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?