A council leader has been quizzed about the directors of a charity which has been loaned millions of pounds of taxpayers money and oversees a large chunk of Croydon’s housing assets.
At last night’s extraordinary meeting Cllr Jason Cummings, shadow spokesman on finance, asked the Labour administration about the selection and appointment of Jonathan Bunt and Kathryn Bull (pictured left) to the board of Croydon Affordable Homes.
Cllr Cummings asked the newly appointed cabinet lead for Croydon Renewal Cllr Stuart King: “One of the things we have seen over recent weeks is we are finding more things coming out of the woodwork that are effecting the council’s financial position. In that vain I need some reassurance. Can you tell me how Jonathan Bunt and Kathryn Bull were selected and are they benefiting personally in anyway from their positions?”
Cllr Stuart King, replied that he was unaware of their names and asked for further detail.
Cllr Cummings said he was ‘surprised’ Cllr King had not met or spoken to these two people given the ‘level of control’ they have over companies that ‘were inherently involved’ in the current situation that the council finds itself in.
He explained they were directors of Croydon Affordable Homes, which has a 90 per cent controlling interest in four LLPs (Limited Liability Partnerships): Croydon Affordable Tenures, Croydon Affordable Homes, Affordable Homes Taberner House and Croydon Affordable Dwellings.
CAHLLP has been lent millions of pounds by Croydon Council after entering in to ‘very, very complex financial arrangement’ with the council, Cllr Cummings said.
Cllr King said it pre-dated his time in post and that the Pricewaterhouse Cooper’s strategic review commissioned to scrutinise Croydon’s involvement with Brick by Brick and all companies would be published next week.
Once published Cllr King said they would be able to provide answers to the questions posed by Cllr Cummings who urged: “I strongly recommend you acquaint yourself with who they are? What they are responsible for? and how much influence they may have over what is currently going on with Croydon’s finances?”
In June 2017, Croydon’s cabinet agreed a report from former housing and finance leads Cllr Alison Butler, and Cllr Simon Hall which was written by the director for resources Richard Simpson and co-authored by Jonathan Bunt and set out the proposals to form a limited liability partnerships including the charity.
The new council leader Cllr Hamida Ali and her deputy Cllr Stuart King, were both members of the cabinet and present at the meeting which heard that the council would generate around £1.4m per annum from the partnership with the aim of delivering affordable homes in Croydon.
In the following year the council’s pensions committee was provided with a similar report which stated that Mr Bunt was a special advisor to the council and proposed that in the future when the arrangement with CAHLLP ended the property could be transferred to the Pension Fund and used to reduce Croydon Council’s employer contributions.
The council set up the LLP, which are increasingly popular with local authorities, as a way of entering the commercial property market. It acted as a conduit between the council, charity, housing managers, tenants and developers including Brick by Brick.
This graphic shows how it was meant to work with the charity Croydon Affordable Housing, whose office is registered as Bernard Weatherill House – the council’s Croydon HQ – sitting on a 99 per cent share and the council owning one per cent.
Jonathan Bunt and Kathryn Bull were appointed directors of Croydon Affordable Housing in August 2017 and are the sole directors. Most trustees are unpaid, but all trustees can claim reasonable out-of-pocket expenses. Charities can pay some of their trustees or people and businesses connected to trustees for services.
It is recommended that a board of directors should be a representation of both management and shareholder interests and include both internal and external members.
Jonathan Bunt, 43, was employed as special advisor to the council in 2017/18 and runs his own company JB Financial Consulting and is a former strategic director, finance and investment at the London Borough of Barking and Dagenham.
His co-director Kathryn Bull, 56, who like Bunt has also previously worked for an unnamed London borough; both have experience of housing, regeneration and investment.
The story becomes more complex because in December 2019 the LLP was dissolved and struck off by officials at Companies House because council staff failed to do their routine paperwork on time.
Auditors Grant Thornton’s Report in the Public Interest described Croydon Holdings LLP, as a complex “group structure.”
It reported: “As part of the Revolving Investment Fund, the council has lent money to schemes designed to support the supply of housing. Two of the schemes that had £55.1million of loans outstanding at 31 March 2019 were Croydon Affordable Homes LLP and Taberner House LLP. The council has a 10 per cent holding in each company and the council’s holding is held by a company, Croydon Holdings LLP, which itself is wholly owned by the council.
“The increasing complexity of the group structures, the interaction between different subsidiaries, the longer-term financial impact for the council and how to safeguard the council’s interests is not clearly understood.”
The 2017 council report reveals how the structure was meant to work. As part of the limited liability partnership with Croydon Affordable Homes, the council lease properties to it on a long-term basis and it manages and maintains the properties, collects rent, and pays any surplus income to the council as rent under the lease agreement.
Its goal was to rent out at least 340 local homes costing a maximum 65 per cent of the usual private rent to borough residents by 2020. Part one of this plan is complete, with 96 one: two- and three-bedroom properties now formally transferred from being council-owned temporary housing to becoming part of CAH.
Under the terms of this proposal, at year 40, the Council has the option to exercise a break clause in the lease agreements which means the properties would return, fully maintained and unencumbered with debt, to the Council.
The report outlined how the LLPs will: “utilise an estimated £25m of right to buy receipts that the Council does not currently have the capacity in the housing revenue account to use and therefore enable the borough to benefit from their application rather than having to repay to central government.
“The proposals will see the Council take on further debt of approximately £50m to lend to the LLPs. The financial models demonstrate the ability of the LLPs to repay these debts over 40 years in line with the length of the initial period of the proposed leases. “
Jonathan Bunt, was employed as special advisor to the council and worked alongside then finance chief Richard Simpson, who resigned from the council in November 2018.
Mr Bunt also has a background developing affordable housing programmes and sits as a director on Bromley Council’s Beehive Affordable Homes.
His name appears in Croydon council’s report in January 2018 delivered to the council’s pensions committee overseen by the then cabinet lead for finance Cllr Simon Hall, under the subject heading Croydon Pension Fund: Property Transfer Proposal.
The report set outs transferring the CAHLLP property assets into the Pension Fund at the end of the lease agreement with one option to sell off the properties with the aim of reducing Croydon Council’s employer contributions.
The report also states that there is a local authority ‘precedent’ for this proposal and that Bromley Council set up a similar arrangement with its Pension Fund which was approved in 2016.
Less is known about Mr Bunt’s fellow director Kathryn Bull’s connection to Croydon. She has worked as an Associate for Campbell Tickell since 2018 specialising in governance and risk related consultancy projects. According to her biography on its website her non-executive roles include being a trustee of a housing charity in Croydon.
Kathryn, it says, has wide ranging senior management experience of running corporate and strategic services within housing organisations and worked for a London borough leading on housing strategy, HRA Business Planning, finance and asset management.