By Andrew Rowson
Council created bogus mortgages to cover up housing company insolvency.
Since its inception in 2016, Cambridgeshire County Council’s (CCC) wholly-owned housing development company, This Land Ltd (TLL) has been loaned £133 million of taxpayers’ money by its shareholder. To afford the loans, CCC borrowed from the Public Works Loan Board (PWLB).
In the nine years since then, TLL has recorded comprehensive
losses every year totalling £63.9 million up to March 2025 (2024/25 figures are
subject to audit).
Over the years, TLL has repaid £13.3m of loan principal. Those repayments were all for unsecured loans, which normally attract a higher interest rate for the borrower because of the higher financial risk for the lender. The table below shows all loans, which reconcile with This Land Ltd’s closing borrowing balances in its financial statements (excluding the March 2025 debt write-offs - see below).
Where did the remaining loans go?
Apart from the start-up funding from the £13.34m
unsecured loans (apparently repaid with cash from later loans), the £119.7m loans
outstanding at 31 March 2025 were supposed to be mortgage loans, secured on former CCC-owned properties (greenfield and brownfield sites) that the
council sold to This Land at market rates.
In his report
on This Land’s latest business plan in July 2025, CCC Executive Director of
Finance and Resources, Mr Michael Hudson writes of This Land paying the
authority “£78.8m in capital receipts” for those properties. That leaves unexplained lending of
£40.9 million. Where did that money go?
The answer lies mostly in the legal charges against This Land’s
properties filed at Companies House under This
Land Development Ltd. The first 30 charges relate to purchased land
assets. Charge No. 0031 created in May
2023 is a catch-all charge on all This Land’s assets, including cash, plant and
machinery etc. presumably to minimise CCC’s losses in the event of This Land’s
insolvency.
The first 30 charges are tabulated below. Their total value is £113.8m, £5.9m
short of the £119.7m total loans figure, but still £35m more than the stated
capital receipts figure of £78.8m. In the
absence of any other information, it could be assumed that the £5.9m represents additional money used by This Land to keep the company running, rather than for purchasing properties. If so, on top of the £13.34m
repaid loans, it would bring This Land’s start-up funding to £19.24m.
On closer examination of the legal mortgage documents,
charges 0001 to 0027 (total value £77.872m) represent individual properties or
packets of properties representing This Land’s portfolio of mortgaged land. In every instance the charge value is identical
to the corresponding property’s sale price to This Land in 2018 and 2019, as recorded
at the Land Registry. In other words,
they are all 100% mortgages.
Charge
0030 is the only disclosed property This Land purchased from someone other
than CCC. It is a property in Hertfordshire
bought from a private individual for £1.75m in March 2021. Therefore, it does not feature among the
capital receipts TLL paid to CCC.
The £77.872m represented by charges 0001 to 0027 is within £1m
of Mr Hudson’s £78.8m capital receipts figure.
The difference may be down to an undisclosed additional mortaged
property, a misstatement by Mr Hudson, or some other reason. But it does not explain the remaining £34.2m
difference between the total borrowing and the total charges, which seems to
lie within charges 0028 and 0029 – highlighted in blue above.
Before exploring those two charges, a look at a
representative charge in the 0001 to 0027 range proves instructive.
Charge reference 0010 created on 13th April 2018 was for TLL’s purchase
from CCC of the Fitzwilliam Road Hostel in Cambridge:
TLL paid £1.1 million for the hostel, and that money came out
of a larger loan facility agreement, known as “Portfolio 3” of £38.291m (see
below).
The stated loan facility total is in fact slightly higher
(by £1.445m) than the corresponding loan of £36.846m CCC took out from the PWLB
in January 2018 (shown in yellow in the borrowing schedule table above). Perhaps the authority added £1.445m from
available funds to make up the Portfolio 3 total.
No second mortgage allowed
An important clause in every charge/mortgage document is
clause 6.3 – No Security:
It means that both parties agree that the charge is the only
charge on each property, and there can be no second charge against it. That is standard practice, especially since
they are 100% mortgages. If a second charge were to be made against the same property, in the event of the borrower
defaulting, the second lender would have no security over the
property because of the initial charge, and the second loan would thus effectively
be an unsecured loan, and possibly unlawful if it had been presented as anything
else.
