Financial accounting amateur hour - courtesy of This Land Ltd and Cambridgeshire County Council

By Andrew Rowson

Say you are a housing development company.  Eight years after incorporation, you have made comprehensive losses totalling £50 million.  At the beginning of year nine, you owe your 100% shareholder (Cambridgeshire County Council) £113.8 million.  During year nine, because you cannot afford to pay the interest on the existing loan, the shareholder is foolish enough to lend you a further £5.9 million.  Over the course of year nine you do not repay any loan principal to the shareholder, and in spite of the additional loan, you do not pay any loan interest either.

At the end of that year, what is the balance on the outstanding loan principal owing to your shareholder? Is it... 

A: £119.7m (£113.8m + £5.9m) or

B: £107.9m (£113.8m - £5.9m)?

If your answer is A, you are correct.  If your answer is B, your name is This Land Ltd (TLL), Cambridgeshire County Council's struggling, wholly owned housing development company.

On page 6 of This Land Ltd's audited accounts for 2024-25, (which can be found here), TLL's finance director wrote this in the strategic report for the year: 

"On 30 August 2024, the Company, other members of the Group, and our Shareholder Cambridgeshire County Council entered into an amendment agreement supplemental to the Original Facilities Agreement dated 11 May 2023. The amendment allows for an additional £5.9m of available facility in addition to loan amounts already received prior to the Amendment date.  All amounts were drawn down during the year."

The exact amount of the loan was  £5.924m.

That sounds straightforward enough.  So what does the loan liability with the County Council (CCC) at the 31st March 2025 year-end look like in TLL's 2024-25 audited accounts?

£107.9m.  The in-year loan has been subtracted, rather than added.  But, if the company has received the cash, as shown above - "All amounts were drawn down during the year" - then the accounts will not balance, because the cash received is a debit posting in the balance sheet, but so too is the incorrect debit posting of £5.9m to the long-term creditors account in the balance sheet.  That means the total debits are higher than the total credits by twice £5.9m, or to be exact, twice £5.924m, i.e £11.848m.  How did This Land or its auditor (RSM UK Audit PLL) not spot that elementary error, and how was it resolved in the final accounts?

Clearly it was not spotted, because the incorrect £114,416,855 borrowings total figure from Note 16 above found its way into TLL's balance sheet - under the "Loans with related parties" heading (see below).

The total liabilities are therefore understated by £11.848m, and should instead show £130,119,961.  Likewise, Total Net Liabilities should be commensurately higher, at £58,011,759, not £46,164,290.

This Land's corrected balance sheet would look like this:

This Land's total liabilities at 31 March 2025 were therefore £58 million higher than its total assets - maintaining the same trend since the company's incorporation in 2016.

In spite of these discouraging results, CCC continues to maintain that the company is a going concern, and continues to sign a guarantee to that effect each year, which This Land's auditor, RSM, relies on to audit TLL's accounts on the going concern basis.

Another consistent trend, though in the opposite direction, is RSM UK Audit PLL's remuneration for its audit work on TLL's financial statements.

The £11.8m fudge factor

Returning to TLL's balance sheet, the yellow highlighted line in the Equity section above at the foot of the balance sheet published on Companies House shows a figure of £11,847,469, described as "Capital contribution from Shareholder".  It is exactly twice the value of the 2024 loan the company subtracted rather than added to its "loans from related parties" figure.  That is not mere coincidence.

This is how This Land explains the fictitious "capital contribution" in note 18 to the audited accounts:

Two things to mention here:

1) There is no such thing as a remeasurement of a loan that gives rise to a gain.  The explanation above, including the writing back to the loan liability over four years, is simply nonsense - apparently an attempt to baffle the public and possibly elected council members who on the whole are not financially literate.  A loan is a loan.  Either it is honoured, or it needs to be written off or written down.

2) the second point is that This Land is claiming the restated agreement in March 2025 had the effect of changing practically half the total value of interest-bearing loans into non interest-bearing loans, but not of writing down the loan liability itself by £59.85m.  That is not how CCC itself has accounted for the same event.  CCC's accounts show a year-end debtor balance for the loans to This Land reduced by half to £59.9m.  That is calculated by correctly adding (not subtracting) the 2024 £5.9m loan, and then writing off £59.85m of the loan value because CCC (and particularly its auditor KPMG) do not expect it to be recovered.  Thus, £113.85m + £5.9m - £59.85m = £59.9m.

