Why didn't CCC close down This Land Ltd in 2020?

By Andrew Rowson

In the last post on this site, I explained how Cambridgeshire County Council's (CCC) wholly owned housing development company, This Land Ltd (TLL), would need to make at least £28.6m of clear profits in each of the next three financial years if it is to repay CCC just half of the £120m loan capital it owed at the end of March 2025.  31st March 2029 was the date the authority's Executive Director of Finance and Resources, Michael Hudson set last year for finally winding up the loss-making company.

On 31st March 2025, TLL and CCC entered into a loan Amendment and Restatement Agreement, in which £59.85m of its outstanding debt to CCC would be written-off, whilst the remaining £59.9m would remain, though with higher loan interest rates (9.37%) - at least initially.  That remaining half of the debt is due to be fully repaid by March 2029.  To conceal its true nature, CCC's narrative for the £59.85m loan write-off was that it was not a write-off, but a "conversion to a non-interest bearing loan", or a "capital contribution", or "capital grant".  The idea is that it will still be repayable to CCC only inasfar as there are sufficient funds available in March 2029 after This Land has discharged all its other debts and liabilities of whatever nature (see agreement, p28).  It follows that for This Land even to begin repaying that £59.65m "capital contribution", This Land will need to make at least £86 million of profit over the next three financial years, after making £75.8m of losses over the previous ten years.  A close look at the figures makes that outcome wholly unlikely, which is why CCC formally acknowledged in its final 2024-25 accounts that it was not expecting any repayments from that component, and This Land's latest business plan does not include any repayments to CCC towards the £59.85m.

The last post looked at the projected loan repayments in This Land's latest business plan for meeting its  remaining £50.9m repayment obligations.  Every one of This Land's historical business plans has been discredited for being totally unrealistic and over-optimistic.  Like its predecessors, the latest business plan projects the bulk of the repayments to come near then end of the plan.  But there is no explanation, at least to the public, of how the company will generate the profits to make even those repayments possible.

Two more statistics reinforce the implausibility of This Land meeting even half of its debt repayment obligations.

In November 2020, the last government banned councils from borrowing from the Public Works Loan Board for "debt-for-commercial yield" activity - e.g. with a view to making commercial profits on enterprises and investments outside councils' core business of delivering public services.  In March 2020, HM Treasury announced its intentions in a publicly available consultation document.  The following month, in a confidential decision that the public cannot see, CCC's Commercial and Investment Committee resolved by a majority to allow This Land to begin selling off its mortgaged properties to developers and retain the proceeds rather than repaying its lender (CCC) the loan principal (which is what happens in the real world). Conservative Members voted for the recommendations, Lib Dem and Labour Members voted against.  The only reason the public knows about that decision is because it was referred to in a report to the Strategy & Resources Committee two years later in March 2022 (see here, Agenda Item 6, paragraph 3.4), when Members resolved unanimously to allow This Land to dispose of more mortgaged properties without repaying the mortgage principal to CCC.

In both instances, in 2020 and 2022, the decisions were made because This Land needed the additional cash to stay afloat and to pay CCC the commercial interest it demanded (up to £8.5m/year).  That income, around £45 million between 2018 and March 2026, was paid into CCC's Finance & Resources Directorate supposedly to contribute towards CCC's frontline services.  But no public reconciliation exists to show how and where that cash was spent after it arrived at CCC.  Officers and Committee Members point to that income as an example of how This Land benefits CCC.  But if that £45m income comes at the cost of a £66m bad debt write-off, with additional future losses likely,  it is not a net benefit at all.  And that net loss is before one considers the loan repayments CCC has to make to the Public Works Loan Board (PWLB) on the loans it took out in order to lend on to This Land for its purchases of Council-owned land.  Even at 2%/year interest, 11 years' worth of interest payments to PWLB will cost the Council around £26.4m.  If those PWLB loans were taken out for longer than 11 years (typically 25-40 years), the relevant cost to CCC and its taxpayers may continue for decades into the future.

The most visible effect of This Land disposing of those mortgaged properties is that the authority's land security against This Land defaulting on its loan repayments has been steadily eroded by the decisions recommended by CCC's current and former Chief Finance Officers (Michael Hudson, Tom Kelly, and Chris Malyon), and approved by two committees chaired by former Councillor Josh Schumann in April 2020, and by Cllr Lucy Nethsingha in March 2022.

By March 2025, £83.5 million of CCC's land security had gone, which fully explains why the Council had to write off £59.85m of unrecoverable debt in March 2025, plus £5.8m of its worthless equity investment in This Land.  The remaining £20.6m in the chart above is what remains of CCC's land security a year later, in March 2026.  That represents the remaining asset base on which TLL has to generate the unlikely profits over the next three years if Cambridgeshire taxpayers are to avoid having to pay yet more for the Council's failure to oversee and demonstrate good governance over This Land Ltd.

The erosion of CCC's land security is measured in This Land's disposals of mortgaged land since 2020-21 without repaying CCC the loan principal.  Three CCC CFOs (representing the lender) recommended the disposals, which were approved by the elected Members of the two committees mentioned above.

Up to £89m of taxpayers' money has been deliberately thrown away with those property disposals.  The 2025-26 figure (£5.73m) is This Land's total revenue in 2025-26 according to the consolidation schedules it sent to CCC.  The split between house and land sales in 2025-26 is not yet available because CCC has denied interested parties their statutory rights to inspect This Land-specific documents, which are related to CCC's group accounts.  So the precise land disposals figure for 2025-26 might be slightly lower than £5.7m.  It is fifth successive year CCC has broken the law to prevent the public from inspecting and having copies of those important documents.

