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.”

North Yorkshire County Council has been criticised for delaying scrutiny of its loss-making Brierley Group.

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

But the group, which includes housebuilding company Brierley Homes, reported a loss of £639,000 last year.

Brierley Homes’ developments include Woodfield Square in Bilton and Millwright Park in Pateley Bridge.

Council officials this week told a shareholder committee the group had bounced back with a “really positive” first three months of the financial year.

But a Conservative councillor questioned why the Tory-run authority had delayed its corporate scrutiny committee examining the performance of the Brierley Group by some nine months.

Cllr Richard Musgrave, who represents Escrick, said: 

“Our scrutiny is pretty much pointless if it is so out of date considering it.

“The Brierley Group made a whacking great loss for the year to March 2021.

“I certainly have some questions I would like to ask about the performance of the Brierley Group.”

Does council have business acumen?

Cllr Musgrave’s concerns follow other members of the authority questioning whether the council has the necessary business acumen to run the array of firms, in particular housebuilding.

However, senior county councillors said they were positive the losses could be recouped.

The committee was told the Brierley Group was seeing “promising shoots of recovery”, with a predicted profit by the end of the year of £51,000 as complications arising from the covid pandemic begin to wane.

Read more:

• County council’s trading company records £639,000 loss
• County council ‘optimistic’ over redeeming Brierley Group losses

Members heard the Brierley Group’s education service was adapting to meet changing demands and its internet access arm had seen a strong start to the year.

They were also told First North Law, a council-controlled law firm, had been buoyed by improved performance, waste management company Yorwaste had performed well and its building design consultancy was forecasting a return to profitability.

However, Brierley Homes was forecast to generate a loss for the year of £712,000.

The meeting heard a primary concern for Brierley Homes was the availability of materials and labour to complete committed projects to time, cost and quality.

Brierley has a ‘perception problem’

Cllr Don Mackenzie, executive member for access, said the outlook for Brierley Homes was much more positive than the council had become accustomed to over the last year, and highlighted how the authority was forecast to receive £4.3 million in savings and benefits this year from its companies.

Cllr Gareth Dadd, the council’s finance executive member, said Brierley Homes was suffering from a “perception problem” due to upfront housebuilding costs and when its developments in Harrogate and Pateley Bridge were completed next year the figures would look different.

He said: 

“If you were a layman looking at that sort of balance loss or perceived loss you would be quite startled by it. We know that it is not a true reflection.

“We have a duty to shoot this loose rabbit dead that it is costing the taxpayer hundreds of thousands of pounds or has even snowballed into millions.

“It is going to take some time before we realise the benefits of it. Politically we are going to have to live with the perception issue with the hope that those who are casting doubt on it listen to the full story and not just a headline figure.”