By Andrew Rowson
What sequence of events led to Cambridgeshire County Council's (CCC) housing development company, This Land Ltd (TLL) being allowed to dispose of land and properties it had only purchased from its shareholder two years earlier?
Since April 2020, TLL has disposed of £88 million worth of its own mortgaged property, selling it to developers without repaying the mortage principal to CCC. In so doing, most of CCC's land security has now been lost. That loss of security was the single biggest factor in CCC's decision a year ago, (apparently at auditor KPMG's insistance), to write off £59.85 million of unrecoverable loan debt owed by TLL, and to make a 100% impairment (i.e. write-off) of CCC's now worthless £5.85m equity investment in This Land.
The County Council not only allowed This Land to throw away the authority's only chance of making a long-term return on its investment, it recommended it.
In April 2020, Members on the Commercial and Investment Committee agreed, by a majority, to a recommendation in a report by a senior Finance Officer to permit TLL to dispose of a number of mortgaged properties and keep the proceeds, rather than to repay the mortgage principal.
Both Officers and Members have a duty to be good stewards of taxpayers' money. Allowing a supposedly arms-length subsidiary to throw away the Council's land security does not look like good stewardship. This is the story of how that pivotal decision was made.
The background.
By September 2019, TLL had been in existence for three years, but had yet to sell a single house. On 13th September 2019, CCC's Deputy s151 Officer presented an update report on This Land Financing to Members of the Commercial and Investment Committee.
The report pointed to the over £100m that This Land had already borrowed, and signalled that CCC would now need to lend substantially more to the company as it entered the development and construction phase. No concrete figure was given, and the Committee was only asked to note and comment on the report rather than approve a specific recommendation.
Three days later, TLL's accounts for the year to December 2018 were signed off by its auditor, RSM UK Audit LLP. The company had made a comprehensive loss of £3.9 million, which raised the company's total losses over its first two years by a factor of six. A week later, on 24th September 2019, TLL held its AGM, and the Commercial and Investment Committee held a brief confidential meeting beforehand.
The agenda papers and minutes for that meeting have not been made public. However, the action log for the Committee shows that at that September meeting, Committee Chairman, Cllr Joshua Schumann, was tasked with seeking legal advice on who should be allowed to serve on TLL's Board of Directors.
In particular, Committee Members were apparently unclear and needed a qualified lawyer to tell them whether it was appropriate for CCC's Chief Finance Officer and s151 Officer, Chris Malyon, to serve on This Land's Board, or whether that might be considered a conflict of interests.
Mr Malyon was the architect behind the This Land project, and in charge of the Finance and Resources Directorate, where the commercial loan interest from TLL ended up, before it was forwarded (according to Mr Malyon) to frontline services in a manner that has never been made public, and which no elected Member apparently has ever asked to see. Up to March 2026, £45 million of interest from This Land has been paid into CCC's Finance and Resources Directorate.
The Action Log record shows that it then took a further nine months for the legal advice to arrive.
When the C&I Committee met on 19th June 2020, Mr Malyon explained what the lawyers had said (see also here, timestamp 33:05):
"...the other key issue is around the non-exec director role, which Steve Cox and I both act as shareholder representatives on the Board, and Members of the Committee will know that the advice that we’ve received on two occasions now from external legal support has been quite candid. In my statutory role as Section 151 Officer to the Council, there is a risk that I would be conflicted in sitting on the Board. And, although we’ve taken steps to mitigate that in terms of the activities of this Committee by me stepping down from any issues associated with the loan structures and sale of any properties to This Land, it does put Tom Kelly, who is my Deputy Section 151 Officer obviously in a difficult position because he reports to me, and I sit on the Board of the Company. So, we’ve always had in mind that… and have agreed that I would step down and a political representative would then be appointed by the Committee."
Companies House filings show that Mr Malyon resigned from his This Land NED role three weeks later, on 9th July 2020.
Why did it take so long? Why was the first legal advice insufficient? And when was that provided? Did anything consequential take place during that nine month period?
Information about the relevant dates and which legal advisors were used is currently the subject of an FOI request. Seven months into that nine month period marked perhaps the most critical decision about TLL's future.
