Taxpayers face potential financial risks as North Yorkshire Council's house building company, Brierley Homes, forecasts a £7.5m annual deficit.
Taxpayers may not get money their back from North Yorkshire Council’s loss-making house building company, opposition leaders have warned as details of a £7.5m annual deficit are revealed.
Council-owned Brierley Homes is forecast to make a loss of £7.47m in 2025/26 — despite a profit of around £700,000 being forecast.
The council has blamed the poor performance less income from sales the expected, increased costs and delays in the completion of homes, leading to increased overheads and interest costs.
Following years of poor performance, a new managing director was appointed in February and a plan put in place to restore the company’s fortunes.
Council chiefs have previously agreed a £27m loan facility for Brierley Homes and the plan warns that £7m of the loan may still be outstanding in five years time.
The council has set aside a £7m reserve in case the loan is not fully paid in a move senior officers say is a “prudent” step to minimise the risk to the authority.
But Liberal Democrat councillor Peter Lacey, leader of the opposition, said it meant taxpayers could “end up paying the price for the mess at Brierley Homes”.
He added:
“People will be shocked to see the council now setting aside £7m because it may not get all of its money back.
“At the same time, the council says it is struggling to cope with rising costs in children’s services and adult social care.
“Residents will rightly wonder how things were allowed to get this bad.”
Councillor Steve Shaw-Wright, leader of the Labour group on the authority, called for the company to change direction and build more affordable homes and council houses “rather than the £500,000-plus houses they currently do”.
He added:
“It’s well before time that those in power swallowed their pride and change direction now, before the mountain of debt becomes unmanageable.”
Green Party councillor Arnold Warneken:
“This is the clearest sign yet that the council no longer expects to recover all of the £26m lent to Brierley Homes.
“It’s time for some straight-talking from the council because they can’t have it both ways – they treat it like a private company when scrutiny is uncomfortable, and yet they rely on taxpayers to foot the financial risk when things go wrong.”
Despite the latest loss, North Yorkshire Council said its commercial operations remained good value for money and were returning a healthy profit, which was invested in frontline services.
A spokesperson added:
“Overall this year, that represents in the region of £3.2m and that’s after taking into account the in-year estimated loss for Brierley Homes.
“Given the financial position of the company, a provision of £7m has been made by the council should it be needed.
“Brierley Homes, despite its losses, gives us the opportunity to provide much-needed housing with more flexibility, including providing more affordable homes in partnership with Broadacres, the redevelopment of brownfield sites and potential opportunities around our own rental and shared ownership schemes helping people get onto the housing ladder at a very difficult time.
“Things are not always as straightforward as profit and loss, and we have to look at our wider responsibilities around providing affordable, accessible homes for people across the county.
“It’s prudent that we recognise the financial issues which the company is experiencing and put a plan in place to minimise further risk to the council, hence the offsetting of potential losses against the income from the rest of the Brierley Group.”
The company’s finances will be discussed by the executive committee at a meeting next Wednesday.
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