By Andrew Rowson
At the meeting of Cambridgeshire County Council (CCC) on 18th March 2025, councillors heard a public question from Soham resident, Mr Phil Duff, and responses from council leader Cllr Lucy Nethsingha.
The Youtube video of the exchange is found here.
The public questions and responses are transcribed below, followed by commentary on the highlighted sections in the text.
Mr Duff:
The figures I’m about to quote are taken from This Land’s own accounts, which they have filed at Companies House – thus making them public documents.
Cambs County Council’s wholly owned company – This Land, has lost money every year since its inception eight years ago, and has now lost over £50 million in total. These losses have accelerated to nearly £1 million per month in the last year. Bearing in mind the ever-growing gap between its liabilities of over £120 million, and its assets of just £76 million, how much longer is the council going to allow this company to continue?
Cllr Nethsingha:
Thank you for your question, Mr Duff. Whilst it is typical for a company of the nature of This Land to experience accounting losses in the early years of development, the wider economic situation arising from the pandemic, the Ukraine war, alongside the impacts on inflation and interest have adversely impacted nearly every company in this sector. It is helpful, I think, to point out that the original plan was always a long term one, that the company would deliver projects and a return by 2030 – and that remains the focus of the company. The joint administration has transparently shared that it took a decision to support that delivery with a small additional cashflow to enable the company to progress its developments in response to those challenging economic factors.
The company board has assured itself of the future solvency of the company as it must regularly do, and I thank them for that challenging task. The county council officers are diligently collaborating with the company to ensure the successful delivery of projects, and we also have a robust and regular governance check on it, including the newly appointed shareholder sub-committee, which continually checks and assures the performance and [that] the business plan is achieved.
We remain focused on ensuring that the overall long-term cashflow to the council from This Land is greater than its outflows, and while also realising the huge tangible benefits to our community that have been secured from the development of land and homes in Cambridgeshire.
Mr Duff – supplementary question:
The Council’s own auditors, KPMG advised the following on This Land:
“The Council does not have the suitable skills and experience to effectively manage the risks associated with the commercial private sector subsidiary facing significant financial cashflow challenges.”
On the evidence to date, they are stating the obvious. Or do you think your own auditors are wrong?
Cllr Nethsingha:
I think it’s always important that any public organisation takes the view of its auditors seriously – and we do take the view of our auditors seriously, and we have been reviewing the governance arrangements around This Land. Thank you.
Commentary
This Land Ltd has now lost over £50 million in total
The company that was later renamed This Land Ltd (TLL) was incorporated in June 2016, under the previous Conservative administration. When the Lib Dem/Labour joint administration took over in May 2021, This Land's cumulative losses were £16.5 million. Today they are 50.23 million. The company's audited accounts are filed at Companies House.
In the original plan, the company would deliver projects and a return by 2030
The public has not seen the original plan, only the original "outline business case" presented to members of CCC's former Commercial & Investment Committee on 27th May 2018, which promised that the company would make "substantial losses for many years"... "maybe even for decades". This Land's 2022 and 2023 business plans do not mention making any return. The 2023 business plan states:
"The business maintains a good cash position up until 2029."
and
"Our cashflow modelling confirms the repayment of all loans and interest by 2029."
Both predictions have been proved wrong, since the company requested and was given another loan of £6.3m by CCC just twelve months later, to address TLL's cashflow situation. CCC is now restructuring its loans and allowing the company to defer loan interest payments for the foreseeable future. So even the latest loan was not sufficient to put things right.
For This Land to repay its loans and make a return by 2030, or even break even, it would need to make at least £180m of profits in the next five years to cover the loan principal repayments, loan interest backlogs, and to make up for the £50m worth of losses recorded to date. Since the company only had £25.4m of land security left at March 2024, and in light of its commercial record to date, that outcome appears most unlikely. If it makes further losses in 2024/25 - which seems more than likely, then the challenge will become harder still.
"The joint administration took a decision to support that delivery with a small additional cashflow"
The "small additional cashflow" took the form of a £6.3m short-term loan agreed in closed session by CCC's Strategy, Resources and Performance Committee in July 2024. It would appear to be an unlawful loan, since its primary purpose was to secure a commercial yield for the County Council on the interest rate difference between CCC borrowing from the Public Works Loan Board at around 2%, and lending to This Land at a "commercial" 7.1%. Such borrowing for commercial yield was banned by the last government in 2020, backed up by revisions to the Prudential Code in December 2021.
