A deal to off-load the loss-making housing firm at a massive loss to tax-payers has been dropped. By STEVEN DOWNES
Croydon Council has been forced to abandon plans to flog-off loss-making builders Brick by Brick.
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.
Worried: Chris Buss
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
Change of mind: the Flyover Towers and 22 other BxB projects will continue to be council-funded schemes
“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.
Useless: Brick by Brick CEO Colm Lacey
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
Read more: Making a Splash: big bailouts behind Brick by Brick’s buyers
Read more: ‘An accountant could have foreseen this more than a year ago’
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Amazing that so many of the fuckwits who got us into this mess are still being paid by us; Alison Butler, Paul Scott; Colm Lacey. It’s almost as if they did nothing wrong and all those bad things never happened.
If Shakespeare were still amongst us we could suggest a new play to him based on the Council’s relatively recent history. He could call it “A Comedy of Errors” which describes it, and the latest BxB fiasco well. Its not really a comedy, its very sad. A community has been messed up and millions of our money chucked away almost heedlessly and certainly negligently. Now, what would the Bard make of that: “All’s Terrible that ends Terribly” has a certain pedestrian but accurate ring to it.
i suspect that the desire achieve a very rapid sale of BxB at any cost was very politically driven. The Council would much prefer to get BxB off its books and out of the media spotlight well before the DEMOC referendum on Oct 7th (or the local elections next May). The keeping of BxB hanging on their necks along with the periodic media features is very unlikely to support their campaigning to maintain the status quo.
That assumes that the elected councillors are capable of “driving” anything. As has been demonstrated on multiple occasions, that is really not the case at all. They are in power, but not in control.
And we have to wait until September for the release of Grant Thornton’s potentially damaging report on the conduct of the Fairfield Halls refurbishment. This ain’t going away any time soon.
Yes I agree.
But I would not bet against the Grant Thornton report on the Fairfield Halls refurb being delayed a few extra weeks to make the publication very soon AFTER Oct 7th. Or the Council might even cancel the DEMOC referendum under some pseudo babble reason.
Surely this could not happen in democracy? Let’s see…..
Baseless conspiracy theories only got Donald Trump and his gammon mates so far, Geoff, and they won’t serve you too well, either.
Cock-up theory is proved to be correct far more often.
Grant Thornton are currently working on the audit of two years of the council’s accounts: 2019-2020 (yes, we’re still waiting for those to be signed off) while last year’s (2020-2021) have not even been put out for public scrutiny yet. Trust you’ll be a willing volunteer when iC seeks to carry out its People’s Audit.
We’ve had reports from some readers that they’ve had sight of the Fairfield Halls investigation report (the first draft has been with the council since April), but when asked to produce this damning evidence, we only ever hear back stunned silence…
So far, £10,000 has been spent on an external QC to pore over the Fairfield report, which sources assure us will be released once other audit commitments allow, probably in September.
There is one other potentially damaging report, by Richard Penn of the LGA, into possible wrong-doing at the council. This has been withheld for six months by Katherine Kerswell, the council CEO. Most councillors have not had access to it.
To try to suggest that elected councillors, our mostly third- and fourth-rate politicians, are in some manner keeping the Fairfield Halls review back, stopping Grant Thornton (the authors of the Report In The Public Interest, remember) from releasing their work is far-fetched in the extreme.
Croydon’s Town Hall Labour group may be in power, but they are not in control.
IC, do you know why it is this report on the botched refurbishment of Fairfield Halls won’t be released until September? I understand the report has been finished for quite some time?
Volume of work.