This is how it is shown in Note 27 of CCC's audited accounts (the £6.8m represents the loan interest TLL did not pay in 2024-25):

The net effect of TLL subtracting the additional £5.9m loan, but not writing down the £59.85m in its own accounts, is that the intra-group balances of the same item are now different by £48m between the two organisations:  (59.85 - 11.85 = 48.0).

This should have created a problem for the County Council because This Land and CCC are the only two entities in CCC's consolidated group accounts.  After adding together the accounts of both entities, the council has to eliminate the intra-group balances, which should all be equal and opposite.  But CCC's debtor balance, and TLL's creditor balance representing CCC's loans to TLL are not in synch.  They are out by £48m.  That means CCC's own group accounts must also be out by £48m.  That sizeable discrepancy should have been investigated and corrected.  But it was not.  CCC and its auditor KPMG both looked the other way.

In This Land's books the inconsistency goes further.  Whilst it does not recognise the £59.85m loan write-off in its audited accounts, TLL does recognise the write-off in its forward business plan.  Here is TLL's updated business plan presented to CCC's Shareholder Sub-Committee on 17th February this year (see also here, p15).  The "Opening Loan Balance" in the top left cell of the second table below shows £59.901m - the same as CCC's accounts, but £48m lower than the same item This Land's accounts.  The different balances cannot both be correct.

It would appear that CCC and TLL's finance departments, and their respective independent auditors are comfortable taking a selectively myopic view of these irregularities.  KPMG, CCC's current auditor, seems to be following a time-honoured tradition.  KPMG was Carillion's last auditor before its collapse in January 2018 with liabilities of almost £7 billion.  The following month, during an MPs' Select Committee hearing, it emerged that the KPMG audit partner did not know whether his client was owed £200m by another company, or whether Carillion owed that company £200m (see here, Q959 - Q973).

As for RSM, last year, a member of the Soham 100 Consortium wrote to This Land's audit partner, Mr Stacy Eden, asking for an explanation for the many apparent errors and anomalies in This Land's audited accounts.  This is the response received from Alexandra Flynn, RSM UK's Senior Legal Counsel.  The auditor's fundamental duty of confidentiality to its client apparently meant that Mr Stacy could not comment.  The Counsel suggested we write to This Land itself, which we did.  Here is the response from TLL's current CEO, Mr Rob Williams.  He disagreed with our analysis, but would not elaborate.  He was happy with the auditor's unqualified audit opinion, and suggested we put our concerns to the Financial Reporting Council or other regulatory body.  That is certainly on the to do list, but Mr Williams must know that the FRC has to be selective with its investigations, and would be unlikely to look into an entity as relatively small as This Land Ltd.  It would have been so much simpler and more helpful for Mr Williams to have explained why This Land is correct and consistent, and why our analysis is wrong.

This Land Ltd CEO: “We are not a housebuilder”

 By Andrew Rowson

An astonishing admission last month from the CEO of Cambridgeshire County Council’s (CCC) wholly owned housebuilding company, This Land Ltd.

Rob Williams, the loss-making company’s fourth CEO in as many years was speaking to CCC’s Shareholder Sub-Committee on 17th February about This Land’s Business Strategic Review.  He told members:

“We are now clear on the right future direction for the business, which responds to the strengths of the business, but also recognises, you know, that the business is not a housebuilder.  Our strengths are around land, and how we develop, promote, create a place and bring forward land for residential delivery.  We are not a housebuilder.  We can do it, but on significant scale, we can’t compete.”

That is a far cry from the clear message ten years ago.  In May 2016, CCC’s CFO, Mr Chris Malyon, told members of the Commercial & Investment Committee that building houses on land from the council’s extensive property portfolio was the only way forward:

“Simply selling sites for others to develop, and profit from, is no longer an option for CCC. The scale of the financial challenges facing CCC requires that it has to review every opportunity available to it in order to create an on-going revenue stream that can mitigate the reduction in the services that it otherwise would have to make.

The vision is to transform CCC from being a seller of sites to being a developer of sites. CCC is therefore developing, and delivering, a series of principally residential development projects from its property portfolio across Cambridgeshire, planned over an initial 10-year timescale.”

It was clear from day one to any casual observer that This Land would fail as a housebuilding company.  You do not lumber a start-up business with £120m of loan debt with a 7.35% interest rate years before it can build and sell its first house.  The loan interest repayments alone came to an unaffordable £8.5m/year.  In its first nine years, the company sold just 77 houses and made a comprehensive loss of £63.9 million in the process – an average loss of £830,000 on each house sold.  Recent information from a Freedom of Information request shows that This Land’s construction costs alone over the same period came to £33.15m – 30% higher than the £25.5m revenue from selling the houses.

