North Yorkshire County Council is estimating that its Brierley Group of companies will return to profit by the end of the financial year.

According to a performance report for the group, the businesses are forecast a £2.69 million profit before tax by the end of 2022/23.

The figure is against a budgeted profit of £2.61 million.

It comes as the companies had previously posted losses of £327,000 for the previous financial year due to the covid pandemic.

The county council puts the performance down to a “positive outlook” for sales in Brierley Homes sites and other companies performing above budget.

A report due before the council’s shareholder committee said that while revenue was ahead of budget, the group still faced cost increases, inflation and high energy and labour costs.

It said:

“Revenue remains significantly ahead of budget, however all market segments continue to experience material cost increases, with inflationary pressures in the UK acting to drive up general costs of sale.”

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Brierley Homes saw completion of two of its housing sites last year, which is expected to see sales “fully realises this financial year”, the report added.

The sites include Woodfield Square in Bilton and Millwright Park in Pateley Bridge.

The company expects further sales for its Yew Tree Farm site in Marton-Cum-Grafton.

Meanwhile, Align Property Partners is expected to publish a profitable position with “new external client contracts being acquired” and the firm having a “significant outperformance” against budget.

The company is expected to operate on a commercial basis under North Yorkshire Council as the authority sets up a new council-owned estates firm.

However, North Yorkshire Education Services is expected to post a loss for the financial year.

The council has put this down to “ongoing issues in the education market” due to covid, including rise in food costs in school catering and low pupil attendances levels.

The report said:

“Meal uptake in schools has not recovered in many areas to pre-covid levels which has led to dis-economies of scale.”

North Yorkshire County Council looks set to establish a new property company to look after its estate.

Under plans outlined in a report due before the council’s executive, the new firm would be established with £200,000 working capital backed by a loan.

It would also see the authority’s current estates company, Align Property Partners Limited, operate on a commercial basis.

The new firm would be wholly owned by the council and would transfer to North Yorkshire Council from April 1.

As part of the plan, the company would adhere to “teckal” exemptions – meaning the council could directly award it contracts without open procurement.

Vicki Dixon, assistant director for strategic resources, said in a report that the current firm, Align Property, was “well-placed” to operate commercially.

She said:

“A substantial market exists for the services provided by Align, with the company well placed to capitalise on its existing reputation in the commercial space.

“The growth is being driven by non-NYCC externally generated income and indicates that Company trading aspirations have outgrown the initial Teckal-based operating model.”

Read more:

• Harrogate’s Royal Baths: the council’s under-performing ‘trophy investment’
• Council’s Brierley Group reports £327,000 loss

Ms Dixon added that the new company’s function would be to “continue providing high quality property, highways and estates services to the council and associated bodies, while being Teckal compliant”.

Senior councillors will discuss the plans at a meeting on Tuesday, February 21.

The move comes as the new North Yorkshire Council is set to take control over a host of district-council run companies.

Brimhams Active, the arms-length leisure firm, and Bracewell Homes – both of which are owned by Harrogate Borough Council – will transfer over to the new authority on April 1.

The county council has previously been criticised for the performance of its own companies after its Brierley Group of firms reported losses in recent years.

North Yorkshire County Council has reported a £327,000 loss for its Brierley Group of companies for the last financial year.

The council set up the group in 2017 to bring together council-owned companies and save money.

But the group, which includes housebuilding firm Brierley Homes, NY Highways and Yorwaste, reported the loss for the 2021/22 financial year against a budgeted profit of £324,000.

The group lost £639,000 in the previous financial year and the latest figures have raised questions about the council’s ability to run businesses.

According to a council report, authority officials put the loss down to the “impact of covid and the current and emerging market conditions”.

It remained confident that the Brierley Group would turn around the financial situation and post a profit in 2022/23.

Read more:

• Council accused of ‘trophy investment’ for £9m purchase of Harrogate’s Royal Baths
• Harrogate’s Royal Baths: the council’s under-performing ‘trophy investment’
• Council predicts loss-making Brierley Group will return to profit

The council said the overall loss was “driven principally” by two of the companies, Brierley Homes and NYHIghways, posting losses for the year.

However, it added that Brierley Homes’ loss was in line with budget as three of its sites “were in a construction phase during the year” and expected sales were to be realised next year.

The sites include Woodfield Square in Bilton, Millwright Park in Pateley Bridge and Yew Tree Farm in Marton-Cum-Grafton.

NYHighways’ loss was attributed to it being its first year of operation and “higher mobilisation and integration costs”, the report said.

The council report said:

“The expectation is a return to a positive profit after tax position through FY22/23.”

“Brierley Homes will see the sales completion of a number of sites; Woodfield Square, Millwright Park and Yew Tree Farm and NY Highways are now in a stronger position to refine and streamline the business, with other companies in the portfolio like First North Law, Align, NYnet and Veritau building on the successes of FY21/22 with high levels of customer retention and satisfaction as well as additional capacity and expertise into their teams.”

‘Sad state of affairs’

Stuart Parsons

Cllr Stuart Parsons, leader of the Independent group on North Yorkshire County Council, described the loss as a “sad state of affairs”.

He added it would mean less money for vital services.

Cllr Parsons said:

“It’s a sad state of affairs. The company was created by North Yorkshire County Council to generate profits which would be used to support services like adult social care. 

“Expecting North Yorkshire County Council to guarantee this loss means that even less money is available for front-line services.

“North Yorkshire County Council obviously does not have the capacity, nor the ability, to run commercial companies.”

Cllr Gareth Dadd, the council’s executive member for finance, assets and resources, said:

“The Brierley Group includes several companies providing services for us and financially most performed well last year, with some outstripping expectations.

“While we are disappointed the group recorded an overall loss, we recognise the unique set of circumstances  which contributed to the position and are also reflected across the whole of the economy last year. However it should also not be forgotten that the profit or loss a Brierley group company makes is only part of the picture.

“All companies generate a value for North Yorkshire County Council as shareholder and last year the value of this was £5.6m through interest payments to the council alongside contributions towards council service costs.”

“We are confident in the outlook for the future as the group emerges from the challenges of covid and that it will return to a financial surplus in the current year.”