Charges 0028 and 0029 – double and triple counting of the same land security
Charge 0028 was created in August 2020, shortly before This Land reported devastating results in its 2019 audited financial statements. In the
calendar year to December 2019, This Land sold no houses. Its token sales revenue was £34,407 rental
income. Its comprehensive loss for the
year was £11.8m. At the year-end it had only £3.78m in the bank, and owed CCC £5.18m in loan interest
arrears that had been payable in 2019. To
compound matters, in the course of 2019 This Land borrowed a further £50m from
its sole shareholder, bringing its total indebtedness to CCC at December 2019
to £96.5m. The interest payable over the
next 15-month accounting period would be in the region of £8.9 million.
At the beginning of 2020, This Land’s development pipeline also looked
bleak. During the 15-month accounting
period to March 2021, TLL would sell just two houses (its first two) for £1.2m (i.e. less
than a quarter of the 2019 loan interest arrears). The company was critically short of cash. In the background, the Treasury had published a consultation
paper in March 2020 on future lending terms for councils borrowing from the
PWLB. The writing was on the wall that the unchecked cycle of CCC being able
to borrow from the PWLB to lend to TLL, only to borrow more to lend to TLL
so it could pay the loan interest, would soon come to an end.
Charge 0028 is different to the preceding charges. Unlike them, the charge relates to a long list of
properties, most of which apparently are set out in an “instrument” that is not accessible to the public. However, the
two named properties in the brief description below are familiar because they are
properties on which CCC already had 100% charges. The former Pru at 8 Station Road, Foxton, together with the Methodist Church at 6 Station Road is charge No. 0011 (see above), and
the Fitzwilliam Road Hostel is charge No. 0010 (see above).
Charge 0028 states above that in respect of this £18.6
million mortgage (which matches the £18.6m loan dated August 2020 and highlighted
in orange in the borrowing schedule table above):
“Under this deed, the Borrower
[This Land Development Ltd] provides security to the Lender for the £18,600,000
made available or to be available under Facility Agreement.”
But that is impossible.
This Land cannot provide security to the same lender a second time for
the same named properties in Foxton and Cambridge. That is double counting, and possibly fraudulent.
What other properties are secured against the £18.6m mortgage? Since the public cannot access the “instrument”,
the next best thing is to scroll down the Charge
0028 page on Companies House to look for additional transactions filed
against the charge. There are seven of
them, all charge release documents, with dates ranging from February 2024 to January 2025. All the pdf documents
can be downloaded and inspected.
The earliest charge release document, on 5th February
2024, is a release of the Fitzwilliam Road
Hostel charge, which is the same property, with the same Land Registry title
number (CB346566) as Charge No. 0010 shown above:
An examination of all the charge release documents under Charge 0028 confirms that in every instance, the properties connected to that charge are already properties subject to one of the earlier 100% charges in the range 0001 to 0027. Those other charges, and their release dates under Charge 0028 are shown in the Charge 28 column highlighted in blue in the charge table shown above. From that table one can see that Charge 0010 was also released in the documents on its own Companies House page, on the same date (5th February 2024). That release document omits a description of the asset, but the charge code ending 0010 identifies it as the Fitzwilliam Road Hostel.
Strangely, on the charge
0010 page on Companies House, the hostel was also released in full from the
charge at the earlier date of 18th April 2023. The property itself was sold by This Land on
24th February 2023, as
recorded at the Land Registry. So
the second charge release, a year after the property was sold, is redundant
at the very least, and impossible since after the first release the property no longer belonged to This Land.
As the charge table above shows, Charge 0029 follows the same
pattern as Charge 0028. It too covers
multiple filings contained in an inaccessible “instrument”. It also has the same brief description
as charge 0028:
As with charge 0028, charge 0029 also has additional transactions
filed against it - eight in this case. They too all refer to properties already held by
This Land, secured by previous charges that cannot be added to. Five properties have three 100% charges against them: 0028, 0029 and the original charge reference.
Others, like 0018 and 0024 have been released from charge 0028 and or
0029, but those charge releases have not been recorded under the original charges 0018 and 0024 themselves.
