Questions have been asked in the House of Commons about the legality of Croydon Council’s land sales to Brick by Brick, and the answers make for uncomfortable reading for the Town Hall leadership, as KEN LEE reports
Croydon Council may have acted unlawfully by selling off public-owned property at vast discounts to Brick by Brick, its in-house building company.
That’s according to a written answer given to questions raised in the House of Commons about the council’s multi-million-pound secret subsidy on land sales to Brick by Brick.
Even the site with the biggest price tag, the Lion Green Road car park in Coulsdon, which the council sold to Brick by Brick for £1.5million, is reckoned to have gone for well under the full commercial market value. Sold by Croydon Council after having been granted planning permission for 157 homes by Croydon Council, the large site is reckoned to be worth at least £5million, perhaps as much as £7million.
The property sales, with Brick by Brick using millions of pounds of funding borrowed from Croydon Council to buy land owned by Croydon Council, went through between March 2018 and January this year.
According to the junior minister for housing, Kit Malthouse, in a written answer to Croydon South MP Chris Philp, “Public bodies should generally dispose of surplus land at the best possible price reasonably obtainable.”
And Malthouse added, “Secretary of State consent is required if a local authority wishes to dispose of housing land… at less than best value, including disposal to a local authority housing company.”
That was on May 7.
Philp immediately wrote to Jo “We’re Not Stupid” Negrini, the council’s £220,000 per year chief executive, to enquire when her council had indeed obtained Secretary of State approval for the cut-price land sales.
According to Philp’s Westminster office, nearly three weeks later, and Negrini has yet to provide even a straight forward “yes” or “no” response to his enquiry.
Brick by Brick was established in 2015, the brainchild of Negrini and her exec director for development, Colm Lacey, a council employee since transferred to BxB’s staff as its CEO.
Listen to how council leader Tony Newman has to be asked FIVE times by BBC London presenter Eddie Nestor before he would admit his Labour-run council is not building any council homes:
Croydon has borrowed at least £340million of public cash at a low rate of interest from the Public Works Loan Board, which it has loaned on to Brick by Brick on favourable terms to kick-start its business – building 1,000 new homes. More than half of these are going straight on to the private market, with some houses being sold for £600,000.
Croydon has built no new council homes since 2014. Brick by Brick’s business model relies on selling homes on the private market, in theory to pay for the building of “affordable” homes. The reality is proving somewhat different, with 71 per cent of BxB units that are due to be completed in 2019 going on the private market (the council’s target is supposed to be 50 per cent of all Brick by Brick homes are to be “affordable”).
And of the 38 build schemes on Brick by Brick’s books, every one of them has been delivered late or is behind schedule, causing further cashflow difficulties for Lacey and Negrini, even with the multi-million-pound secret subsidies on the council land sales.
Section 123(2) of the Local Government Act 1972 is pretty clear that “a council shall not dispose of land… for a consideration less than the best that can reasonably be obtained”.
Yet the detail of Malthouse’s written response, as reported in Hansard, ought to cause even more consternation within Fisher’s Folly and the Town Hall next door.
Council leaders, rather than council executives, are the ones who normally have to carry the can for acting recklessly with public property and failing to abide by laws intended to protect public property from misuse.
The most notorious case in recent times is that of Dame Shirley Porter, the one-time leader of Westminster council, who faced £26million-worth of surcharges in the 1980s when she gerrymandered council homes to boost her party political prospects.
Porter was an heiress to a fortune from Tesco. Newman, Croydon’s £55,000 per year council leader and sometime organ player in a rock band, could face a very long time busking on George Street if he ever has to make good the difference between the council’s land sale prices and their true market value.
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