The ten years it took This Land and its sole shareholder to recognise the obvious resulted in CCC having to write off half of the total debt (£59.9m) owing by This Land.  That cost hit CCC’s budget and its reserves in 2024-25 and results in cuts to frontline services that could so easily have been avoided.  What took This Land so long to reach this epiphany?

-ooOoo-

To show your support, please email Charles Warner at The Soham 100 Consortium* who is collecting e-signatures.  You will not be contacted further unless you join our mailing list.

*When you click this link, it will open up your email with a pre-filled message - just add your name and send.  If for any reason your email does not open, you can still add your name, just email soham100consortium at gmail.com with Sign Petition as the subject.

We Need You!

 

A petition asking that ‘This Land Ltd’ receives no further funding

We are asking all our followers, subscribers and anybody interested to please sign our petition which will be submitted to Cambridgeshire County Council.   To show your support, please email Charles Warner at The Soham 100 Consortium* who is collecting e-signatures.  You will not be contacted further unless you join our mailing list.

-ooOoo-

The petition reads:

We, the undersigned ask Cambridgeshire County council to cease using tax payers money and land assets to support its failed subsidiary company, This Land Ltd (TLL).

TLL was founded by in CCC in 2016, purportedly to generate income for taxpayers from housebuilding, and from the interest on £127m in loans from CCC. For every £1 of loan interest TLL paid to CCC it has cost local taxpayers over £3 in lost assets. This combined with continuous trading losses totalling £63.9m clearly demonstrates a situation that cannot be defended any longer. 

The company should be terminated in the most economical way possible at the earliest opportunity to minimise further losses.

-ooOoo-

To show your support, please email Charles Warner at The Soham 100 Consortium* who is collecting e-signatures.  You will not be contacted further unless you join our mailing list.

*When you click this link, it will open up your email with a pre-filled message - just add your name and send.  If for any reason your email does not open, you can still add your name, just email soham100consortium at gmail.com with Sign Petition as the subject.

What is £1 million between friends? The Malta Road mystery.

By Andrew Rowson

On the Companies House website, This Land Development Ltd – one of the This Land group of companies, lists 31 charges (legal mortgages) which it claims are secured against properties purchased by This Land.  Charges with references 0001 to 0027 are all for specific properties purchased from Cambridgeshire County Council (CCC), This Land's sole shareholder.  Charge 0031 is against land in Hertfordshire that This Land bought from a third party in March 2021.

Charges 0028 and 0029 (highlighted in blue below), are both described as development charges, and are unsecured loans, though the two "legal mortgage" documents claim that the loans are secured against properties.  Those two loan facilities were given to This Land in 2020, shortly before the last government put a ban on councils borrowing from the Public Works Loan Board (PWLB) for commercial ventures - as CCC had been doing to fund its onward loans to This Land.  The stated purpose of the two 2020 loans is set out in section 4 of the two loan documents.  £23 million of the loans was earmarked to enable This Land to repay CCC some of the loan principal and crippling loan interest on the earlier loans that it could not afford without help because the company has never made a penny of profit, and had yet to sell its first house.  In other words, in 2020, CCC lent This Land over £40m more money so it might manage to pay its existing, unaffordable debt.  Even that assistance ultimately failed.  In some respects therefore, the 2020 loans were a Ponzi scheme.  The lender's conditions were not too onerous.  Section 4.2 in each loan document helpfully state: 

"The Lender is not obliged to monitor or verify how any amount advanced under the Agreement is used."

Charges 0001 - 0027 are all 100% mortgages secured against properties purchased from CCC, with money borrowed from CCC.  The total purchase value of those properties is £77.872m, as set out below.  CCC received capital receipts for those sales to This Land.

However, on several occasions, CCC has claimed that the  capital receipts total is £78.8m, £1 million more than the sum of charges 0001 - 0027.  For example, in his report on the latest This Land Business Plan on 24th July 2025, CCC's Executive Director of Finance and Resources, Mr Michael Hudson, informed members of the Shareholder Sub-Committee (paragraph 1.2):

"To date, This Land has paid the Council £78.8m in capital receipts and £42.6m in interest as revenue between 2017 and March 2024."

