CROYDON IN CRISIS: The scandals at Fisher’s Folly surrounding questionable property transactions keep emerging.
EXCLUSIVE By STEVEN DOWNES
The council’s £1.5billion pension fund has been the subject of two complaints to the statutory watchdog, the Pensions Regulator, Inside Croydon has discovered.
Both complaints centre on a 40-year property deal involving 346 council-owned homes, some of which were supposed to be provided by the council’s failed house-builders, Brick by Brick.
In the end, such were the delays in Brick by Brick’s delivery of finished homes, what have been described as “street properties” were acquired instead.
The arrangement was made originally to reduce the council’s annual employer contributions into the fund.
It was first proposed in 2018, when Simon Hall was still the council cabinet member for finance and Richard Simpson was the executive in charge of finances.
Simpson quit his Croydon Council job at the end of 2018, while Hall resigned as a councillor earlier this year after having his membership of the Labour Party suspended following the financial collapse of the authority.
One of the complaints about the deal was made to the Pension Regulator by a member of the council’s own pensions committee, and resulted in the chair of the pensions board, Mike Ellsmore, being interviewed by regulator staff with a solicitor present.
Peter Howard is a former CID detective in the Metropolitan Police and a member of the Unison trades union who sits on the committee as a pensioners’ representative. He told Inside Croydon that he had lodged the complaint.
“I’ve always been against this deal and the council’s pension fund to take £100million of property now but only receiving the money in 40 years’ time.
“I asked that this scheme be cancelled as a bad deal for pensioners in the future, and now,” Howard said.
Howard’s concerns include the possible state of disrepair of the properties in 40 years’ time, when they are due to revert to the pension fund. His questioning at a recent pensions committee led to Chris Buss, the council’s interim finance director, revealing that the homes acquired for the pension fund are “street properties”.
Or what Howard describes more colourfully: “They are all flats above chip shops, or knocking shops.”
Pelling, a former merchant banker, described the deal as “a downside protected geared play on the property market”, which while meaningless gibberish to most people, drew the agreement of Buss.
Croydon’s pension fund has outperformed most other council funds since 2016, moving from £860million to more than £1.5billion. But it is still underfunded and therefore receives protection from downside moves in value by the council.
Pelling told committee members that he had also filed a complaint to the regulator, in his case because of the failure to complete the deal that was agreed by full council in December 2018.
Inside Croydon understands that the Pension Regulator has taken no action in respect of the complaints, but the matter remains unresolved as Buss now wants to cancel the deal altogether.
Hall and Simpson’s plan involved providing properties for Croydon Affordable Homes, which was set up by the council with the aim of renting out at least 340 homes at 65 per cent of the usual private rent.
“Borrowing restrictions mean the council cannot fund these developments through its Housing Revenue Account, so the creation of CAH allows the same outcome of delivering affordable rented properties across the borough,” according to the council when Croydon Affordable Homes was established.
The majority of the CAH homes – 244 out of 340 – were supposed to be “delivered through agreements with private developers between 2018 and 2020 that will be part-funded by £30million-worth of Right To Buy house sales”.
Those “private developers” were Brick by Brick, and Hub, the company handed the Taberner House site and a large chunk of Queen’s Gardens in the town centre.
But when both Brick by Brick’s and the Hub schemes hit delays, the council had to look elsewhere for properties for its CAH scheme.
Buss, who took over the council’s finances in the midst of Croydon’s covid-induced cash crisis, clearly sees the properties as a possible source of extra money for the Town Hall’s coffers.
“One of the reasons for the delay in executing this proposal has been the difficulty in valuing the proposal and projecting that valuation into a future net value,” said a report from one of Buss’s officials to May’s Pensions Committee.
“It is unusual for a fund of this size to manage a large residential property portfolio in-house and maintaining these assets as investments rather than as social housing is outside the scope of current housing teams,” the report said.
- You can support Inside Croydon’s news-breaking independent local journalism. Sign up today as a subscriber. Click here
- If you have a news story about life in or around Croydon, or want to publicise your residents’ association or business, or if you have a local event to promote, please email us with full details at firstname.lastname@example.org
- Inside Croydon is a member of the Independent Community News Network
- Inside Croydon works together with the Bureau of Investigative Journalism and BBC London News
- ROTTEN BOROUGH AWARDS: Croydon was named the country’s rottenest borough in 2020 in the annual round-up of civic cock-ups in Private Eye magazine – the fourth successive year that Inside Croydon has been the source for such award-winning nominations
- Inside Croydon: 3million page views in 2020. Seen by 1.4million unique visitors