A top board director has claimed a Derbyshire council’s decision to publicly release a critical review concerning the authority’s arrangements with its wholly-owned development company without ‘full context’ and an ‘action plan’ could have ‘serious catastrophic, reputational and financial consequences’.
Bolsover District Council’s relationship with its wholly-owned Dragonfly development companies has been criticised following a Local Partnerships’ review which identified risks including a lack of good governance, a lack of a business plan and a conflict of interest between the roles of the organisations.
However, Dragonfly Board of Directors’ Chairperson Deborah Watson, who is also an Independent district councillor, said: “Myself and [Dragonfly Secretary and Director] Grant [Galloway] made it perfectly clear to the Leader of the Council that releasing this information into the public arena without full context and without an agreed action plan could have serious catastrophic, reputational and financial consequences on Dragonfly, its current projects, and thereby the council itself.”
The Labour-controlled council 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.
Bolsover District Council’s Dragonfly was established by the former Council Leader Stephen Fritchley when Woodhead Construction fell into administration in 2022 while working on Elmton-with-Creswell Parish Council’s costly leisure centre project which Dragonfly subsequently completed.
And Cllr Watson has now strongly disputed criticism aimed at Dragonfly Development and its board of directors concerning a lack of good governance, a lack of a business plan and a conflict of interest, and she has argued any lack of good governance since the development company’s launch lies with the council and its officers.
She said: “I feel criticism has been unfairly-aimed at Dragonfly instead of Bolsover District Council’s own officers.”
Cllr Watson claims Dragonfly Development was given just ten minutes’ notice about the council’s planned press release and the authority is using the Dragonfly Development Company Board of Directors as ‘scapegoats’ for their own shortcomings because the responsibility of governance lies with the council and not Dragonfly.
She stated the Dragonfly Development directors provided a business plan to the council and they have shared information including risk management but the authority has not engaged with them and has not allowed Dragonfly to manage its own financial systems or to attend Shareholder Board meetings with information updates.
The review identified a number of risks associated with governance but stressed these have not ‘crystallised’ and the council still has an opportunity to manage the situation and despite claiming Dragonfly Development has not delivered all of the objectives originally envisaged it has made progress in challenging circumstances with some achieved objectives.
Cllr Watson has also said any issues with governance can still be resolved ‘amicably and sensibly’ but the council knows it wants to bring Dragonfly Management back in-house and to dissolve Dragonfly Development so that is why it has not cooperated because they would see it as a waste of effort.
She added that Dragonfly Development has proved to be value for money after building much-needed, quality homes in areas other developers would not consider which have attracted funding support and have returned healthy profits equating to an estimated £1m per annum over three years returned to the council for the benefit of the district’s residents and taxpayers.
Cllr Watson argued Dragonfly is fulfilling the ambitions of Bolsover District Council providing houses and improving the economics of the area and improving the financial well-being of residents.
But despite her loyalty to the council, she added: “After eighteen years I am at the point where I am not proud, and I am ashamed of that council and it’s about to trash its own company – making them £3m in profit, building lifetime homes for its people – and they have put it into disrepute by releasing this [review] and not preparing an action plan.”
Dragonfly Development has overseen many of the council’s recent building projects but it has attracted concerns from some about possible conflicts of interest with the mixing of a commercial company with a public authority’s work and the review identified a conflict of interest between the roles of the organisations.
But Cllr Watson has stated there would be no conflict of interest if the situation was managed correctly by the authority and Dragonfly has legal advice confirming that these circumstances can be safely managed.
The review’s report has also questioned the extent of the board of directors’ skills and it is recommending a new board be established with an independent chairperson, a senior council officer, one other independent, a non-executive director, and the companies’ Chief Executive Officer.
However, Cllr Watson said the current board members are all degree-level educated professionals with vast relevant experience or experience in the world of business finance and one is a professional auditor and another has construction management degrees and they have all undergone training and are supported by a Senior Leadership Team professionally qualified in business.
She added: “To have no councillors on the Board of Dragonfly would be a travesty. The companies are owned by the council to work on the ambitions of the council which is a democratic body.
“If you take away the councillors it would become simply a commercial enterprise led by people who see only profit margins and not the best interests of the residents of this district.”
The only threat to the council’s governance, according to Cllr Watson, is its own ‘inability’ to properly manage the governance issues of the companies along with a desire from officers to control all aspects such as not allowing Dragonfly to manage its own financial systems.
Cllr Watson stated Dragonfly Development has delivered an external housing scheme for Bersahill Ltd, completed a leisure centre for Elmton-with-Creswell Parish Council and has carried out numerous pre-construction consultancy projects which have generated a positive return for the organisation.
She added that it is currently delivering three new-build projects for the council and it is close to signing a number of internal and external contracts to secure work through to 2027 and it is forecasting a profit for this financial year.