What explains the £1 million difference?  It might have been dismissed as a simple transcription error, or rounding error, until one looks at the loan documents behind charges 0028 and 0029 above that were obtained under a Freedom of Information request.  In Schedule 2, on pages 29 and 30 of each loan document is a list of the properties that supposedly provide the security for the "legal mortgages".

Each loan document shows the same ten properties, nine of which already have 100% morgages against them in earlier charges filed at Companies House.

This is problematic for several reasons:

1) The corresponding original charge documents for those nine properties (apart from the Malta Road Centre) all contain the same condition in paragraph 6.3 of their mortgage contracts:

No Security

"The charged property is free from any Security other than the Security created by this deed"  

 2) The earlier charges were all 100% mortgages.  Nine of them have now been mortgaged three times over, possibly for 300% of their value - which raises questions about the lawfulness and the enforceability of the charges in the event of default by This Land.  It also raises questions about the conduct of the officers at CCC and This Land who signed the two unsecured loans in 2020.  Both parties must have been aware that they were putting public money at risk, and possibly breaking the law.

3) There is no charge document for the Malta Road property filed at Companies House other than the two so-called development charges.

The first two points above warrant an in-depth treatment of their own, which may be the subject of a future blog post.  However, the £1 million value against the Malta Road Centre above appears to neatly explain the £1 million discrepancy between the total capital receipts acknowledged by CCC, and the £1m lower sum of the purchase prices of the properties in charges 0001 to 0027, as shown in the table above.

All This Land Development Ltd's charges are chronologically ordered, with no gaps in the numbering sequence.  So when was the Malta Road property purchased?  The Land Registry title reference leads to the Summary of Title document which can be downloaded from the Registry.  That document shows that the property was indeed purchased by This Land Development Ltd from CCC for £1 million on 30th August 2018.  If it had had a charge reference on Companies House, it would fit between 0020 and 0021.  Could its omission have been a simple oversight?  The other place that charges are registered is on the Land Registry's Summary of Title document.  All the other This Land title documents downloaded clearly show a charge between CCC and This Land Development Ltd.  Here for example is an extract from the Charges Register for 34a Station Road, March - Charge No. 0008:

But there is no such charge between CCC and This Land for the Malta Road Centre property - just two charges that pre-date This Land's purchase of the property in August 2018.

What does this mean?  It could mean that This Land has taken possession of a £1 million property free of charge.  CCC loaned This Land millions of pounds to buy the  surplus properties from CCC's extensive land portolio.  This land made the purchases, took possession of the properties and handed CCC the purchase price (the capital receipts).  The final component in the arrangement - the legal mortgage in 2018 between This Land and CCC - is missing for the Malta Road property, unless the two loans corresponding to charges 0028 and 0029 two years later can be said to be valid mortgage contracts, in spite of them doubling up and both stating that there can be no other charges against the same property.  And what is the significance of there being no reference to one or both charges in the Land Registry title document?

Several questions arise from this convoluted set of facts.  For example:

• Which party holds the title deeds to the Malta Road Centre - CCC or This Land?
• Should This Land's debt to CCC now be raised by £1 million plus the loan interest accrued over the last 7.2 years? (around £528,000 at the weighted average interest rate of 7.35%).
• Is it lawful for This Land to dispose of this property while its ownership is in doubt?
• How was it possible for CCC and This Land to overlook the Malta Road Centre's mortgage, and who was responsible?

These and other questions might be put to CCC's Shareholder Sub-Committee, which is charged with governance over This Land, on behalf of local taxpayers.

How is such incompetence possible?

 This Land Ltd loses £500,000 on a property purchased for £350,000

By Andrew Rowson

The story of 34a Station Road, March may shed some light on how Cambridgeshire County Council's wholly-owned housebuilding company has managed to lose £63.9 million in its first nine years of operation.  

In April 2018, This Land Ltd (TLL) purchased 34a Station Road, March as part of a £38.3 million portfolio of properties previously owned by Cambridgeshire County Council (CCC).  The substantial building is a former education centre, located on the same site as the March Community Centre (No. 34).  No. 34a was unused in 2018, with boarded up windows, and ripe for development in the centre of March.

As with all TLL's properties, it was purchased with a 100% mortgage loan from CCC.  The legal mortgage is filed at Companies House under This Land Development Ltd, with charge reference 0008.

Although the mortgage document is signed by both parties (CCC and TLL), the mortgage value, and hence the purchase price, is omitted.  It is not clear what effect that omission may have on the mortgage contract's validity.

To establish the purchase price one needs to obtain the historical title document from the Land Registry.  TLL paid CCC £350,000 for it on 13th April 2018.  