Finally, in two instances (charges 0002 and 0022), the mortgaged
properties have been sold to third parties, and the sales recorded on the Land
Registry, but the charges have not been released in either of the charge
documents on Companies House.
A word about Charge 0029
The Charge 0029 document dated 2nd December 2020 puts the value of that facility agreement at £15.6 million. Yet the corresponding loan closest to that date in This Land Finance Ltd’s audited accounts is for £9.279m, with a repayment date of November 2026 (see first light blue highlighted row in the borrowing schedule table above). So, presumably the start date was in November or December 2020.
In July 2024, CCC’s Strategy, Resources and Performance Committee agreed
in secret to lend This Land a further £5.9m and add £400,000 to the council's equity
investment in TLL. According to subsequent public documents from the Strategy, Resources and Performance Committee in October 2024, the additional loan was to come from a previously unused drawdown facility on the "last loan" (i.e. the Nov/Dec 2020 loan of £9.279m). Later the equity investment
was dropped, but the £5.9m loan went ahead.
It would have brought the loans against that agreement up to £15.179m –
just £400,000 shy of the original facility agreement’s stated total of £15.6m. The £5.9m facility amendment agreement, dated
30th August 2024, can be viewed
here. The document refers not to the
2020 agreement, but to an amendment of an original loan facility agreement
dated 11th May 2023. That is
odd because there is no reference to a 2023 loan facility agreement on
Companies House or in This Land’s or This Land Finance’s or This Land
Development’s audited accounts. This
Land’s outstanding loans to CCC remained at the same £113.8m level for four
years, right up to the additional £5.9m loan agreed in July 2024.
There is no reference in the amendment document to any land security as
collateral for the risk to the lender of This Land defaulting on its loan obligations. Also, the agreed interest rate of 7.1% is implausibly low for a short-term, unsecured loan to a company with no creditworthiness, no
record of making profits, historical losses of over £50 million, and £113.8m of outstanding debt. CCC's current and previous local auditors have both commented
that there is a significant risk of some or all of that debt not being
recoverable. As one former county councillor implied as far back as October 2020, no rational lender would lend to This Land with its track record. Nor should CCC have done.
Finally, following the government’s November 2020 ban on councils
borrowing from the PWLB “primarily for financial return”, and the amendments to
the Prudential
Code in December 2021, it would appear that this unsecured loan, in addition to being
reckless on CCC’s part, may also have been unlawful.
What does it all mean?
The main finding after examining This Land Development Ltd’s charges on Companies House is that in 2020, CCC and This Land twice knowingly entered into substantial commercial loan agreements that they knew to be highly irregular, if not fraudulent, and that put taxpayers' money at great risk. At the time, it was anticipated that the government would shortly prohibit councils from borrowing from the PWLB for commercial yield. CCC and This Land both knew that the latter's cashflow position and short to medium term commercial prospects were dire. Others might have concluded that that was the moment to admit defeat and wind the company up. In March 2021, This Land's official total losses were only £20 million. Now they are £64 million. In 2020, CCC chose instead to pump more taxpayers' money into the company, just before the government ban came into effect, in the forlorn hope that the extra cash might keep the company afloat long enough to allow it to make pie-in-the-sky mega profits at some future date. Charges 0028 and 0029 were not loans secured on This Land’s assets that were free from other charges. They were bogus mortgages that provided zero security to CCC or its taxpayers, and came with an extremely high risk of never being recovered. That risk manifested itself in March this year, when Mr Hudson secretly wrote off £59.85m of This Land's debt, and all of the authority's £5.85 equity "investment". The need for those write-offs can be traced back to 2020 and former CFO Chris Malyon's dishonest decision to prop up the zombie company with significant state aid masquerading as commercial loans secured on land assets unencumbered by other charges.
Why did they do it?
In This Land’s 15-month financial period to March 2021, the
company received cash from three sources:
- £1.2 million from the sale of its first two houses,
- Two loans from CCC totalling £27.879 million (£18.6m + £9.279m)
- Proceeds of £18.211m from the sale of mortaged land to third parties, without TLL repaying the loan principal to CCC.
