Millions lost by council housing firm 'shameful'

Lion Homes was set up to help deliver new homes in Norwich

A council lost millions of pounds on a housing development company whose performance was "not regularly tracked", according to a leaked report.

Last month Norwich City Council agreed to liquidate Lion Homes, which had been set up to generate revenue for the authority and build more affordable homes.

Green councillor Alex Catt said it was "shameful" that a review found the firm's shareholder panel - which included councillors and was supposed to meet four times a year - had not met since November 2023.

The Labour-run council – which had to write off a £6m loan to the firm – said it had struggled because of "spiralling borrowing costs and a hostile planning system".

Carli Harper, cabinet member for finance and major projects, said there would be "a full scrutiny and audit review" of what happened with the company.

Founded as Norwich Regeneration Limited in 2015, the company was supposed to develop private housing projects to raise income for the council, while also providing some affordable homes.

But some of its developments struggled and in 2020 it emerged £6m was lost when homes in Bowthorpe were sold for less than they cost to build.

Norwich City Council had hoped Lion Homes would also raise revenue for the authority

With the company close to collapse last year, consultants 31Ten were commissioned to review the financial risk posed to the council.

The BBC has seen the report from October 2024, which found that objectives for the firm "were not clear" or "clearly linked to key performance indicators nor regularly tracked".

It said it was "critical" for the shareholder panel – set-up to oversee the business – to meet regularly, but it had not done so for months.

The consultants also found that the four Lion Homes employees also worked in the council's housing delivery team and warned that could "lead to a perception of conflict of interest".

They also said the firm had built up loses of £5.72m over a number of years, while the council had invested £3.42m in it and provided a loan of £6.15m, which has since been written off.

Green councillor Alex Catt said Lion Homes "had problems from the beginning"

A separate report from accountants Grant Thornton said liquidating the company and its assets could recoup the council £4.5m.

Alex Catt, who leads the council's opposition Green group, said concerns raised by his party about how the firm was run "had been completely ignored".

"It's frankly just a mess," he said.

"It's lacked basic governance, any accountability, any sort of purpose and was going forward on the basis of financial calculations that were completely wrong."

Harper said selling Lion Homes' assets "will help us to significantly reduce any outstanding debt" and insisted the council was "always transparent about finances".

She said other housing companies had faced the same problems of "spiralling borrowing costs and a hostile planning system" and that the council would develop housing projects itself, instead of using a private firm.

"Bringing Lion Homes in-house… ensures the council continues to deliver the housing Norwich needs in a more transparent, accountable way," she said.