TLL did nothing with the property for sixteen months.  On 23rd August 2019 it submitted a planning application to Fenland District Council for a change of use to nine residential dwellings comprising one two-storey house, four 2-bed and four 1-bed flats.

Fenland District Council granted TLL planning permission on 4th February 2020, with the standard condition that development work had to begin within three years of the decision notice - i.e. by 4th February 2023.  This Land then had the option of developing the site itself, or selling it to a developer, with planning permission, which should have substantially enhanced its value.

The expectation was that This Land would develop the building, since that is what CCC set it up to do.  Here is an extract from the "Outline business case" put before CCC's Commercial and Investment Committee on 27th May 2016 for establishing a company "as a housing development vehicle (HDV) for property development":

"In view of CCC land holdings, and the currently extremely buoyant economic conditions for housing development, there is an opportunity for CCC to develop its own land rather than sell it. Simply selling sites for others to develop, and profit from, is no longer an option for CCC. The scale of the financial challenges facing CCC requires that it has to review every opportunity available to it in order to create an on-going revenue stream that can mitigate the reduction in the services that it otherwise would have to make.

 The vision is to transform CCC from being a seller of sites to being a developer of sites. CCC is therefore developing, and delivering, a series of principally residential development projects from its property portfolio across Cambridgeshire, planned over an initial 10-year timescale."

For whatever reason, TLL did not develop 34a Station Road, but waited a further three years and nine months before selling it to Gas Tech Utilities Ltd on 27th November 2023 - without planning permission - for £251,000 + VAT.  The sale price was £99,000 (28%) less than TLL had paid for it five and a half years earlier.

Only This Land can explain why it squandered the opportunity of developing or selling the property within the three year planning permission window.  In so doing, it wasted time and the fees charged for the planning application.

The new owner, a director of March-based Gas Tech Utilities Ltd, submitted an all but identical planning application on 9th January 2024.  It was granted on 19th September 2024.  The new application used the same agent as TLL, and the 2024 application was for the same conversion to nine residential dwellings.  The Land Registry currently shows five of the nine new residences on its website: 1, 2, 5, 6 and 7 Grammar House, 34a Station Road, March.  No onward sales have yet been recorded.  That could be because the properties may have been let.  The purchaser is also a director of a property lettings company with the same March address as Gas Tech Utilities Ltd.

Why was the November 2023 sale price so much lower than the £350,000 TLL paid in April 2018?  One possibility is that it had been grossly over-valued by CCC's valuer Savills in 2018.  Another  is that property prices in March slumped over those five years.  That appears not to be the case, according to Nationwide's house price index calculator.  Property prices in March and East Anglia rose by 21% over that period, and by 27% between April 2018 and November 2022.  The sale price to Gas Tech Utilities Ltd in November 2024 was 41% below Nationwide's estimated market value.

A third possibility is that This Land, which has been chronically short of cash since incorporation, was squeezed by developers (who would have been aware of the company's cashflow crisis) into disposing of the property at much lower than market value.

So how much did This Land lose overall on this investment?  The relevant components are the purchase and sale prices, TLL's loan interest payable to CCC (around 7.1%), the planning application fees and associated costs, business rates, and the time value of money (cost of capital). 

If one estimates planning application costs of £60,000 in 2020 and applies a 3% cost of capital (close to the average house price increases over the same period), the discounted cash flows produce a net present value of minus £497,686 for the project in 2024 terms.

Future blog posts will feature other properties bought and sold by This Land Ltd.

I was wrong. This Land Ltd sold only one house in 2024-25

 By Andrew Rowson

Cambridgeshire County Council denies statutory information inspection rights to the public and its own elected councillors.

In the last post, I speculated that Cambridgeshire County Council's (CCC) beleaguered housebuilding subsidiary, This Land Ltd, may have made a comprehensive loss of over £1m on each of the thirteen houses it sold in 2024-25.  The calculation was based on the average sale price of  the 23 houses the company sold the previous year, and on the assumption that all, or nearly all the company's revenue that year had come from selling houses, rather than selling its own land, which historically has made up 76% of its total sales.  This Land Ltd has now published its audited financial statements for 2024-25, and the official figures are even more alarming.  This Land did not sell thirteen houses in 2024-25.  It sold just one: 61 Windmill Close, Over - for £463,543 on 24th May 2024. 

Apart from £57,000 rental income, the remaining £5.23 million sales revenue came from land sales, further depleting the company's property portfolio with which it plans to trade itself out of its current mess.  

