BCP Council has asked for financial support from the government for up to nearly £76million following the failed beach hut sell-off, a letter from the government has revealed.

The letter, sent from newly appointed minister of state at the Department for Levelling Up, Housing and Communities, Paul Scully, contains a number of previously unpublished details about the controversial project.

The letter, seen by the Daily Echo, was sent to Cllr Drew Mellor on July 29, days before the recently-appointed levelling up secretary, Greg Clark, stepped in to call a halt to the council’s intention to create a majority or wholly owned company which would have bought thousands of huts to fund transformation.

Read the letter in full here 220729 Paul Scully MP to Cllr Drew Mellor.pdf

The details from the letter state:

• The DLUHC informing Cllr Mellor on June 16 that the proposal to sell-off the beach huts was “not in line with the intended use” of flexible use of capital receipts. However, the letter of June 16 from MP Kemi Badenoch, while saying she had concerns the flexibility was not being used appropriately, did not explicitly rule it out. She told Cllr Mellor in this letter of June 16 that she would ask officials to ‘review the direction’.

• Chief executive Graham Farrant wrote to the department on July 15 to ‘indicate’ the council wanted to apply for a capitalisation direction.

• Officers have said the council will need support totalling £75.9million over the next three years.

Read more: Controversial BCP Council beach hut sale SCRAPPED after government intervention

An extraordinary meeting of the council’s corporate and community overview scrutiny committee was due to take place last month, July 20.

But days before, with no sign of a report for members or the public, it was postponed.

At the time, leader of the council, Drew Mellor blamed the ministerial changes in Westminster for the delay but said the council “had been able to positively pick those conversations up directly with the new minister”.

In the letter of July 29, Mr Scully also says under the exceptional support process, which the council will have to apply for funding under, BCP Council could have to undergo an external assurance review of its finances.

Letter to Cllr Mellor on June 16 220615 DLUHC KB to Cllr Mellor.pdf

He adds: “In some circumstances, a council’s governance arrangements may also be in scope for such a review.

“This is an important part of the process and helps ensure that a council seeking exceptional support has a plan for financial sustainability and policies and procedures are in place for robust decision making and accountability.

Mr Scully ends his letter by saying there is “very positive work underway” to ensure the DLUHC understand the council’s financial position and transformation ambitions more fully and to “progress your request quickly”.

Read more: Sir Christopher Chope slates BCP Council over beach hut plan

In response to a number of questions from the Daily Echo, Cllr Drew Mellor said: “Over the last few months, we have been exploring various ways to make the most of BCP Council assets, including discussions with the Department of Levelling Up, Housing and Communities (DLUHC).

“Correspondence from DLUHC on 16 June clarified that our SPV proposal was within the regulations at the time, and that DLUHC were considering consulting on changing these regulations. This meant that we needed to consider different scenarios where the planned SPV could go ahead in some form, while also exploring other options for funding with DLUHC.

“DLUHC have now updated the regulations for the flexible use of receipts and that means that one of those options – the use of a Special Purpose Vehicle to commercialise our beach hut assets and use the receipt to fund transformation – is no longer open to us.

Read more: Emergency BCP Council budget plea after beach hut sale axed

“I believe that Government should encourage and support local authorities to transform and this is a point I have made positively now to a number of Secretaries of State so as an alternative, we have submitted an application to DLUHC for a capitalisation direction of £75.9M to fund our Transformation programme over a 3-year period and DLUHC have indicated they will initially consider an application for the first year. I am confident that this programme will put our finances in a good and genuinely sustainable position.

“We are in the early stages of our application for a capitalisation direction; the details of any assurance process which might be attached to that application and any other conditions that might be applied are yet to be worked through.

“I have asked our director of finance to bring forward our quarterly financial update on the council’s financial position to the cabinet on 7 September so we can be transparent about how we expect these changes to positively affect our financial position. We are very pleased to be working with DHLUC on our approach and look forward to taking their feedback as we shape this process.”