In the last two financial years, This Land's revenue from the sale of houses and land has dropped precipitously to £5.69m and £5.73m respectively.  In 2024-25, the company sold just one house for £460k.  It is not yet known whether This Land sold any houses in 2025-26.  However, with This Land's interim CEO Mr Rob Williams publicly acknowledging in February this year that "we are not a housebuilder", it is likely that most of the company's 2025-26 revenue came from land disposals.

The fall in house and land sales in the last two years means that comprehensive losses in both years (in red) were more than twice as large as the company's disclosed revenue.  It is suggestive of This Land's pipeline of houses and land to sell drying up, or being tied up with procedural delays.  Historically, This Land's houses have sold for substantially less than their construction costs alone.  The table below shows that selling land is not something This Land can turn a profit on either, even before deducting the other overheads such as administrative expenses and loan interest payable.  These statistics make the prospect of This Land suddenly turning the corner and making super-massive profits between now and March 2029 even more improbable.  And yet no elected Member serving on CCC's Shareholder Sub-Committee has raised any concerns or challenged the figures they are presented with - at least not in public.

Why wasn't This Land closed down in 2020?

This Land did not sell its first house until the 15-month accounting period to March 2021, nearly five years after the company was incorporated.  By then it was already mired in debt for which it could not afford the loan interest.  Before 2020, CCC's response to TLL's appeals for cash was to lend the company yet more, which only exacerbated the problem.  But with the government's well signposted decision to stop councils like CCC borrowing more from the PWLB for their commercial initiatives, that source of funding dried up overnight.  In March 2020, following the Treasury's consultation document, CCC was faced with a stark choice.  It already knew that TLL's wildly over-optimistic projections for massive profits from housebuilding were fantastical.  Either close down the operation immediately and cut its losses (TLL's total losses then were £16.5m - now they are £75.8m), or soldier on, putting its faith in an unlikely turnaround in fortunes and bigger rewards in the future that would more than compensate for the company's rocky start.  Where was the evidence to support that rosy prospect?  It certainly was not available to the public in 2020, or in any year since then.

In April 2020, CCC's Commercial & Investment Committee nonetheless resolved in confidential session to persist with the company, and thus to put more substantial sums of public money at risk. The decision to allow This Land efecively to cannibalise itself - to dispose of its own mortgaged land so it could keep up with the interest payments to CCC and spend the remaining proceeds on admin expenses, consultants etc. was clearly reckless, and resulted in precisely the outcome the Treasury had warned about in its consultation paper only a month earlier:

"The case for this ‘debt-for-yield’ activity can be compelling for the individual

local authority. But it introduces risks locally and nationally. At the local level,

it exposes ratepayers to the risk that the income does not materialise, leaving

the local authority with an inflexible commitment to keep up with the

repayments on their loans. Within the wider public sector, it diverts money

from core services such as schools, hospitals, and roads."

The fact that CCC made a conscious decision to throw away ratepayers' security seems to indicate two things:

1) This Land could not continue its operations without further cash injections once PWLB-financed lending via CCC would no longer be available, and 

2) CCC was more focused on the uninterrupted inflow of commercial loan interest receipts into its Finance & Resources Directorate than it was on supporting and monitoring This Land as a business.  No start-up business like a housing developer with a long lead-time before it can generate income and profits could have survived the onerous burden of repaying up £8.5m/year in loan interest to its lender. Besides, This Land did not have sufficient qualified staff to process and develop £87m worth of properties all at once, and convert them into new houses to sell to the public. It was a recipe for failure.

Later in 2020, CCC made available a further £34.2m for TLL in two loan facilities (here and here).  Presumably those loans were also financed by the authority borrowing first from the PWLB in time to beat the governent's ban in November that year.  Those loans, corresponding to charges 0028 and 0029 in This Land Development Ltd's charges register on Companies House, purport to be secured on properties.  But, the loan instruments show that all but one of the properties were already associated with earlier exclusive 100% mortgage charges recorded at Companies House.  It means that several of the same properties had been mortgaged three times over.  Effectively, those 2020 loans were unsecured, and possibly unlawful.

The additional unsecured loans further increased CCC's exposure to risk.  They were executed by CCC Finance Officers, once again with the full knowledge and approval of elected Members serving on the Commercial and Investment Committee, chaired at that time by Cllr Mark Goldsack.

Taking everything into account, it would appear that CCC as a whole is unwilling or unable to admit that the This Land project has failed, and content to make further losses so long as the loan interest revenue continues to flow into the Finance and Resources directorate, all the while maintaining that the company is a going concern.  This Land Ltd's latest consolidation schedules show that the company's total liabilities exceed its total assets by £58.1 million.  After ten years of commercial operation, that does not sound like a going concern.

An independent inspection of CCC's £45m loan interest income and where it went?

It should have been clear to CCC years ago, and certainly by March 2020, that the company could not succeed because it was too small to compete, that CCC lacked knowledge and experience of the housebuilding sector, and because serious miscalculations were made about cashflow and the start-up company's ability to service a nine-figure debt burden imposed upon it practically from day one.

In light of CCC's irrational decision in 2020 to put more taxpayers' millions at risk, it may be appropriate to suggest an external examination of what happened to the £45 million of loan interest income from This Land between 2018 and March 2026 that the former Chief Finance Offficer (and This Land's founding Director) Mr Chris Malyon engineered would be paid into the Council's Finance Directorate, which he ran.  If Officers are correct in stating that those funds were subsequently redirected to the Council's frontline services: adult care, potholes etc. there should be clear evidence of that in the form of electronic audit trails and account reconciliations to vouch for all the money coming in and exactly where it went from there.  A Council that places "accountability" as the first of its core values in its Constitution should have no objection to such an exercise, and it would be a comfort for local taxpayers to know that at least some of their money has not been totally misspent.