This Land Ltd and its single shareholder, CCC, insist that the company will repay all its outstanding loans totalling £120m, plus interest (at least another £27m), by March 2029, which is now only three and a half years away.

All those repayments will have to come out of super massive profits, which the graph above shows is not This Land's forte.  In the latest accounting year, the company reported a loss of £13.63m.  Its net profit margin for the year was an impressive minus138%.  As reported in a previous post, to achieve that miraculous turnaround, This Land would need to build and sell hundreds of houses every year over the next four years, all at exceptionally high profit margins, on the small amount of land it has left after selling most of it to proper housebuilders.  The numbers clearly do not add up, and This Land's latest business plan is an arithmetic impossibility.

Riding roughshod over the law

In the circumstances, given the scale of This Land's losses and its outstanding debt, it is only reasonable for concerned members of the public and elected councillors who do not serve on the secretive Shareholder Sub-Committee to ask reasonable questions, challenge the figures we are allowed to see, and ask to see the supporting documents that might explain just how This Land plans to pull off the greatest turnaround in corporate history.  CCC is having none of it.

In July this year, I asked to inspect documents relating to This Land during the statutory 30 working days inspection period under section 26 of the Local Audit & Accountability Act 2014.  CCC's draft annual accounts include consolidated group accounts (pp144-155), which comprise CCC's and This Land's accounting records.  Section 26 states that during the inspection period, any interested person may: 

'inspect the accounting records for the financial year to which the audit relates, and all books, deeds, contracts, bills, vouchers, receipts and other documents relating to those records.'

That naturally includes This Land's draft accounts and all other accouting records, documents etc. relating to This Land's 2024-25 accounts, because they form an integral part of the county council's group accounts.  CCC though has a different interpretation of the law.  It asserts, without producing any evidence, that the group accounts and related documents are somehow out of scope of s26.  The senior legal officer and Monitoring Officer at the council, Ms Emma Duncan, claims to have received external legal advice to support that illogical interpretation, but has not produced any evidence of it.  I first asked Ms Duncan for that legal advice in July 2024.  She ignored the letter.  When I asked to see the evidence in July this year, the Chair of the Audit & Accounts Committee, Cllr Chris Boden, declared that it could not be produced because it might be subject to legal, professional privilege.  A Freedom of Information request was raised, which the authority should have responded to by 26th August.  Instead, it gave itself another four week extension period, citing dubious technical grounds.  The exemptions the authority claims to be relying on were challenged last month, but the authority has so far declined to address the substance of the challenge, resorting instead to its well used tactic of issuing a ludicrous threatening letter, signed on this occasion by the Monitoring Officer herself.

Elected members also denied their statutory inspection rights

As for CCC's elected councillors, many of them are just as concerned about This Land Ltd, and keen to have information that might explain exactly how the company plans to make super-massive profits in the next four years, when its house sales have all but evaporated, and without any further financing from CCC to repay all its debt and loan interest without taxpayers' money being lost.

If there is a plausible explanation, it must lie in six appendices that have been concealed from the public under Agenda Item 4 in the July 24th meeting of CCC's Shareholder Sub-Committee.

Any elected member at CCC, regardless of whether they serve on the sub-committee, is fully entitled under section 100F of the Local Government Act 1972 to inspect and have copies of any and all of those appendices.  Several councillors at CCC I understand have already asked to inspect them, but the Monitoring Officer has flatly refused their requests, apparently in breach of the statutory legislation.

Under section 5 of the Local Government and Housing Act 1989, the Monitoring Officer has a legal duty to ensure councils fulfil statutory obligations and apply their codes of conduct. This includes investigating and reporting on anything the authority does that has the potential to be an illegal action or any action that might count as maladministration.  So what happens when the Monitoring Officer herself repeatedly breaches statutory obligations that should allow the public and elected members to inspect important documents relating to a wholly owned housing company that has lost £63.9 million in 9 years, sold just 77 houses, owes its shareholder £126 million (including unpaid loan interest from 2024-25) that it can never hope to repay, and which pays its chief executive £575,065 in a single year?

This Land Ltd - losing £1 million on every house sold in 2024-25?

