BARRATT HOLMES, our housing correspondent, on a set of figures which Jo Negrini would probably prefer you did not know about
Brick by Brick, the council-owned housing developer, made a loss of £1.1million in its first full year of trading. And with not a single brick being laid.
The figures have been revealed in official accounts and documents filed at Companies House.
Brick by Brick is the brainchild of the council’s chief exec, Jo Negrini. Croydon Council has “off-shored” its home-building efforts, to set its new houses outside the reach of (current) Tory right-to-buy rules. It is using £250million-worth of public property – council-owned land and buildings – to build 1,000 homes.
Fewer that 450 of those homes will be “affordable”. None will be what is usually understood as council houses, or social housing.
Losses are to be expected in the early stages of a development business of this kind. Though whether a development business of this kind is what a Labour-run local authority ought to be involved with, and whether it will ever deliver the volume and the sort of social housing that is really needed in the borough, remains in doubt.
Sources close to Alison Butler, the Labour council’s cabinet member responsible for housing, suggest that the amount of “genuinely affordable” homes to be made available for rent, at 65 per cent of local market prices, could be down to as few as 300 of the 1,000 properties being built. The rest would be flogged on the open market.
Many of Brick by Brick’s developments proposed in the past nine months have proved deeply unpopular with existing residents in the affected neighbourhoods, who are seeing their green spaces, garages and playgrounds being earmarked as sites for the council’s house-building programme.
“It’s a hard sell to residents of Heathfield Gardens and Auckland Rise and others,” said one senior Labour figure when shown the Brick by Brick accounts. “They will see massive infilling of their small estates and loss of open space, and the new units there will all be sold off.
“They’re being asked to make sacrifices when the results of the development won’t directly help any of Croydon’s people in greatest housing need.”
Outside the borrowing figures – with the money coming from Croydon Council, naturally – the accounts reveal that of the four directors, the two who are not council employees, Skanska director Jayne McGivern and Jeremy Titchen, a real estate manager who has worked closely with the Qataris, were both handsomely rewarded, with £24,000 and £13,500 respectively. Nowhere in the annual report does it state what services they performed for these fees. Though they must be doing a whole day per month for such largesse.
For carrying out a routine audit of the accounts, Grant Thornton made an easy £30,000.
Perhaps of greatest concern at this early stage is a note in the directors’ report, which explains the losses.
“The Company made a tax loss of £1,088,108 in the year 2016… At the balance sheet date, the Directors decided they were unable to completely demonstrate there would be sufficient future taxable profits against which current taxable losses could be set against. As a result, it was decided not to recognise a deferred tax asset in respect of tax losses.”
Of course, any profits made by Brick by Brick will be paid over to its sole shareholder, Croydon Council. If they ever make any profit.
But the directors’ apparent lack of confidence to meet their tax liabilities hardly inspires confidence. So, according to the accounts, the council has provided a letter to state that it will provide funding to ensure Brick by Brick can continue as a going concern, at least until September 2019.
Which is good of them.
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