Council agrees to an independent review of Brick by Brick – and stops any further loans being made pending the outcome.
At this evening’s Emergency Budget meeting the Labour Council repeatedly refused to answer a number of specific financial questions about Brick by Brick – the Company set up by the Labour Council in 2015 to deliver affordable homes in our Borough. But at least an independent review is now in sight.
I asked about the interest payments on the £200 million pounds plus loaned to Brick by Brick, enquiring how much has been paid. When this wasn’t answered by either Cllr Tony Newman, Leader of the Council, or Cllr Simon Hall, Cabinet Member for Finance, I then asked how many interest payments had been made – but again this wasn’t answered. I wonder why we cannot be told.
In the face of the Council’s failure to listen to and answer questions about Brick by Brick, Croydon Conservatives and thousands of local residents have repeatedly called for a review of this Company’s activities. Despite the Labour Council lending Brick by Brick over £200 million at mates’ rates, selling it tranches of much loved green open spaces at bargain basements prices of as little as £1, and waving all their schemes through the planning process, this company has built just three purpose-build Council homes, is lagging behind with delivering the affordable homes which Croydon families are desperate for. There are also clearly unanswered questions about the Company’s loan interest repayments.
The Croydon Recovery Plan presented at this evening’s Cabinet Meeting sets out the dire financial situation which Croydon now finds itself in. It is having to go cap in hand to the Government to ask for help. With the current forecast overspend of £22.4m and insufficient reserves to fund this overspend (there’s just £10m in the kitty) the Labour Council is completely unable to deliver a balanced budget.
It has clearly been spending much more than it can afford and this is clearly unsustainable. It is mystery and a great worry to many of us that Labour councillors think they can spend what they haven’t got. But this has been what has been happening for the 6 years they have been running the Council - and the Council is now on the brink of bankruptcy.
As part of the Croydon Recovery Plan the Government is, quite sensibly, requiring an external strategic review of Brick by Brick. This will no doubt confirm that Brick by Brick have a comprehensive loan arrangement for each of its sites, which mean that they don’t have to start making any loan interest payments until every unit in the scheme is sold/occupied. Who would have thought the Council would have to bear the whole risk for quite so long and surely gives no incentive for Brick by Brick to find buyers to move in.
Many of us are worried that this review may all come too late and that in order to protect the most vulnerable of our residents from the cuts to services which will inevitably follow, Brick by Brick should be stopped right now, before they do any more damage to the precarious finances. Not a penny more of public money should be given to the Company and all their plans to build on lovely green spaces should be ditched with immediate effect.
My request that the plug be pulled on Brick by Brick – at least for now - was refused. However I did get a grudging acknowledgement that Brick by Brick is not delivering the homes as expected and that they do need to improve. And Cllr Hall did agree with me that no more loans would be made to Brick by Brick pending the outcome of the independent review.
It cannot be that this unusual candour had anything to do with the fact that the MHCLG (who will decide on the bail out request) were watching the meeting can it?