Cambridgeshire County Council needs to come clean with taxpayers over failed housing company

By Andrew Rowson

Last December, at a meeting of the full Cambridgeshire County Council (CCC), a member of the public (Mr Guy Lachlan), asked Cllr Lucy Nethsingha about the performance of This Land Ltd, the authority’s wholly owned housing development company.  This was the council leader's reply:

“The company has enabled the building of nearly 1,000 homes, including 300 affordable homes, with plans to deliver over 4,700 more, of which around 1,700 will be affordable.  In continually assessing the value of the company, we hold regular meetings to discuss progress and performance, as well as to ensure the company is following its business plan and provide security for our loans.”

It was a highly inaccurate and misleading statement in several ways, not least in the use of the phrase “enabled the building of...”.  What the councillor meant, but did not say, is that to address This Land’s chronic lack of cash and its hopelessly over-simplified business plans, the company has sold off to developers at least £78 million worth of its own mortgaged land purchased from CCC for the express purpose of building houses on it and selling them for profit.  It was those developers, who sometimes picked up the properties for much less than they were worth, who are responsible for the 1,000 homes statistic, if even that is an accurate figure.  In all but one instance, This Land kept all the onward sale proceeds, failing to repay the County Council the mortgage principal.  That apparent breach of legal mortgage agreements between This Land and CCC largely explains why the company’s debt (before the recent debt write-offs) is £119.8m, whilst its shareholder's land security in March this year was only £24.4m.  

As for This Land itself, in the eight accounting periods to March 2024, audited accounts filed at Companies House show that it sold just 76 homes, at average prices ranging between £247,000 and £561,000 per unit per year.

The public cannot see how many houses This Land alone has built or plans to build in the future.  That information is not shown in the latest business plan published in July. It might be held in one of the confidential appendices only some county councillors have been allowed to see.  In addition, for the fourth consecutive year, CCC has denied a member of the public’s request to inspect This Land’s draft accounts during the statutory document inspection period – in breach of the law.

This Land’s 2024/25 audited accounts are unlikely to be published before the end of the year, which is only three months before the end of the 2025-26 accounting period.  In the meantime, some details about its 2024-25 performance have emerged in This Land’s accounts consolidation schedules – figures This Land produced for the County Council to construct its own consolidated group accounts.

The table above shows This Land's 2024-25 house sales in sharp decline over the last two years.  The £5.693m revenue figure for 2024-25 in fact covers house and land sales, but the consolidation schedules do not show the split.  However, the indications are that This Land may have run out of surplus land to sell to keep itself afloat.  So most, if not all that figure is likely to be house sales.  Although This Land is supposed to be a housebuilding company, historically less than a quarter of its sales revenue has come from selling houses.  In the four years to 2023-24, 76%  came from cannibalising its own mortgaged property portfolio to avoid running out of cash altogether.

If one assumes all of This Land's 2024-25 sales revenue came from selling houses, that would represent a 42% fall in house sales on the previous year.  So how many houses did This Land manage to sell in 2024-25?  The number of units is not included in the consolidation schedules, though it should be stated in the draft accounts.  If one takes the same average sale price per unit as the year before, (£427,400) that would be just 13 houses sold in This Land’s ninth year of activity.  If the average sale price in 2024-25 were higher than that, or some of the revenue related to land sales, the number of units sold would be correspondingly lower, and the loss per sale higher.  13 house sales would mean a comprehensive loss of £1.05 million for each house This Land sold in 2024-25 (£13.633m / 13) - at a time when it had to be ramping up construction and sales by at least an order of magnitude to stand any chance of meeting its loan repayment promises.  Without the £65.7m write-off, This Land will need to repay its lender, CCC £120 million of loan principal, plus at least £35 million of loan interest in the next five years - with all of those repayments having to come from house sale profits.

In March this year,  CCC wrote-off £59.85m of those loans, plus 100% of its £5.85m equity "investment" in This Land, and called the company a going-concern as a result.  At the same time, Cllr Nethsingha insisted it was not a write-off and bizarrely, that all the loans and interest will be repaid, apparently by 2030, with no new funding needed.  The new Chair of the council's Shareholder Sub-Committee, Cllr Karen Young, echoed that upbeat message in a written answer at July's full council meeting: 

"This Land themselves will continue accounting for the full repayment of the amounts lent by the Council."