According to the Asphalt Industry Alliance, £6.3 million in 2025 would pay for the repair of 87,000 potholes at the UK average cost of £72.37 per pothole.
But there have been other irregular cashflows to This Land Ltd, to the tune of around £55 million over the last four years that have gone under the radar, and have impoverished CCC whilst robbing local taxpayers of the same amount of land security.
Under the peculiar terms of the charge documents drawn up between CCC and This Land, such as the Queen Street, March charge (see also below), This Land was granted ownership of the properties from day one - see Background, paragraph (B) - even though the property purchase by the borrower was
"deemed to constitute a legal mortgage over the property" - see Background, paragraph (D)
In addition, under the same charge/legal mortgage template, which seems to have been used for all such charges, the borrower is permitted to dispose of the property to a third party, with the sole condition being the lender's
"prior, reasonable, written consent." (- see paragraph 7.1)
In other words, This Land has been allowed to sell its mortgaged properties and transfer the title deeds to third parties without first having to repay the loan principal to CCC. These documents thus represent a novel interpretation of what is normally understood as a legal mortgage over a property, that will be wholly unfamiliar to any householder with a mortgage of their own. At face value these agreements would appear not to protect the lender's interests, and therefore they give rise to the question of whether the solicitors who drafted the documents were acting in the best interests of their client (CCC).
This Land has taken full advantage of the apparent loophole in these charge documents to sell on £78 million worth of mortgaged property since 2020 (i.e. after the government's ban on borrowing for yield) without repaying any, or almost none of the loan principal. In so doing, This Land effectively helped itself to at least another £55.1 million pounds of cash that should have been returned to CCC. That is the only reasonable explanation for why CCC's land security over This Land's property fell from £80.5 million at December 2019 (see Inventory note, p30) to just £25.4 million at March 2024 (see Inventory note, p37) whilst, over the same period, This Land's long-term borrowings from CCC rose from £88 million to £113.8 million, and remained at that higher level for the last four accounting periods.
To readers of CCC's own audited accounts - until 2023/24 at least, this steady erosion of CCC's security over its loans to This Land, and the fact of the company failing to repay CCC material sums of loan principal when it disposed of those properties, has gone unreported. This is what CCC's accounts have said about land security in recent years:
"The Council’s credit risk exposure to its customers and entities that it loans funds to (such as This Land Limited) is monitored and regularly reviewed to ensure that money owed to the Council is paid as it falls due. The value of these amounts is impaired if it is felt that this debt would not be recoverable.
During the reporting year the Council held no collateral as security, other than for loans to This Land Group."
Readers of CCC's accounts and group accounts who have not scrutinised This Land's own accounts (why should they have to?), have thus been given the wholly misleading impression that all, or substantially all CCC's secured loans to This Land remain secured against mortgaged properties - because that is the public's understanding of how legal mortgages work. They will not be aware that around 80% of those loans are now unsecured because This Land has sold most of the land to third parties.
The initial batch of charge documents was drawn up by LGSS Law Ltd (now Pathfinder Legal Services Ltd) and dated 13th April 2018. LGSS Law was 33% owned by each of CCC, Northamptonshire CC and Central Bedfordshire DC. LGSS Law's CEO was Mr Quentin Baker. Mr Baker was simultaneously the Monitoring Officer of Cambridgeshire County Council and Central Bedfordshire DC, as well as being one of This Land's two founding directors (along with CCC CFO Mr Chris Malyon). Mr Baker and Mr Malyon were thus both effectively borrower and lender at the same time in respect of the loans CCC made to This Land Ltd.
Mr Baker unexpectedly and without notice resigned/was terminated as CEO of LGSS Law Ltd on 14th May 2018 (one month after the first charge date). He left CCC on the same date, the day before a meeting of the full council. Companies House shows his termination at the This Land group companies on 5th June 2018. The public has never been given an explanation for his sudden departure other than his statement that he decided to seek new challenges elsewhere.
