CROYDON IN CRISIS: When in a hole, stop digging? Not Croydon’s bankrupt council, which is ‘damned if it does, damned if it doesn’t’ according to a senior Tory councillor over plans to throw more cash at its loss-making house-builder. KEN LEE reports
Monday night’s council meeting is expected to recommend more money for Brick by Brick
Good money after bad… The “London Borough of Croydon is likely to lend more money to its cash-strapped housing company Brick by Brick,” according to a report on the website of CIPFA, the association of civic accountancy professionals.
The council’s loss-making house-builder is nearly six months late in publishing its annual accounts for 2019-2020, and senior sources working at Fisher’s Folly suggest that this continued delay may be because auditors cannot sign off on the accounts to say that Brick by Brick is a “going concern”, unless there is some kind of financial guarantee in writing from the council.
Such letters of assurance have been made repeatedly for Brick by Brick since it was formed in 2015, before the council was forced to declare itself broke, issuing a Section 114 notice in November.
Then, the council had a £66million hole in its budget for this year, of which £36million was money “at risk” of not being paid by Brick by Brick, according to the council’s senior finance officer, Lisa Taylor.
Now, it appears, the only way the council can retrieve any value out of the badly mismanaged housing company is to provide it with enough money to complete existing builds and flog-off some of its other sites as it is wound-down over the next couple of years.
Croydon has already lent £214million to Brick by Brick, which has failed to make a single loan repayment, repay any interest or pay over any profits from its ventures. According to auditors Grant Thornton, the council is owed around £110million. Since 2015, Brick by Brick has managed to deliver just three purpose-built council flats.
A report going to Monday’s cabinet meeting is recommending lending more money to the company, or otherwise risk never recovering any of the outstanding cash.
The council report to cabinet says, “Further borrowing is likely to be required and this will be in line with value for money criteria and will be detailed and approved in future cabinet reports.”
PublicFinance.co.uk quotes opposition Conservative councillor Jason Cummings as saying, “What the council is trying to do is turn around the performance of Brick by Brick in the short-term.
Jason Cummings: short-term fix
“If they cease to lend to it, then they are at risk of losing all of the money that they have put into it, so it is a kind of it is a ‘damned if you do, damned if you don’t’ situation.”
Croydon Tories’ shadow cabinet member for finance said, “They are planning to put more money in, but they have given us no details of what that looks like, and frankly, the fact that it is not in this paper suggests they do not want to.
“It is an indication of just how bad the internal reporting and controls are within Brick by Brick that they cannot give us any figure on the short-term borrowing requirements for the company.”
Read more: Brick by Brick has paid nothing to council
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Read more: Council staff ‘are angry, upset and want answers’
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Are Croydon Council for real!!!!
So other services are put on stop for MORE money to be thrown away at Brick by stupid brick!!!
How about they try and get another operative to take over the existing and demanding the late reports from brick by brick and how they propose to repay.
Honestly I think some peoples heads are truly up their arse.
One might consider such a proposal as akin to a gambler chasing their losses.
In these uncertain times, particularly in the housing market, the decision-makers must exhibit more competence than they have to date.
Perhaps the L.G.A can appoint lead officers as soon as possible to every single department of the Council known to be failing from the top down. It is in the public interest that this Council and all its Leaders, Councillors and Administrative decision makers are totally transparent in everything they do and the why, no matter how unpalatable to the voters this may be. There should also be oversight of all the companies supplying services and this reported publicly weekly,There is a collapse in public confidence in local democracy and Council Administration along with the supplied and contracted services and all associated with this fiasco and systemic failure.
This disgraceful mess hasn’t happened overnight. Where was the oversight and auditing that allowed this to happen? Brick by Brick is an unviable mess and needs a competent receiver appointed to establish how to provide the best way out for the ultimate owner: the tax payer.
Beyond that a full, independent investigation must be held and those responsible brought to book.
Why it’s ridiculous that the council would even consider this.
Bankrupt throwing more money in to the incinerator. Instead of keeping their promises to improve parks and keep our librarys
Council Tax will be increased by the highest permissible amount in Croydon for the next 20 years to pay for the financial disaster Tony Newman and Brick x Brick has caused (aided by Jo Negreedy and Simon Hall).
1. The Council should therefore tell residents what the short, medium and long term plans are for Brick x Brick
2. The Council should replace the senior management at Brick x Brick.
Anything less than this is not acceptable and if this carries on, politicians will be further held to account – more so now as the facts are out there.
You’re no Nostradamus, Seb, with predictions like that.
Under governments that underfund local government, as a means of outsourcing blame, we have had maximum Council Tax increases every year for the past decade – with the exception of one year in a Tory administration and under Labour, just before an election.
Council Tax increases are an annual tradition now.
Oh, and all the facts ain’t out there. Yet.
Adding money here isn’t the issue, it happens all the time in the private sector if the financials stack up. Which I hope for the council’s, the government’s and more so the residents sake is the right decision. If professional advice in this instance (like with the council’s property acquisitions and work with BxB thus far) hasn’t been taken then more people should be going to jail.
If a mess up like this happened in the private sector, those at BxB who borrowed the money would be bankrupt. Add in that they have misappropriated public funds and there seems to be no consequence, I’m in absolute disbelief.