BARRATT HOLMES, our housing reporter, on a worrying lack of accountability at the Labour-run Croydon Council’s housing company
Brick by Brick, the council chief executive Jo Negrini’s house-building brainchild, has broken the law and committed a criminal offence after barely a year of existence.
Brick by Brick’s directors face fines of up to £5,000 and criminal records for failing to file its annual return on time with Companies House for its first year’s operation.
It is hardly a ringing endorsement of Negrini’s administrative qualities, nor those of Colm Lacey, who she has appointed as director of development in Croydon and who heads up Brick by Brick.
It is also a worrying trend for a company using millions of pounds of public money but which is not subject to Freedom of Information requests; Brick by Brick’s official records lodged at Companies House are the only (and limited) source of public information about its management of Croydon tax-payers’ property.
Brick by Brick is on a mission to convert every scrap of land around the borough owned by the council into 1,000 homes. Somewhat disappointingly, as this is an initiative from a supposedly Labour council, only half of the new homes it builds will be “affordable”, which means they will be for sale or for rent at 80 per cent or less of the market value.
For most hard-working families living in the borough, 80 per cent of the market rate remains pretty unaffordable when the average rent is £1,200 per month and one-bedroom flats are on the market for £350,000 or more.
And what about the other half of the 1,000 new homes Brick by Brick is building on publicly owned land, using public finance? They are to go on the open market, to make as much profit as possible, alongside all the other properties built by commercial developers and speculators who have been prowling around the borough. Hardly what you might call “council housing” or “social homes”, then.
In the first 18 months of Croydon’s Labour-run council, they delivered the grand total of 12 new homes; by June this year, they added a further 20, all of them “affordable” according to the criteria explained above.
“As a local authority we have a responsibility to be delivering affordable housing,” is the mantra of Alison Butler, the deputy leader, a form of words which neatly avoids stating whether that is what the Labour council is actually doing.
Of Brick by Brick, she said, “Because the company is independent they would have some choice about who they would sell the homes to in the first instance.” Which equally can be interpreted as meaning that Brick by Brick can sell its council-funded properties built on council land to the highest bidder if its “independent” board of directors sees fit.
Brick by Brick has been spun off as a private company by the council to avoid the homes it builds being automatically subject to the Tory Government’s Right to Buy policy, which sees public property transferred into private hands at massive discounts.
The flagship Tory policy under Thatcher, Right to Buy has denuded local authorities across the country of their social housing stock and, more than 30 years on, is increasingly being seen as one of the contributory causes of the over-heated housing market in London, by creating additional demand where social housing used to provide.
As a consequence of Right to Buy, many council properties, once sold to their occupiers, are re-sold on the open market at vast profit, while doing nothing for the public finances which helped to provide them, and placing the homes permanently out of affordable reach for local people.
The other fear over Brick by Brick is that it is some kind of “Son of CCURV”. CCURV was the secretive £450 million property adventure, carried out with our money, conducted under the previous Tory administration at Croydon Council, an earlier attempt by the local authoritiy to rub shoulders with the property big boys, but which flopped and landed the residents of Croydon with significant debts. The financial details of the CCURV debacle have never been properly revealed, neither by the Conservatives nor by Labour since they took office.
According to Lacey, “Part of the thinking behind [Brick by Brick] is the council can compete on an equal commercial footing to private developers.” Yes: Lacey seriously thinks that with him in charge of Brick by Brick, it will be able to take on the property speculators…
“The company actually allows us to behave like any other private developer would but importantly it allows the council to benefit much more than it traditionally would in terms of its dealings with private developers.” Ah, bless.
“Equally it means that any profit that the company makes comes 100 per cent back to the council.” Lacey failed to mention what would happen if Brick by Brick makes losses. But you can guess.
The serious disadvantage of Brick by Brick’s private status is that, despite having the benefit of vast financial resources from the local council, it is entirely unaccountable to the people of Croydon. There’s no FoI provision available on the private firm, and the company has been established without a single elected representative of local residents on its board, neither from the ruling Labour group nor from the opposition Tories. Brick by Brick does, however, have one director with extensive experience of working with Qatari developers in their acquisition of large tracts of London.
This opacity with millions of pounds of public property and funds is happening in a borough in which the Labour leader, Tony Newman, promised it would have the most “open and transparent” council ever.
“This is happening increasingly often, it’s anti-democratic, and it is a something we need to keep close watch on,” a local Tory councillor told Inside Croydon. “It’s the local authority equivalent of off-shoring. It’s similar to what’s happening with the South London Waste Partnership – there’s no opposition councillors, no real scrutiny, yet they’re handling millions of pounds of public money.”
This all makes Brick by Brick’s failure to file even its first annual return more worrying, or – more likely – just the latest sign of the incompetence that prevails among some of the senior execs who occupy Fisher’s Folly, the council’s over-expensive £140 million head offices (see CCURV, above).
Brick by Brick’s first annual return was supposed to cover the 12 months to May 6 this year – hardly a particularly difficult accounting proposition, since there had been little business activity in that time. This annual return was due to be lodged with Companies House by June 3.
Six weeks later: zilch.
According to Companies House guidance, “Failure to file confirmation statements, annual returns or accounts is a criminal offence which can result in directors being fined personally in the criminal courts.” Fines of up to £5,000 for each document not filed can be raised against individual directors, and the company can even be removed from the register.
For the sake of the Council Tax-payers of Croydon, Negrini, Lacey and Brick by Brick had better be more accomplished when it comes to delivering new homes on time.
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