Central Beds Council to invest £40m in its own housing company say councillors

Independent councillors say Central Bedfordshire Council is planning to invest more than £40m in its housing company.

The local authority has lent it £1.1m so far, a meeting of its audit committee heard. That amount of £1million per year is expected to continue “until its expiry date of March 31st 2026, at which point it’s required to be fully repaid”, said a social media post from several independent CBC councillors.

The administration approved plans for a council-owned private housing company called New Vista Homes (NVH) in 2019. It agreed to delegate authority to officers and Conservative councillors about how to set up the company structure, explained the Facebook post.

The Independent councillors claim the housing company is being funded with millions of pounds of public money “which isn’t exposed to scrutiny in the same way as the council’s usual operations”.

During an audit committee meeting, Independent Aspley and Woburn councillor John Baker asked: “How much money is lent and, if the wholly owned company folded, would we get that sum back? What’s our liability?”

CBC director of resources Charles Warboys replied: “We’ve lent New Vista Homes £1.1m. That’s an interest bearing loan. It’s met all the interest payments. Would we get it back depends on how the company collapsed, in that scenario you’re painting. I can’t really answer it other than to say it’s incredibly unlikely that will arise.”

Councillor Baker explained: “I wasn’t suggesting the company would fold. I just wanted to ensure we’re all clear on the financial implication of the company folding. That’s given the mitigations say limited liability companies and councillors are only liable to the value of the unpaid share capital. There are other liabilities beyond that.”

Mr Warboys said: “I accept the point at being exposed to any loans. That’s something we’ll add into the risk register in future, so ‘thank you’ for that.”

Independent Potton councillor Adam Zerny wondered which specific local authorities with their own housing companies has CBC considered in detail.

Mr Warboys added: “Croydon ran into many millions of pounds. There were some strange valuations attributed to what Croydon housing were buying and selling. It wanted to buy office blocks to turn them into housing. We’re not in that market at all. It was symptomatic of a general loss of financial control.

“Whenever there’s a public interest report, I always read through those. The issues are quite varied. When Northamptonshire County Council got into trouble, we went through all the findings to make sure we weren’t in the same position.

“There’ve been problems with Thurrock and its investment in solar power, at Nottingham over its housing revenue account, the Robin Hood energy company at Nottingham City … we’ve looked at all of those. I’m not sure any others spring to mind which are housing-related.”

The Independents refer to CBC saying: “The council intends to provide capital loan finance of £1m in 2022/23 for the first housing development. Further capital loan finance is expected of £17m in 2023/24 and £24m in 2024/25,” making an overall total of £42m.