A decision by North Yorkshire Council bosses to lend the authority’s commercial house-building business an extra £1.4m was the “right thing to do”, councillors say.
Senior Conservative councillors in North Yorkshire have backed the move to provide further funding to Brierley Homes which was taken by the authority’s leadership without the usual vote by members of the executive committee due to the urgency.
Opposition leaders at North Yorkshire Council have questioned the decision to lend more money to the housing company.
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.
Council officers say the developer is currently working on sites which would deliver 127 affordable homes above the number required by planning policy.
The latest loan will be provided at the base interest rate rather than commercial rates because it is building affordable properties.
Speaking at a meeting of the executive at County Hall in Northallerton, council leader Carl Les said that although deputy leader Councillor Gareth Dadd’s name was attached to the agreement,
“a lot of us were involved in that decision-making process and at the time we thought that was the right thing to do and we stand by that today”.
Councillor Mark Crane, executive member for open to business, added:
“I’m fully supportive of the decision that we’ve taken here.
“When you think that we’re lending money at five per cent above the base rate, there is significant benefit to this council and also the number of affordable homes that the Brierley Group are delivering is significant and is a positive to the communities of North Yorkshire.”
Gary Fielding, corporate director for resources, told the meeting the decision was urgent because
“a number of sales fell through in the preceding weeks that Brierley was expecting and as a consequence of that, there was a risk that suppliers would not get paid”.
He added:
“We took the view that as a wholly-owned company, it stood by its obligations to the supply chain and made those payments.
“So we made that an urgent decision, but there will be a further report coming back to the executive on September 16, which will highlight some of the issues around managing cash flow and the loan in greater detail.”
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