At 31st March 2021, This Land had a cash balance of £18.33m, up from £3.78m in December 2019 (see 2020/21 accounts, p29). Had it not been for the two bogus, unsecured loans, This Land’s bank account would have been £9.01m overdrawn. Without the irregular loans and the proceeds from the mortgaged land disposals that year, the company’s bank account would have been £27.2m overdrawn. It would appear that both parties have been covering up This Land’s true commercial position for nearly five years. Every year since then, This Land has continued to dispose of mortgaged land (over £78m in total), and keeping all the proceeds, with the express written consent of CCC's CFOs, including the current Executive Director of Finance and Resources, Mr Hudson.
The motives for this course of action seem to be two-fold:
1) CCC officers
and elected members would be prepared to do almost anything to avert and
avoid reputational damage. Pretending
This Land is still a going concern is a way to kick difficult decisions into
the long grass. The same mentality
exists in 2025 following CCC’s £59.85m (50%) write-off of This Land’s irrecoverable loan
debt, and the council leader's insistence that it is not a write-off
but a “debt rescheduling”.
2) Even by
2020, CCC Finance had become accustomed to, and dependent on receiving substantial and growing net
revenue from This Land with loan interest income at around 7.35% less loan
interest payable to the PWLB at around 2%.
The net income (up to £6.2m/year), was built into CCC’s investment income budgets. Were it to falter or fail, CCC Finance would
need to compensate with savings elsewhere or make cuts to frontline
services, as it now has had to do. The finance department, and perhaps
the wider council therefore had another perverse incentive not to address This
Land’s declining performance and hopeless financial position, which had its
origins in former CFO Chris Malyon's 2016 plan to set up a housing development
company principally to bring in net loan interest revenue to the authority. The original ten page prospectus, approved unanimously by members at the time, with no detailed business case and no public consultation, can be found here.
Who knew about it?
The list of people who were complicit, must have known, or
should have known about the bogus unsecured loans in 2020 and in the five years
since then, is long. The names of This Land's senior officers can be found on Companies House. The names below include
those working for CCC with special responsibilities for governance of This Land.
A)
This Land Non-Executive Directors appointed by CCC
Quentin Baker: - NED - Jun 2016- Jun 2018 (CCC Monitoring Officer)
Chris Malyon: – NED – Jun 2016 – Jul 2020 (CCC CFO)
Stephen Cox: - NED - Nov 2019 – Apr 2023 (CCC Exec Director: Place & Economy)
Cllr Josh Schumann: - NED - Jul 2020 – Jul
2021
Frank Jordan: - NED – Apr 2023- (CCC Exec Director of Place and Sustainability)
Cllr Neil Gough: - NED – Jul 2021 – May 2025
B)
CCC officers
Gillian Beasley: – CEO – Sep 2015 - May 2021
Stephen Moir: - CEO – May 2021 –
Chris Malyon: - CFO – Nov 2013 – Mar 2021
Tom Kelly: - CFO – Apr 2021 – Mar 2023
Michael Hudson: - Exec Director of Finance & Resources:
- Mar 2023 –
Quentin Baker: - Monitoring Officer - 2009 - May 2018
Fiona McMillan: - Monitoring Officer – May 2018 – Nov
2022
Emma Duncan: - Monitoring Officer – Mar 2023 –
C)
CCC elected members
Cllr Steve Count: - Council Leader and Chair of General
Purposes Committee – 2014 – May 2021
Cllr Lucy Nethsingha: - Council Leader and Chair of
Strategy & Resources Committee – May 2021 –
Cllr Mark Goldsack: - Chair of Commercial & Investment
Committee – May 2020 – May 2021
Cllr Ros Hathorn: - Chair of Assets & Procurement
Committee – Jul 2023 – May 2025
Cllr Karen Young: - Chair of Assets & Procurement
Committee – May 2025 -
Cllr Mike Shellens: - Chair of Audit & Accounts
Committee – 2018 – May 2021
Cllr Graham Wilson: - Chair of Audit & Accounts
Committee – Dec 2020 – May 2025
Cllr Chris Boden: - Chair of Audit & Accounts
Committee - May 2025 –
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