Cllr Watson said: “Dragonfly Management is performing well against the Key Performance Indicators set by the council and has attracted external funding to support Bolsover homes scheme projects of over £3.6m from Homes England, an additional £172,000 from the East Midlands Combined County Authority and it was instrumental in securing £15m of regeneration funding for Bolsover District Council projects.
“Dragonfly Group have been audited by the council’s auditors on nine occasions and have achieved the top two levels of assurance in each case.”
Dragonfly Development has, however, had to re-tender work packages on its delayed Shirebrook Crematorium scheme due to what it claims have been design issues received from the client.
But Cllr Watson says some packages are still in the process of being priced and the new design details have been received and she added that great progress is being made with completion expected by December 2025 for commissioning and testing, and so it will hopefully be open by the spring of 2026.
By contrast, Cllr Watson claims the council chose not to use Dragonfly on the Shirebrook Market Place scheme preferring a cheaper contractor but she claims this scheme can no longer be financed at the original quoted price and she claims this scheme has become a ‘mess and a debacle’ and the authority alone does not have the expertise to complete similar projects themselves.
Cllr Watson believes releasing the review report has jeopardised projects but she feels that with the ‘wonderful’ staff that work for Dragonfly Development it is possible to still complete them and get them all back on track and contractors and suppliers can be reassured that Dragonfly Development is a successful company and is financially sound.
However, if the council chooses to dissolve the Dragonfly Development Board of Directors, Cllr Watson expects there will be huge costs for the council not least sorting out the TUPE requirements to return Dragonfly Management back into the council, but she does not envisage job losses from that particular company as the services will still need to be delivered.
Cllr Watson said: “If Dragonfly Development was to be dissolved the costs would be huge as the projects would undoubtedly stall and the council would not have the capacity to complete them.
“Sub-contractors and suppliers would lose confidence in the schemes and walk. Ultimately, this would cost us the taxpayers.”
The council is considering the review’s recommendations should it choose for its Dragonfly companies to continue including revisiting its business case to determine whether there remains a need for the companies and the report has recommended that the council further considers both companies to determine their future.
Recommendations include: Ensuring necessary management resource and clienting capability; That the companies ensure sufficient resource including a dedicated finance function; A clarity of purpose in a refreshed and more comprehensive companies’ business plan; The creation of a working group to reset the relationship between companies and the council; Changes to board memberships; Adherence to all company rules; a more robust framework around meetings including a regular meeting of senior management of both companies and the council with an improved working relationship.
The report has also advised updated business cases every five years, a document for stakeholders, and that the shareholder board should be dissolved and replaced with a shareholder committee and that the council should consider bringing the former Dragonfly board members onto this committee subject to a political balance with meetings.
It also outlined an action plan for the council to convene a meeting to signal a reset, dissolve the Dragonfly Board of Directors and recruit new directors, review membership of a shareholder board to ensure suitable political representation and to convert it to a committee, and finally to set up a task force to review an updated business case to determine if there is still a case for the Dragonfly companies.
Council Leader, Cllr Jane Yates, has said the review provides an opportunity to consider all the options for the Dragonfly companies and she has offered reassurances that current projects will continue but it is essential the council has full control over its statutory duties including housing management.
Following the review, an options appraisal is to be developed to help councillors make a decision on how to proceed with the Dragonfly companies and an Extraordinary Council meeting will take place in July with a final decision expected from the council’s Executive committee at a later date.
Council Chief Executive Officer Karen Hanson has said she welcomed the review’s report and she is fully committed to finding the right way forward with the best outcomes for residents and businesses.
However, Cllr Watson said: “The council is using the directors as scapegoats. We have worked hard to ensure the fantastic successes and profits which the companies have achieved, but they prefer to highlight their own failings in governance over celebrating the company successes.
“Their end game was always to prove a case to bring services back into the council and [they] have gone a long way round achieving that instead of working with us for the best solutions for the people of this district.”
Four Independent councillors including Cllr Watson, who is also the Independents’ Group Leader, now represent nearly all the Dragonfly Development board directors with Anne Clarke, Emma Stevenson and Janet Tait alongside one Reform councillor, Carol Wood.
Conservative Bolsover District Cllr Will Fletcher said: “I’ve long been a sceptic as to whether the Dragonfly companies will provide sufficient benefit to Bolsover District Council to outweigh the risks involved.
“As a number of high-profile cases have shown, when these companies collapse it is financially devastating for the council and for local taxpayers who end up footing the bill.
“The recent review into the Dragonfly companies raises serious questions about their value for money and the level of risk to which the council is exposed. I’m pleased that the council has commissioned Local Partnerships to undertake an options appraisal, as it is clear that independent expertise is required on how best to proceed.
“A central consideration of this options appraisal must be how we best protect taxpayers’ money and minimise the cost to them. It should properly consider all options, including whether to wind up the Dragonfly companies, and ensure that money already spent on live projects such as the Shirebrook Crematorium is not wasted.”
