CROYDON IN CRISIS: It looks like Tory Mayor Jason Perry and the council execs who now run the failed housing company have opted to bury bad news. EXCLUSIVE by STEVEN DOWNES
What could possibly be the very final set of annual accounts to be filed by Brick by Brick have been deferred for three months, in a move that council insiders suggest has been carried out to cover-up bad news about the losses incurred by the council-owned housing developer.
Brick by Brick was the housing company which borrowed £200million from the council but never made a penny profit. Brick by Brick’s failure to make scheduled repayments on its loans and interest was a significant factor in Croydon Council’s financial collapse in 2020.
In June this year, Inside Croydon reported exclusively how Croydon Mayor Jason Perry had pushed through one final, multi-million Brick by Brick property deal.
In-the-red Clover Gardens: a deal ‘as bad as anything that was done during the time when Labour’s Tony Newman was running the council’
Five residential blocks built on a council car park in Coulsdon had been sold for £38million, well below market value, in a deal described as “as bad as anything that was done during the time when Labour’s Tony Newman was running the council into the ground”.
The deal was pushed through without any discussion or debate in the Town Hall Chamber, and without being looked at by the council’s scrutiny committee.
What Perry failed to announce at the time was that the council is leasing back three of the blocks for £127.9million over 50 years. “It’s just a re-financing deal, and a bad one at that,” according to a professional financial analyst.
Once all other payments and income is factored in, the sale of Red Clover Gardens – or “In-the-red Clover Gardens” as Coulsdon residents have started calling them – could end up costing the residents of cash-strapped Croydon close to £60million.
It is this detail which will have been confirmed in Brick by Brick’s annual accounts, but which is now being withheld while the council plunges into its latest financial crisis.
Since the council issued its first Section 114 Notice, effectively declaring itself bankrupt, the long process of winding down its failed building firm has been conducted with independent directors, some with direct experience of the building industry, replacing former council staffer Colm Lacey and his board.
At the end of March this year, those independent directors, Duncan Whitfield and Ian O’Donnell, two of the local government finance experts who were brought in to help oversee the council’s coffers in 2020, together with Griff Marshalsay and Andrew Percival stood down from the BxB board, their work seemingly done.
Troubleshooter: Ian O’Donnell discovered 75 serious flaws with the way the council was being run
O’Donnell’s tour of duty in the civic war zone of Croydon Council’s accounts department was longer than most: it was finance consultant O’Donnell who was parachuted into Fisher’s Folly in May 2020 and came up with a list of 75 recommendations for improved governance and financial management – in other words, 75 very worrying flaws in the way the council and its money were being looked after.
Jo Negrini, the council CEO, and council leader Tony Newman and his cabinet member for finance, Simon Hall, had all departed the council soon after O’Donnell’s report was made public.
Nearly five years later, and no recovery action or disciplinary action has ever been taken against the council’s former chief executive or the ex-councillors, nor against Lacey, despite all Mayor Perry’s bluster about bringing those responsible to account.
In February this year, the council cabinet meeting rubber-stamped proposals to wind up Brick by Brick. “It’s time to bring the sorry saga of Brick By Brick to an end,” said Mayor Jason Perry at the Town Hall meeting, as if he was claiming credit for some kind of success.
The independent directors were replaced on the Brick by Brick board by two mid-ranking council employees: David Corcoux, the “director of policy, programmes and performance”, and Stephen Hopkins, who works on “adult placement and brokerage and market management”.
Having council staff on the board of Brick by Brick was one of the red flags raised by external auditors Grant Thornton towards the end of 2020. It was not only that the council officials were inexperienced in running a medium-sized property development company, but there were also significant issues around conflicts of interest.
Corcoux left his job at Croydon Council in September (he now works for Southampton City Council), but he retains considerable influence over the business affairs of hundreds of thousands of Croydon residents. He and Hopkins, in theory at least, are the people who should sign-off on Brick by Brick’s final set of accounts. Unless, of course, someone else is exercising control over the company – in potentially a serious breach of corporate governance.
By the start of this year, the 157 “architect designed” flats at Red Clover Gardens had been standing empty for almost two years, as Brick by Brick struggled to find a buyer who might pay anything close to the valuation for the flats, in a forlorn effort to recover as much as possible of the overpriced cost of building them.
One deal with a housing association collapsed because of the low-ball offer from Notting Hill Genesis.
Eventually, in the spring of this year, a Reigate-based estate agent began marketing some of the Red Clover Gardens flats – some for as much as £2,400 per month.
Mystery has surrounded the bottom line on the disposal of Red Clover Gardens, with the council and Croydon’s usually gobby Mayor unusually quiet on the matter.
This was always suspected as being not a good sign.
