Sefton’s Cabinet on 7th September 2023 is being requested to approve another business plan for Sandway Homes Ltd.
As we reported on this page in July 2022 Sandway Homes Ltd was set up by Sefton Council as an arms-length company to build houses for sale on sites owned by Sefton Council. The company is not required to offer solely “affordable homes” in their developments and was intended to operate in a similar way to conventional commercial house-builders. Profit from this housebuilding activity would be passed back to the Council and to pay back a loan from the Council.
We noted last year that the Council had agreed to offer a loan agreement to Sandway Homes Limited to help their cash flow. This loan was initially for £5.1m but later increased to £8.3m of local taxpayers’ funds.
So how is Sandway performing?
Their accounts lodged with Companies House are alarming: In March 2020 their shareholders deficit was £1,333,794 By March 2021, this had grown to £1,838,479 The deficit for the year ending 31 March 2022 is a staggering £2,234,082.
Cabinet were told that “it was originally anticipated in 2019, that Phase 1 would deliver a profit / dividend to the council upon completion of £1.051m, which was subsequently increased to £1.350m and then reduced to £1.050m in a subsequent report received by members.”
Cabinet are now being informed that this dividend will fall to £300,888 – a shortfall of almost one million pounds. Even this figure is not guaranteed and we read “Delivery of this dividend is dependent on a number of factors including construction contract price for Buckley Hill Lane, achieving estimated sales valuations and the company maintaining its cashflow position in terms of further loan drawdowns. The Council’s Medium Term Financial Plan will need to be updated for this position.”
The reason for this financial nightmare is in part due to slow performance by Sandway in delivering the homes they promised.
Meadow Lane, Ainsdale was due to complete in July 2023 but now will not complete until October 2023. Bartons Close, Crossens, was due to complete May 2023, but has slipped to September 2023. Buckley Hill Lane, Netherton, has slipped from July 2025 to November 2025.
The slippage is now being affected by increased costs in materials and labour and which many national housebuilders have reported. However, the private companies do not have the luxury of a taxpayers’ loan of £8.3. (We do not know what terms were agreed between the Council and Sandway and how this has been affected by interest rate changes).
Despite this poor performance and a massive financial prop from Sefton’s residents, Sefton Council continues to offer sites to Sandway Homes Ltd for new housebuilding. The latest proposal is for the former Bootle High School site, which has lain vacant for many years and a site at Benthams Way.
We have to ask, why these sites were not offered on the open market to experienced housebuilders with a proven track record.
This Labour Council has not explained convincingly why it felt necessary to create a high-risk housing company such as Sandway Homes Ltd rather than enter into partnership with existing housebuilders.
There is no evidence that the performance of Sandway Homes Ltd is being scrutinised by Members of this Labour Council (who have one member on the Board) and as a result are simply costing this Council more and more money as a result of inadequate performance measures.
This Labour Council cannot be trusted with our money.