If the above legal mortgage document conditions have been respected by both parties, the other inescapable conclusion is that one or more senior finance officers at CCC over the last four years have given their "prior reasonable, written consent" to the This Land group of companies (This Land Development Ltd in particular) to dispose of those properties, effectively waving goodbye to £55.1 million of land security without receiving the corresponding loan principal in return. They have also allowed This Land to spend that money so that, following last year's £6.3m loan, there is now an almost £100 million shortfall between what This Land owes CCC (loans plus equity), and the remaining land security CCC might be able to recover in the event of This Land defaulting on its loan repayments - a risk which CCC's auditor KPMG describes as "significant". The auditor also noted that This Land was not included in CCC's corporate risk register for 2023/24. Councillors serving on the Strategy, Resources and Performance Committee, or on the Shareholder Sub-Committee might wish to request copies of those consent documents, and share with local taxpayers whose signatures they bear.
"The company board has assured itself of the future solvency of the company as it must regularly do."
This Land's directors prepared the company's 2023/24 accounts on the going concern basis, largely because CCC guaranteed to support the company financially for at least the next twelve months, as it has done every year. CCC made that guarantee because, up until the end of 2023/24 at least, it relied on the net loan interest income from TLL to balance its own revenue budget, even when the income was initially sourced from more loans from CCC, and later on from the sale proceeds of TLL selling its own mortgaged land to third parties. This Land's auditor (RSM Audit UK LLP) relied on the board's going concern conclusion. This Land had a cash balance of £6.1 million at the 31st March 2024 balance sheet date. Had it repaid CCC the £55 million or more mortgage balances when it sold those mortgaged properties over the last four years, This Land would not be solvent today. On the evidence of the company board's previous assurances, the public cannot be blamed for having little confidence in their statements about the future. Nor should the council. Why should This Land be entrusted with any more of our money?
"...realising the huge tangible benefits to our community that have been secured from the development of land and homes in Cambridgeshire."
This Land's audited accounts show that in the eight years to March 2024 it sold just 76 houses, and that 76% of its revenue came from selling its own mortgaged land, often at a loss, rather than from selling houses it has built. For example, in April 2018, This Land purchased land and buildings from CCC at Queen Street, March for £840,000, with a 100% mortgage from its shareholder. This Land did not develop the property, but paid loan interest on it for four years and five months before selling it in September 2022 for just £392,000 including VAT. It follows that most of the benefits to the community in terms of providing new homes could have been achieved more cheaply and simply, and without any commercial risk, if the County Council had sold its land directly to developers, as it did before This Land was incorporated. Going indirectly through a company that has shown itself incapable of building and selling homes for a profit, that has annual overheads of over £4 million, is hamstrung by £8.5 million annual finance costs and debts of over £120 million that realistically, it will never be able to repay, was and remains an entirely avoidable risk.
"We do take the view of our auditors seriously"
Here are two further comments by KPMG on the Significant Value for Money Risk relating to private sector skills and experience, taken from its Annual Report for CCC:
"Given current economic uncertainties affecting the construction sector, the continued under-performance of This Land and the various complex options being considered to maximise the Council’s return, we consider it would be appropriate for the Council to have representation on the This Land Board and Strategy, Resources and Performance Committee with appropriate skills and experience."
"Based on our findings we have determined that there is a significant weakness in relation to arrangements for economy, efficiency and effectiveness due to the lack of expertise required to oversee and challenge commercial subsidiaries, particularly This Land."
At three meetings since 29th January this year, the Strategy, Resources and Performance Committee chaired by Cllr Lucy Nethsingha, and the Shareholder Sub-Committee chaired by Cllr Ros Hathorn met in closed session to discuss This Land's 2025/26 Business Plan and other matters relating to the company's future. From what the public can glean, all the talk has been about continuing financial support, restructuring loans and deferring loan interest repayments. Nobody at CCC seems to be entertaining the thought of winding the company up before the losses rise even further. Would a rational commercial lender think along those lines looking at This Land's performance over the last nearly nine years?
It would appear that CCC is already ignoring its auditor's advice by allowing unqualified people to make far-reaching decisions behind closed doors on the future of This Land Ltd that may have considerable financial repercussions for local taxpayers. Is it too much to ask the council at least to put off making major decisions about This Land until those charged with governance and scrutiny have received the recommended training, and until there are expert people in the room who know what they are doing?