CROYDON IN CRISIS: There’s mounting concern over possible poor value for tax-payers in the ‘sweetheart’ deal arranged with Manchester developers.
By STEVEN DOWNES
Brick by Brick proved good at producing child-like scribbles, much less good at building homes
Growing suspicions surrounding the too-good-to-be-true deal over the sale of loss-making house-builders Brick by Brick has seen the government send in a specialist agency to assess whether the council will extract real value for public money.
Homes England has been brought in to run the rule over a bid from Urban Splash for the council-owned business.
Croydon’s bankrupt council has been rushing to dispose of several property assets in order to help balance its books and pay for its few remaining services. But there’s huge doubt that the cash-strapped local authority will extract best value from all of its disposals.
Yesterday, Inside Croydon reported on the sale of College Green, next to the Fairfield Halls, where bids of just £20million have been invited for a site with planning permission for more than 400 flats; once those homes are developed, such a site could be expected to generate more than £140million in sales.
And there’s real fears that the tax-payers of Croydon could take a hit of at least £100million over the hurried sale of Brick by Brick, after a series of “sweeteners” have been applied to the failed business to make it a more attractive proposotion for potential buyers. These include transferring nearly £70million in overspend off BxB’s balance sheet, buying up some of its stock of just-completed flats, and a second £10million bail-out loan in the space of a few months.
Croydon Council set up Brick by Brick in 2015 and in the subsequent five years lent the company more than £200million. Not a penny in interest, loan repayments or profits were ever paid to the council by Brick by Brick, which was cited as a principal reason for the council’s financial crash last year.
Inside Croydon revealed last month that the council had granted preferential bidder status to Manchester-based Urban Splash in an effort to push through a sale as quickly as possible.
But the government-appointed improvement panel, in its latest report, last week raised a red flag over the proposed Urban Splash deal, with Whitehall inspector Tony McArdle questioning whether a proper “assessment of the relative value of the offer” was even possible if alternative bids had been rejected by the council so readily.
McArdle suggested that Homes England should be brought in the check Croydon Council’s homework. Homes England is an agency of the Ministry of Housing, Communities and Local Government. The agency has been closely involved in a number of Urban Splash’s own housing developments.
The Urban Splash deal has been brokered by Chris Buss, the former senior Wandsworth council official who is now Croydon’s interim finance chief.
Chris Buss: pushing the Urban Splash deal
The decision over whether to sell to Urban Splash is expected to be put before one of two council cabinet meetings next month – where debate is very tightly controlled, with few opportunities for opposition councillors or Labour back-benchers to question or scrutinise the deal.
Brick by Brick claims to have built 333 homes since 2015. It was meant to be delivering more than 500 homes per year, with half of those supposedly “affordable” housing, the others going for private sales. All its unfinished development schemes and any sites already transferred from the council would be expected to be included in the sale to Urban Splash.
According to specialist magazine Building Design, a spokesperson for the council has said: “We remain in discussions with a potential buyer for Brick by Brick, who have submitted a revised offer that we are currently considering.” The original 28-day exclusivity period for Urban Splash, according to McArdle’s report, began in February this year – four months ago.
“Getting the best possible value for local taxpayers is central to any potential sale, and Homes England has advised us as part of this process.
“No final decision has yet been made on the future of Brick By Brick, but an update paper is expected to be discussed by councillors at either of cabinet’s two meetings in July.”
Read more: Council set to take £100m hit as it winds down Brick by Brick
Read more: Brick by Brick has paid nothing to council
Read more: ‘An accountant could have foreseen this more than a year ago’
Read more: Conflicts of interest, incomplete contracts, unlawful payments – how the Fairfield Halls refurbishment cost Croydon £50m-plus
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“Out of a succession of frying pans, and into the fire” ?!
The (first-class) passengers on the Government/Local government gravy train, which keeps visiting East Croydon Station, seem to be competing to try and make more and more money out of Croydon.
Brick by Brick was bad enough, but circling local government trouble-shooters (the vultures) were picking over the Croydon carcass, and now the bigger (corrupt) vultures from central government are trying to chase off the (corrupt) local government predators, so they can sell what is left of Croydon to THEIR OWN friends instead.
Heads – the gravy train fat cats win; Tails – Croydon loses ?!
Council says:
“We remain in discussions with a potential buyer for Brick by Brick, who have submitted a revised offer that we are currently considering.”
What it really means is:
“We thought we were getting a poor deal but Urban Splash has seen how desperate we are so they have dropped their price We have excluded other bidders, and so now we are even deeper in the financial shit and have no idea how to get out of it.”
The more options considered the better. Where is the wisdom in panic selling to the first person to make an offer, giving them exclusive first dibs screams dodgy. Croydon seems to be a money pit with all the money disappearing into people’s pockets with little to show for the taxpayers forking out the dosh.
Is there something I am not understanding? There is still a buoyant market for flats in London.
Surely the site just need marketing and the flats sold off. Are the asking prices too high?
If so, reduce them a bit.
If they are sold to developers who will rent them out–then maybe sell them in 10 years– rather than sold now to individuals,would it not be possible for the council to have some profit share in the future sales?