A review of North Yorkshire Council’s loss-making house-building business has concluded that there is no need to close the company — with a further £2m loan being proposed to keep the company trading.
The independent review by consultant Tony Dodd stated that Brierley Homes was a business based on a “sound operating model and an achievable goal”.
The industry expert was called in to produce a report on the company amid concerns about its performance and profitability.
He noted that the business had endured a difficult initial trading period with “global impacts, disappointing contractor performance and some poor project management leading to cost overruns, project delays and an erosion of profits”.
The report said this had led to high debt levels, delays in delivering benefits to the council and criticisms for its unpredictable performance.
But it added that despite this the company was delivering “high-quality projects with a pipeline and forecast to deliver shareholder value over the medium term”.
The report concluded:
“The brief for this report asks if the operational model for Brierley Homes is still appropriate or are there better alternatives.
“In answer, there is no reason to cease the trading of BH or change its current operating model, nor are there any other models that better satisfy achieving the goals of the shareholder.”
The company was launched in 2017 to deliver a return for the council, which it could invest in frontline services.
But while it has more than 500 homes, including over 200 affordable properties, in the pipeline, it has been criticised by opposition councillors for its need to borrow large sums from the council.
As of March 31 this year, Brierley had received loans of £22.493m from the authority, while 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.
It received a further urgent loan of £1.4m earlier this year in order to pay suppliers.
Senior councillors on the council’s executive will discuss the findings of the review at a meeting next Tuesday.
They will also be asked to approve an additional loan facility of up to £2m to ensure the company has cashflow over the short term.
Vicki Dixon, assistant director for resources and the environment, said in a report to councillors:
“Additional loan facility is required in order to potentially allow the company time for sales to be received over the next few months and ensure Brierley Homes can continue to make all payments due to suppliers in the event of some delayed sales in the coming months.”
The loan would be subject to commercial interest rates and would be reviewed after six months.
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