Kakistocracy: Butler forced into £6m bail-out of Brick by Brick

On Monday night in the Town Hall chamber, while keeping a straight face (perhaps she even believes her own bullshit?), Alison Butler actually tried to claim that Brick by Brick, the council-owned in-house house-builder “is delivering homes and is delivering profits to the council, and continues to be on target”.

Yet just the previous week, Butler had got the Labour-run council’s cabinet to rubber-stamp a £6million bail-out for Brick by Brick, the housing company which had failed to get itself registered as a recognised provider of shared ownership homes.

At Longheath Gardens, round behind South Norwood Country Park, 24 Brick by Brick flats intended to be sold as shared ownership homes are nearing completion. The company’s managing director, the bungling Colm Lacey, and Butler were only too aware that not being able to move these properties off the company’s books promptly is liable to create issues, which according to its own accounts has never made any profits and which has already received £260million in public cash in loans from the council.

How Brick by Brick’s building sites come so close to existing homes in Longheath Gardens

Inside Croydon revealed earlier this month that prospective home-buyers for BxB flats in Flora Court in Thornton Heath had been told that they would not be able to go ahead with the sales because mortgage companies and other lenders require the vendor – Brick by Brick – to be registered as a provider of shared ownership homes.

Which is why Croydon Council has stepped in with more public money to buy up 24 flats in Longheath Gardens. Instead of being released on to the housing market as costly shared ownership homes, they will now be rented out at social rents. Which, at least, is an improvement of sorts.

But it is being done at considerable cost to the public, in the latest example of Croydon Council as a kakistocracy.

Are you sitting comfortably? This is how it works…

Croydon Council sets up a house-building company, Brick by Brick, in 2015. It borrows £260million from the Treasury at very low rates of interest. It lends that money on to Brick by Brick, which uses some of it to buy public land and property at very cheap prices from… Croydon Council.

Brick by Brick builds on these sites. Some of the buildings (though not very many), Brick by Brick sells on the private housing market. Some of the buildings it cannot sell. So along comes Croydon Council with another £6million of public money to buy up the homes, which have been built on public property using public money.

Make sense?

But that’s exactly what Butler has done with Brick by Brick’s Longheath Gardens scheme – a project which has antagonised existing residents, with the builders’ slow progress (the development has over-run by around nine months) and the imposition of having blocks of flats built in the spaces between their existing homes.

One of the incongruous blocks of flats imposed on the residents of Longheath Gardens

According to a statement issued by the council’s own propaganda department, the 21 one-bedroom and three two-bedroom homes “will go to borough residents in priority housing need, who are expected to move in by the end of March”.

The council’s mantra remains, “Brick By Brick was set up to build over 2,000 good-quality homes on council land, including around half as affordable homes, with profits from private sales going back into council services.”

In fact, when the whole scheme was introduced as Croydon’s solution to the housing crisis, there was a solemn undertaking from Butler, Lacey – then a mere council employee – and council chief exec Jo Negrini that 50 per cent of the BxB homes would be “affordable”. In 2019, according to Brick by Brick’s own figures, only 39 per cent of the homes its was due to complete would have been “affordable”. The vast majority, 71 per cent, were going for private sale, with some houses on the market for £600,000.

Over time, that might average out more towards affordable homes, though Lacey himself has admitted that under him, Brick by Brick will not meet its affordable targets.

In five years, Brick by Brick has so far delivered just three one-bed flats for social rent – what used to be called council flats.

As it has worked out, the majority of what Brick by Brick wanted to pass-off as “affordable” were to be shared ownership homes, the very kind of home for which Brick by Brick is not registered as an approved provider. According to Butler at Monday’s council meeting, “they weren’t required to register for anything”. According to Brick by Brick’s emails to prospective buyers, they are required to register, and it could be 12 months before Brick by Brick’s registration as an approved provider comes through.

The flats in Longheath Gardens are supposed to be ready by the end of March

In the meantime, Butler and the council’s propaganda department have decided to play around with some figures.

According to their creative accountancy, because the Mayor of London – that is, London’s Council Tax-payers – is being mugged for £100,000 per flat in Longheath Gardens, Croydon is therefore getting the properties for “only” £3.6million, instead of £6million. And we’re all supposed to be grateful.

The council press release chirped: “Using ring-fenced money from its Housing Revenue Account, the council’s investment…”, yep, they are calling it an investment, “… in these Longheath Gardens properties will be £3.6million instead of the original total of £6million. This is because each home will cost £150,000 rather than £250,000 as a result of a £100,000 grant per property from the Mayor of London and the Greater London Authority.”

And the people behind this nonsense have been placed in charge of running our borough.

The figures ought to prompt some investigation of Brick by Brick’s build costs, too: £250,000 each for 24 flats might seem less than competitive, especially since the developers, Brick by Brick, got the land at such a huge discount.

Alison Butler: she thinks Brick by Brick in ‘on target’

“This decision is important because it ensures more local people on our waiting list will get a new council home of their own,” Butler was quoted as saying.

“These top-quality 24 homes are part of a wider Brick By Brick programme that is boosting much-needed supply of housing for Croydon residents, and I look forward to even more completions soon.”

Under Butler, Croydon Council’s housing waiting list has risen to 5,000 households. Once they are completed, Longheath Gardens will bring the total number of council homes built under Croydon’s Labour council since 2014 to 27.

About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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3 Responses to Kakistocracy: Butler forced into £6m bail-out of Brick by Brick

  1. I’m surprised they can see anything in the town hall with all the smoke and mirrors.

  2. derekthrower says:

    This is where an effective opposition would have had a field day. The incompetent development and administration of the scheme has seen the Council have to take retrospective action to keep Brick by Brick solvent and acquire some form of ownership of the properties. They could have scrutinised who will be the actual landlord? It appears this development will be Council owned with the tenants on secure tenancies and entitled to the right to buy. Completely against the original mission statement of Brick by Brick.
    The opposition could have anticipated this bungling by asking the Council to give undertakings to prevent such a retrospective manoeuvre. This would probably have been completely denied, but at least it would have demonstrated they were on top of what is going on here. In their naked partisan political appeal to the Secretary of State about the use of Housing Revenue Account Funds for the use of quasi-public building they could have asked for clarification about the legality of switching tenures at short notice with such funds too and without any Ministerial permission regarding Loan Board Approved Funds, but little is possible with them other than simplistic generalisations.

    An assumption should be made that the Council have asked for some legal opinion to enable them to do all this. This may appear to be an assumption without foundation with the seemingly never ending debacle that is Brick by Brick.

  3. Ebenezer Crutton says:

    I know someone who, although not related to her, is so disgusted he is considering changing his surname from ‘Butler’. I have tried to tell him that ‘Corbyn’ isn’t a great choice either…

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