Putting aside the write-off contradictions above, full repayment seems impossible given the ingredients This Land now has to work with.  At 31st March this year, the company had £11m of cash in the bank and inventory worth £46.7m, of which £24.4m was land.  To repay all loans and interest, This Land would need to convert those assets into profits of £160 million - £32m/year on average, including 2025-26.  With even an exceptionally optimistic net profit margin of 20%, (compared to the minus 183% margin in 2024-25), that means This Land's total house sales would need to be £960 million over five years, or £192m per year on average until 2030.  If one also takes a highly optimistic average unit sale price of £450,000 - (given This Land's commitment to 45% affordable houses), it means This Land would need to build and sell on average 427 houses each year until 2030:  2,135 houses in total.  Looking at the actual numbers and the direction of travel of This Land's house sales over the last three years (33, 23, 13 units), it is clear that the latest business plan, like its predecessors, is another work of fiction, apparently intended to deceive the public. 

In January this year, on local auditor KPMG's recommendation, CCC's councillors serving on the Shareholder Sub-Committee were given governance training, specifically to equip them to challenge This Land's business plans.  This was in response to KPMG's findings from its 2023-24 audit of CCC's single entity and group accounts:

"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."

Yet in July this year, in secret session, the Sub-Committee voted unanimously to approve This Land's revised business plan (which does recognise the huge write-off), but whose arithmetic does not begin to add up, as explained in a previous blog post.

Déjà vu

An elected member from CCC's last administration recently admitted in writing that even four years ago, This Land's assets were between £50m and £90m lower than its liabilities, and that the leadership decided it could not wind up the company immediately because that would mean CCC inheriting the debt, which would bankrupt the council.  Four years ago, This Land's official comprehensive losses were just below £20 million.  So what did CCC do?  It put its collective head in the sand, hoping that somehow things would get better.  Predictably, they got worse.  Now This Land's comprehensive losses are £63.9 million, and the authority is again ploughing on as before, losing over £1 million every month, and over £1 million per house sold.

This Land's revised business plan is a thoroughly dishonest document.  Its cashflow model at paragraph 3.5 provides no useful information.  It simply shows net flows per year, without revealing the corresponding outflows and inflows, or how many houses are due to be built and sold each year.  It does not show the expected profit margin from those sales, or explain how the company can suddenly produce healthy positive profit margins at scale, after years of profoundly negative margins.  It does not explain where This Land will obtain the cash to build the houses that are to produce the model's implausible positive net cashflows.  Nor does it explain how This Land will fit over 2,000 houses onto the remaining land from its portfolio that it has not yet sold to developers, without buying more land with more money loaned by CCC five years after the government outlawed councils borrowing from the Public Works Loan Board to fund commercial activity.

Finally, CCC has chosen to conceal six appendices to This Land's latest business plan that might shed some light on the headline figures.  It declares it is not in the public interest for the public to see that information.

Nowhere has This Land or CCC explained why This Land's house sales have shrunk by 61% in two years, or why average house prices have fluctuated so wildly from year to year.  The public has been kept totally in the dark, and we are expected to put our trust in figures that, as currently presented, make no sense at all, and also to put nearly £200 million of our money in the hands of elected members who the auditor thinks lack the expertise or the curiosity to ensure taxpayers' money is well managed.  Here is another quote from KPMG's latest year-end report to the Audit & Accounts Committee in February this year:

"We reviewed the corporate risk register and noted that there was not a specific risk associated with This Land. Given the potential risk to the Council of This Land falling further behind the business plan, we would expect there to be a risk on the Corporate Risk Register to ensure there is appropriate understanding and oversight over the risk as it may emerge."

Produce the information, or close down This Land now.

In light of This Land's rapid decline in commercial performance, the arithmetic impossibility of the latest business plan working, and the recent £65.7m write-off that was kept secret for nearly four months until after the local elections, the public is entitled to much more and better information.  In 2021 CCC chose not to close the company down for fear of bankrupting the council, when This Land's losses were less than a third of what they are now.  So there is every reason to suspect the same irrational motive for inaction persists today at CCC.  Doing nothing and hoping for the best does not reduce the risk of bankrupting the council, it magnifies it.

Local taxpayers need to see the hidden, so-called commercially sensitive appendices to the latest business plan and This Land's draft accounts for 2024-25 which should provide them with essential facts they have every right to see.  Besides, a company that has been forgiven £60m worth of debt and gifted a two-year loan interest holiday worth a further £15 million so it can carry on losing a million pounds of public money each month is clearly not operating in the same commercially competitive environment as other local housebuilders.  They would have gone bust and left the marketplace years ago had they performed as poorly.  The "commercial sensitivity" argument for CCC concealing embarrassing information therefore expired years ago.  The County Council needs to come clean and produce all the hidden facts and figures without delay, or else close the company down now in the taxpayers' interest, whatever the wider ramifications might be.