which includes Cormac and Corserv Care), which has seen the removal of Cornwall Housing Ltd (CHL) back into the ownership of Cornwall Council and plans for Cornwall Airport Newquay to leave the group structure during 2024/25.

Peter Marsh, a service director at the council, told the committee: "Prior to the pandemic the airport was on track for its best year of trading to date. However, due to various factors including the pandemic and high rates of inflation, Cornwall Airport has remained loss making.

"The airport is a strategic link into and out of Cornwall which creates economic value for the Duchy and supports other vital services. As such the council has been exploring ways to ensure its sustainability into the future by considering the wider site which obviously includes a significant amount of potential development land. Cornwall Council is working with industry professionals to seek a strategic partner to work alongside us to maximise its economic potential."

He said these were issues for future reports but that didn't stop some councillors pursuing the issue of the airport's future.

Cllr Stephen Barnes (Redruth North, Labour) asked: "What sort of models are we looking at going forward? Will it be run directly by the council, who will run it and will it involve the possible sale [of the airport]?

Mr Marsh said the purpose of the meeting was to scrutinise the business plan which mentions the possibility of the airport coming out of the Corserv group. "The way in which that is transacted is still under way and there will need to be future Cabinet decisions made in that regard so it's not appropriate to go into that level of discussion yet at this committee."

Cllr Barnes asked when it was likely that options on the airport's future would come before the council

Chief executive Kate Kennally said that the airport strategy had already gone before the economic growth committee in November which resolved that the portfolio holder for economy be recommended to support objectives to maximise the economic impact of the airport, ensure the continuing operation of Cornwall Airport Newquay, to minimise the financial burden on the Cornish taxpayer and attract investment to the airport. "For the purposes of this committee you're considering the Corserv business plan which fully takes into account that programme of work," she added.

Cllr Julian German (St Goran, Tregony and the Roseland, Independent) responded: "We have heard there's an objective to minimise the burden on taxpayers. Even with reduced numbers, with the current throughput of passengers if we put a £10 surcharge per passenger we could eliminate the airport subsidy." He asked if that had been considered as part of the business plan.

Cath Robinson, managing director of the Corserv Group, said it hadn't and a decision had been made not to go down that route.

Cllr Stephen Rushworth (Padstow, Conservative) pointed out that the business plan report states that demand for property at the airport remains robust "but a lack of suitable accommodation often serves as a limiting factor". He wondered if seeking funding was critical in making the airport sustainable in the long term.

Ms Robinson said: "We are at full capacity within the airport and all the buildings are fully let. It's a great opportunity to develop out the airport with all of its linked businesses and to create something really dynamic around the airport. I do see a strong future there. The strategic review is all about looking at the future of developing the property assets both within the airport and its surrounding areas."

Cllr Barnes said: "I've got concerns regarding the pieces that are being dropped from Corserv such as Cornwall Housing and the airport. Are they going to be asset stripped before they're dumped or are we going to boost them up so they can carry on in a vibrant and economic way?"

Ms Robinson replied: "I can give an assurance there's no plan for asset stripping as part of the transfers of either entity. This is more about putting Cornwall Housing in a less complex and more simple governance process with direct reporting to the council than any plans to either asset strip or put any detrimental process in place. This is all about improving things for tenants." She added the plans were all about futureproofing Corserv.

Deputy leader of the council Cllr David Harris (Gloweth, Malabar & Shortlanesend, Conservative) added that it was not possible to asset strip CHL as "articles are very carefully written to ensure it cannot be messed about with. Cornwall Council is the ultimate body with responsibility for council housing and having Corserv in the middle was a meaningless layer of management, so what we've now got is a strong Cornwall housing board reporting directly to the responsible authority".

The meeting heard that Corserv currently owes the council £7m for fleet loan and £20m in working capital, which was expected to be repaid in 2023/24. Cllr Martin Worth (Saltash Trematon and Landrake, Conservative) pointed out that there were £1.6m costs in changing the way the Corserv Group is now run and an anticipated profit for the year of £2.6m. He asked: "Does the board feel comfortable you're spending effectively more than half your profit on change costs within that year?"

Paul Cooper, Corserv's interim financial director, replied: "The board is really clear that change is very significant and needs to be properly resourced to ensure it's delivered. By making these changes we're driving a future benefit."

Cllr German said that the previous Cornwall Housing board wasn't appropriately challenging its management "which is why we find ourselves in the situation we do, so how are we assuring that the board are appropriately skilled to challenge?"

Su Spence, new MD of Cornwall Housing Ltd, replied that the refresh of the board made it very clear new directors were employed on a skills-based remit and it now comprises people who have worked in housing associations and across different governance sectors. "Board members representing tenants bring real lived experience and an expectation they can handle the complex information put in front of them," she added.

Cllr German asked the Corserv group if would still be able to safely maintain the county's roads due to the cut to Cornwall's highways' budget by 30% over the last two years, and also asked if corporate manslaughter liability rests with Corserv or the council.

Dominic Bostock, of Cormac, said that £16m was budgeted for capital resurfacing this year but the impact of the condition of the roads network means that more and more money year on year is being spent on reactive defects – filling potholes – as opposed to investing in roads before they start to deteriorate. "That's not a desirable strategy at all and we're working with highways colleagues to set out potential investment strategies," he said.

"In terms of liability and risk we only have a situation if insufficient money is available and there is sufficient money available to respond to defects albeit it's a reactive rather than proactive service."

Thalia Marrington said that council cuts are "really really embedding" adding that she found it hard to explain to people in Cornwall that things will get done. "Safety is something that comes up again and again. I totally understand what Cllr German said about the corporate manslaughter thing – from the calls I'm getting and the response I'm able to give it doesn't feel very good for the council."

Ms Robinson added: "Having the Corserv group is a positive as the profits we make go back to the council, who can put that funding towards vital services." The committee noted Corserv's business plan before it goes before Cabinet in September.