Croydon Council set to remove housing company directors from board following critical report

On Wednesday evening, Croydon Council’s cabinet will consider a report put together by council officers, which recommends that Mr Lacey and Evans be removed as company directors and replaced by Duncan Whitfield, strategic director of finance and governance at Southwark Council, and financial consultant Ian O’Donnell.

Cabinet members have been told they should keep in place agreements for funding on more than 20 further ongoing schemes, as not doing so “could present cash flow issues with consequences that would further increase the risk to the council”.

But plans to transfer several other council-owned sites to BBB will likely be suspended while the council appraises its options concerning the company’s future, with a decision due in January.

In July, the cabinet approved the purchase of 231 completed homes from BBB, but it will now reassess these deals site by site.

The authority had budgeted for £16.7m of income from BBB in 2020/21, but it is now uncertain whether that money will be forthcoming.

The officers’ report to the cabinet said the “absence of adequate financial systems and processes in BBB” means the council “cannot have assurance as to the accuracy or veracity of the financial information” it produces.

The council is also set to grant itself the right to inspect BBB’s accounts and records at any time, as well as minutes from directors’ meetings.

PwC’s review also highlighted governance and accounting issues with the council’s other housing company, Croydon Affordable Homes, including concerns about rent arrears caused by an “ongoing mismatch of tenants to appropriate properties”.

The officer’s report said PwC had uncovered “a wide range of governance failures” by the council in its relationships with both companies.

Mr Lacey said: “As chief executive, I remain resolutely focused on leading Brick By Brick’s immensely talented team to continue to deliver our high-quality development programme and I look forward to working closely with our new board members and the council as they develop future options for the company.’’

A spokesperson for BBB said: “Brick By Brick was set up by Croydon Council in 2016 with a mission to deliver high-quality homes that would be accessible for local people, and to return the development proceeds to the council.

“We are delivering on that mission and have now completed 293 beautifully designed homes across 15 sites, including 141 affordable homes.

“We have a pipeline of over 1,000 homes under development and nearly 700 more in planning. We will be working closely with the council, our sole shareholder, to help respond to the PwC report and inform their decisions as to future options for the company.”

BBB’s 2019/20 business plan included an ambition to deliver 500 homes a year.

The company was one of the first council-owned housing companies to get off the ground and is widely considered a pioneer of the sector, with hundreds of local authorities across England now using similar vehicles.