A deal to off-load the loss-making housing firm at a massive loss to tax-payers has been dropped. By STEVEN DOWNES
The council’s interim head of finance, Chris Buss, has spent the past six months or more trying to negotiate a sweetheart deal with a single preferential bidder for Brick by Brick.
But suspicions that the deal was just too-good-to-be-true for Manchester-based developers Urban Splash, with Croydon tax-payers looking to shoulder a further £100million loss on the transaction, have proved to be well-founded.
Last month, a report from the government-appointed commissioner, Tony McArdle, submitted to Secretary of State Robert Jenrick, flagged up serious questions about whether the sale of Brick by Brick represented “best value”, since Buss and the council had rebuffed all other offers for some or part of the troubled housing developer.
Tonight, the council has been forced to admit defeat on its bargain-basement fire sale plan.
In a statement issued from the propaganda bunker at Fisher’s Folly just after 5pm (probably in the hope that as few people might notice as possible), they said, “The council will continue to own Brick by Brick which will, with additional external management and technical support, develop 23 of the 29 sites in its pipeline, with all bar one of them due to be completed this financial year…
“The remaining six sites, which are not yet under formal contract for development, will be marketed for sale with the benefit of existing planning permissions being in place.”
Given how the £200million-plus of loans from the Town Hall to Brick by Brick are now widely accepted as one of the main causes of the council’s financial collapse, the decision announced today, ahead of a scrutiny committee meeting next week, is unlikely to end the controversies swirling around the beleaguered development company.
In efforts to make the deal as attractive as possible for Urban Splash, Buss has recently been given council approval for a £10million loan to help BxB’s cashflow – the second such loan this year – and for shifting nearly £70million off the builder’s balance sheet and in to council debt. He has also won agreement for the council to buy a tranche of flats from Brick by Brick, in a “circular arrangement” which in the past raised the eyebrows of the council’s auditors
“The development of the 23 sites will be closely overseen by the council,” said the council which had failed to closely oversee Brick by Brick’s works over the last six years.
They promise “enhanced governance systems”, whatever they might be. And “regular reporting to the council’s cabinet and scrutiny committees”, which will make a welcome change: council officials have deliberately withheld at least 18 key reports about Brick by Brick’s performance and operations that have been repeatedly requested by elected councillors seeking to scrutinise the loss-making operation.
The council’s press release describes potential purchasers Urban Splash as “a credible bidder”, which might be open to some debate, given that company’s previous track record and recent modest commercial performance.
But “with due diligence support from external independent financial and property specialists… the council is recommending not to proceed with the sale but continue to develop these sites in order to get the best deal for residents”. Which would be another first.
This U-turn will leave a £100million hole in the council’s budgets for the next two years or so, unless or until the Town Hall is able to realise the value from the 23 remaining schemes – something which the incompetents in charge at Brick by Brick have never managed to do since the company was set up in 2015.
None of the very well-paid council officials who carved up the oh-so-cosy sale to Urban Splash provided any commentary on this sudden change of heart tonight, but they managed to put council leader Hamida Ali forward to face the likely flak.
“Our priority over the future of Brick By Brick has always been to find a solution that both secures the best possible return for the council’s investment on behalf of our taxpayers and provides much-needed genuinely affordable homes for local people,” the councillor’s dictated script said.
“We have thoroughly explored our options to find a way forward on Brick By Brick that represents the best possible value for our taxpayers, and I want to thank all our expert external advisers for their important contributions on this.”
“Now our focus is to make sure that the Brick By Brick homes under construction are completed, with all the support and guidance it needs to do that.”
Read more: Council to pick up £69.2m costs of failed Fairfield Halls refurb
Read more: Conflicts of interest, incomplete contracts, unlawful payments – how the Fairfield Halls refurbishment cost Croydon £50m-plus
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Read more: ‘An accountant could have foreseen this more than a year ago’
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