Croydon Conservatives published a self-congratulatory website post claiming credit for a less-than-transparent lease-back arrangement with a firm called Regen Capital.
‘Architect-designed’: architecture correspondents in the posh Sunday papers waxed lyrical about Mary Duggan’s designs for Lion Green Road car park in Coulsdon. But the cost of building the flats made them hard to sell
“The council will take on a long lease for the affordable units but will immediately sub-lease them to Mears or one of their registered providers,” according to the Tories.
The tenants “will become Mears tenants with the council not involved in any day-to-day management of the tenancies or the properties”.
Seventy-two of the flats would be Regen’s to rent or sell, according to the Tories.
“When negotiations are complete the final documentation will set out in clear terms the commercial relationships between purchaser, funder and lease-holder,” Jason Cummings, Perry’s finance guru on the council, told one meeting.
No such “final documentation” has ever been made available.
And now, Brick by Brick’s final accounts are being withheld for another three months. This cannot be good news…
Croydon Council is in the middle of its budget-setting work for the financial year 2025-2026. For this financial year, 2024-2025, “every penny counts”, as Jane West, the council’s finance director, told staff earlier this month, with a predicted overspend of around £20million.
For 2025-2026, the council is predicting a gap between income and expenditure of £83million.
Until Monday of this week, Companies House records were showing that Brick by Brick’s latest annual accounts, for the year ending March 31, 2024, were due on December 31. This is the normal publication timetable, nine months after the end of the accounting year.
Unusually quiet: Mayor Jason Perry
The previous set of Brick by Brick accounts, for the year ending March 2023, had reported property sales of £73million, with unused plots of land – previously council-owned – being revalued for potential sale to other developers.
“The current economic climate has raised challenges in selling the remaining units,” the previous board of directors warned then, “as individuals face difficulty in obtaining mortgages and investors evaluate the current and future interest rate and inflationary conditions.
“The board remains in regular contact with its lender/shareholder…”, meaning Croydon Council, “… to ensure alignment on methods to ensure repayments to [Croydon Council] and the orderly winddown of the company’s activities.
“At the date of signing the accounts, the company is in the process of selling off its final development and will sell off undeveloped land, in order to proceed further with the winddown.”
The accounts which would provide final confirmation of how much Red Clover Gardens was sold for have now been delayed until March 31 2025 – after the council’s budget-setting process is complete, and after Mayor Perry will have hiked Croydon’s Council Tax by a further 5%, to another record high.
Hiding the worse-than-predicted losses at Brick by Brick appears to be the last resort of Perry, the Mayor who promised to “fix the fiances”, but under whom the council’s financial position has become dramatically worse.
Read more: Coulsdon flats deal was rushed through as massive tax dodge
Read more: Farewell but no thanks: troubleshooters leave BxB’s board
Read more: Brick by Brick posts £7.6m loss in latest annual trading report
Read more: ‘An accountant could have foreseen this more than a year ago’
*UPDATED: This article was amended on Dec 29 to clarify Brick by Brick director David Corcoux’s current employment status.
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ROTTEN BOROUGH AWARDS: In January 2024, Croydon was named among the country’s rottenest boroughs for a SEVENTH successive year in the annual round-up of civic cock-ups in Private Eye magazine
Maybe, it will be moved on as a “going concern” to the Regen guys?
This was speculated as a route to exit, from the mess last May 2024 when they completed the deferred sale agreement with investors introduced by the mysterious Regen capital.
Question remains, when the full and final payment of £38 m will have been paid over🤔
What a nightmare Croydon council is. Let me out
If I did leave a comment I’d probably be in prison..
And so should should Perry and his ‘Jobs for the Boys and don’t forge t me’
Why aren’t they serving time?
And we are expected to be surprised?
Whilst I never cease to be astounded by the effort and lengths, Inside Croydon, go to in ensuring that the underhand actions of members, past and present, of our illustrious Croydon Council, remain ever highlighted and in sight, I am left lacking.
Why is it that the hard work, so widely appreciated, (and yes, I do subscribe), is not taken to fruition legally? You would be the obvious choice, at least where I am concerned. Your reputation has been built on being honest and accountable and you have definitely unearthed many that haven’t been and I’m sure should and could be held to account.
Sadly though, I don’t believe any of your readers are really surprised. We read the scandal, act shocked for five minutes, then file it away and wait for the next headline.
Thank you Helen, very kind.
The aftermath has produced another kind of civic waste – all the pretence that some kind of action might be taken.
And while RIPI2 found at least four instances of likely fraud, no one with the powers to investigate fraud – searching bank accounts – ever did.
There is no criminal offence of incompetence, although it appears to be a key qualification for working for the council.