Firstly, the Deputy s151 Officer's 13th September 2019 report set out that CCC Finance was contemplating lending substantially more money to This Land. Some of the additional loans were expressly to allow the company to service its existing loan debt. It was an admission that it could not pay its own loan interest. What rational lender responds by lending a borrower even more money? That only creates a spiral of dependency.
Then, on 11th March 2020, six months after Committee Members had requested the legal advice, and with still no response, HM Treasury published a consultation paper setting out the government's plans for the Public Works Loan Board to stop lending to councils for commercial yield - exactly the type of borrowing CCC had been doing to finance This Land. The document spelled out the risks at the local level if councils borrow irresponsibly for the wrong reasons:
"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."
That warning might have been addressed to Mr Malyon.
The following month, on 24th April, CCC's Commercial & Investment Committee discussed a report in private session on an Agenda item called:
This Land: Multi-year Business Plan, Financing & Other updates.
There is little doubt the Treasury's paper would have been discussed. All the public could glean at the time from the public minutes of the meeting is that Members approved, by a majority to:
"receive the updated This Land Business Plan 2020 as well as to agree the other related recommendations as set out in the report."
It took a further two years, and a brief reference in another committee report for the public to understand what had been agreed in April 2020.
Paragraph 3.4. of the This Land Monitoring Update Report presented to Members of the Strategy & Resources Committee on 29th March 2022 begins:
"In April 2020, the Commercial and Investment Committee gave permission, for the Council’s part, for This Land to sell certain listed properties releasing and varying the Council’s mortgages/legal charge and other rights and interests in those properties. At that time the listed properties focused on those identified for disposal in that phase of the business plan."
Would they have been listed for disposal so soon after This Land purchased them had it not been for that clear signal from the Treasury? So, instead of closing down TLL in April 2020, when total losses were only £16.5 million, when additional borrowing from the PWLB looked impossible, and when CCC could still have repossessed all the property it had sold to the company, one Committee decided in secret to let This Land begin selling its mortgaged properties to developers, not to repay CCC the mortgage principal on those properties, but instead use some of the proceeds to continue paying £8.5m/year in loan interest into CCC's Finance Directorate.
As a direct result of that decision, and the land disposals that have followed every year since, This Land's losses are now £75.8m, CCC's land security is down to £20.6m, it has already had to write-off £66m of unrecoverable debt, and the figures today suggest the company will struggle to find the cash among the ruins to repay much, if any of the remaining £59.9m loan principal it still owes its shareholder.
The April 2020 report setting out the rationale for that recommendation today remains a confidential document. It is the subject of an FOI request. But on past experience, and despite the clear public interest in its disclosure, it may need to be escalated to the Information Commissioner's Officer before it can be made public.
Who authored the report, and does it matter?
The report's author would either be Mr Malyon himself, or more likely his then Deputy, and successor as s151 Officer, Tom Kelly. Whoever it was, at the time Mr Malyon was still the s151 Officer, and remained a Non-Executive Director of This Land Ltd thanks to the delay in obtaining the legal advice. If the report was written by his Deputy, how likely is it that he was not influenced by Mr Malyon, to whom he reported directly?
It is impossible to view that report and subsequent decision in terms of an arms-length commercial relationship beween CCC and TLL. Releasing and varying the Council’s mortgages/legal charge and other rights and interests in those properties resulted in a massive cash injection for TLL and a corresponding loss for CCC, and by extension for local taxpayers. £66 million of that loss was crystallised in March 2025. However senior Officers and the Council Leader try to conceal its true nature, last year's loan write-off will never be recovered.
That far-reaching decision six years ago was not debated or approved by the full Council. It raises other important questions such as - Was the decision properly informed? Were Members aware that This Land was already in financial difficulty? Was the decision consistent with CCC's statutory duties and financial/governance obligations? Whoever's name was on the report, and regardless of whether the s151 Officer left the room before the matter was debated, he could not have been unaware of what was being proposed, or what was decided. The conflict of interests seems as plain as day.
Two months after that decision, and nine months after it was sought, the legal advice arrived, and Mr Malyon resigned from his position at This Land Ltd shortly thereafter (see above).
The FOI request for the April 2020 report and associated documents, including the confidential minutes, can be found here. Readers of this blog will be updated with any developments relating to the request.
