North Yorkshire Council’s commercial house-building business is using the authority like the “bank of mum and dad” after an urgent loan of £1.4m was provided to the loss-making company, it has been claimed.
The decision to provide further funding to Brierley Homes at a time when the council is facing a multi-million pound shortfall has been criticised by opposition councillors.
The authority has revealed this week that senior councillors approved the loan last month to ensure the house builder could pay its suppliers.
As of March 31 this year, the amount Brierley had borrowed from the council stood at £22.493m, although the company also owed £2.346m in unpaid interest.
Under the terms of the original loan, the money was due to be paid back this year, although last year council bosses agreed to extend the deadline until 2028.
A report prepared ahead of next week’s council executive meeting stated that the company needed the loan in order to ensure suppliers could be paid on time after a number of expected sales had not been received in mid-July.
The document said the loan would allow the company to build more affordable housing, with the developer currently working on sites which would deliver 127 affordable homes above the number required by planning policy.
The latest loan would be provided at the base interest rate rather than commercial rates, which would save the company around £84,000 a year in interest.
But the need to provide further support to the developer has been questioned by opposition leaders.
Councillor Stuart Parsons, leader of the independent group on North Yorkshire Council, said the additional funding was been provided at a time when the council was facing a multi-million pound shortfall in its budget.
He added:
“How many more ‘unforeseen circumstances’ will there be requiring the council to find £2, £3m or £4m? We don’t have any confidence that this assistance will be the last made by the authority.
“It’s a concerning business — it’s the age-old problem that local authorities aren’t any good at running businesses.”
The Green Party group on North Yorkshire Council has also questioned the latest loan, claiming the council has framed it “investment in increased affordable housing” when it was actually “cash flow for misjudged sales income, slow delivery, and a lack of contingency planning”.
Claiming Brierley was using the council “like the bank of mum and dad", group leader Councillor Kevin Foster said Brierley should be building council-owned housing rather than properties managed by a housing association.
“We have a housing crisis and what we need most is council houses.
“How can we justify this kind of money when Brierley Homes does not contribute to the council’s target of 500 council houses?
“Affordable housing still isn’t affordable to many — I have families coming to me every week saying they can’t find suitable housing they can afford.”
Councillor Peter Lacey, leader of the Liberal Democrat group, added:
“It’s deeply disappointing that Brierley Homes already needs another loan from the council — it’s exactly the kind of risk we were worried about.
“When the independent review is published in the next few weeks, we’ll go through it line by line to make sure every penny of residents’ money is accounted for and spent wisely.”
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