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12
Nov
Council leader refuses to rule out more loans to loss-making housing company
The leader of North Yorkshire Council said today (November 12) he cannot give assurances that no more loans will be given to the council's loss-making housing company.
Brierley Homes, which was founded in 2017, is part of the Brierley Group of 12 companies owned by the council.
Brierley Homes oversees housing developments across the county, including in the Harrogate district.
The firm, which reported a £3.2 million loss last year, has faced issues over cashflow and has recently been reliant on council loans to "allow the company time for sales to be received”.
At today's full council meeting in Northallerton, which you can watch here, Cllr Andy Brown, Green and Independents councillor for Aire Valley, said members of the council were “nervous" over the increasing financial support for the firm.
Brierley Homes scheme in Woodfield in Harrogate.
He asked Cllr Carl Les, Conservative leader of the authority, whether he could give assurances that no further loans would be approved for the struggling housing company during his administration.
Cllr Les said:
I'm afraid I can't give such an assurance. I think it would be unwise and, in financial parlance, it would not be prudent to do that because who knows what is going to happen in the future.
He added that the support given to the firm was designed to provide financial headroom until sales income was received. The company has since recorded £3.8 million in sales since mid-July.
Cllr Les told councillors that currently the company’s bank balance stood at £513,000 and more than £1 million in sales is forecast before the end of this month.
He added:
The housing sector remains challenging and achieving the timing of sales in line with the budget remains difficult. It will take time for the company to be profitable.
However, actions are ongoing to implement the recommendations of the review which we commissioned recently and was reported to the executive on September 16.
Current projections do not indicate the need for any further loan to be drawn down. However, given the unpredictable nature of the housing sector and that the strategic review of the company is underway, there can never be a 100% guarantee on what will happen in the future.
£27 million loan
His comments come as senior councillors backed a proposal to increase a £25 million council loan facility to £27 million to provide Brierley Homes with further financial headroom at an executive meeting in September.
Cllr Les told councillors this morning that £1.55 million of that loan facility remains available to the company.
Gary Fielding, the council's corporate director for resources, said at the September meeting that he would receive weekly cashflow reports from the company as part of “additional due diligence”.
He said the weekly reports would “ensure there is stronger due diligence” into the firm.
Meanwhile, in July, the council also granted a £1.4 million loan to the housing company to assist it with cashflow while it delivered affordable housing and to "allow the company time for sales to be received”.
The council said the loan, which is separate to the loan facility, will be repaid with base rate interest instead of on commercial terms.
But, the move was criticised by Cllr Kevin Foster, leader of the Green and Independents group on North Yorkshire Council, who questioned how the council could justify further money for the company.
Senior councillors on the authority’s Conservative-run executive said the decision was the “right thing to do”.
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