£100m from This Land could be 'Never Land'
- Credit: Archant
A county councillor expressed fears that with more than £100m loaned to its housing company This Land Ltd could “become Never Land”.
Cllr Peter McDonald described the loan as “a huge amount of money”.
He asked deputy chief executive Chris Malyon: “What does the glide path look like in terms of the return on that money?
“If we’re not careful This Land will become Never Land in terms of our return.
“I know Chris will say that in terms of the borrowing costs and the interest costs, that This Land is returning according to plan, and I don’t doubt at all what Chris is reporting.
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“It just doesn’t feel totally comfortable still with such a large amount outstanding.”
He also didn’t “feel comfortable” with the sudden change of management at This Land.
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“This committee wasn’t aware of those changes,” he said.
“I know that This Land is an independent entity, and of course it legally has the right to do that.
“And the successor to the previous chief executive is from within the existing management team. That may be fantastic.
“I suppose it feels somehow that maybe the running of This Land will be business as usual rather than any significant change to bring a return to the council.”
Mr Malyon said the issues raised were a matter between the shareholder (i.e., the council) and This Land and could be raised at their quarterly meetings.
He said: “I think the acting chief executive has referred to, or made a comment along the lines of a profit will be seen – I think the exact words were ‘in the near future’,
“Now that is obviously dependent on a number of issues but it is something that we would all want to get into more detail within the shareholder meeting, and get under those numbers.
At this stage, he said, “we have no reason to doubt that they wouldn’t continue to service their financial loans to the council”.
Another councillor expressed surprise that no one could tell her how many houses have been built by This Land.
Cllr Linda Jones put the question to Mr Malyon who was until last summer a director of This Land Ltd.
She described a report by Mr Malyon to the commercial and investment committee as “very much a selective update”
From the public’s point of view, she said, this was a housing company “yet there isn’t any update on the number of houses that have been built.
“And one would have reasonably expected that to be given.”
Mr Malyon replied: “I don’t have those details to hand, but I’m more than happy to do so outside the meeting.”
Cllr David Jenkins accepted that This Land, although 100 per cent council owned, operated separately.
But he reminded councillors of the committee’s role in finance and oversight.
He was disappointed to hear of the outgoing chief executive’s departure via the media.
“It is not the way I should be informed about the chief executive of a 100 per cent owned by the county council company moving on. It’s not the way it should happen.”
He said if the former chief executive was leaving of his own volition, then why was he being paid a notice period.
“If he’s leaving because we want him to leave in a hurry, what is the reason?” he said.
“I’m very uncomfortable about this because we all felt that David Gelling was doing a good job, didn’t we – around this room?
“I don’t remember at any of the shareholder meetings anybody asking any aggressive questions of him, or being critical of him.
“So, it was very strange circumstances, and we’re still in the dark, and we are 100 per cent shareholders.
“And they have a hundred million quid of our money, remember. And that’s public money. That’s not good news.”
Cllr Goldsack said: “We keep always talking about the money that’s been loaned to them, and that’s right and that’s valid and that’s proper.
“What nobody ever talks about is the assets that this company is holding, and the assets’ value that they’ve increased on the assets they’re holding through planning permissions gained.”
Acting chief executive David Lewis said last week: “We enter 2021 we in a strong position. Our ten-year cash flow, which was approved in April of 2020, demonstrates we will pay off the shareholder loans by the end of 2028.
“The model's assumptions, particularly related to land disposals, are conservative and we expect to exceed our estimates.
“Despite the very challenging macro-economic environment, the house building industry as a whole has done relatively well – as has This Land.”
Latest accounts are not available but the most recent show accumulating losses including £11.8m for the year end to December 2019, and £3.9m for the previous year.