This is just a brief update to my previous post. I have to be careful what I write because I’m being watched. No, honestly, this is not paranoia, certain people will be reading this very carefully.

Therefore I hope you will understand that I have to be cautious, avoiding the injudicious phrase, the unintended calumny, otherwise certain persons down west will again be scuttling to £260-an-hour Ms Tracey Singlehurst-Ward of Hugh James Legal.

A BIG FAT I.O.U.

To recap . . . Mill Bay Homes is a ‘subsidiary’ of Pembrokeshire Housing, it’s raison d’être is to build and sell houses, then hand the profits from the sale of those properties back to the parent company so that it can build more social units for rent.

It may be worth mentioning – by way of background information – that before a name change in the first quarter of 2012 Mill Bay Homes was known as Pembrokeshire Housing Two Thousand Ltd, a company set up in 1998 that never traded.

So that’s the theory, the justification for Mill Bay Homes. But how’s it working out in practice? Let’s look at what information is available, add a few things that have been said, and then let us draw some conclusions, which we are fully entitled to do, as members of the generous Welsh public that has poured tens of millions of pounds into Pembrokeshire Housing.

When it comes to available information, we encounter a major obstacle in that it’s probably easier to get hold of Vladimir Putin’s personal e-mails than it is to see accounts for Mill Bay Homes. The problem being that because it’s not a regular company there’s nothing filed with Companies House. Because it’s not a charity it’s ditto with the Charity Commission. And while MBH claims to have filed accounts with the Financial Conduct Authority, the FCA says it has received nothing since the report for y/e 31.03.2013.

Though when my collaborator Wynne Jones wrote to the ‘Welsh’ Government, using an FoI request to ask for those accounts he was told, by Ceri Breeze, Head of Housing Policy, that the accounts were already in the public domain – with the Financial Conduct Authority! Sometimes it’s difficult to avoid the suspicion that information is being deliberately withheld on Mill Bay Homes, and that fibs are being told in order to throw people off the scent.

Anyway, let’s see what we can glean from the Pembrokeshire Housing accounts. In particular, the extracts below taken from the figures for the year ending on March 31st 2015. Figures that I suspect are connected.

You will see that between 31.03.2013 and 31.03.2015 Pembrokeshire Housing’s cash reserves fell dramatically, from £12,551,763 to £2,782,838. A reduction of £9,768,926, or 78%.

During the years ending 31.03.2014 and 31.03.2015 £6,135,000 was ‘loaned’ to Mill Bay Homes. The most recent figures available for Mill Bay Homes, those for y/e 31.03.2013, show a ‘loan’ of £245,000, which we can be fairly sure came from the parent company. If we add them it gives us a total of £6,360,000.

Without wishing to over-egg it I suggest we must also add other costs not stipulated. For example, Pembrokeshire Housing staff must have been working on the Mill Bay Homes ‘project’, and they must have used Pembrokeshire Housing offices and equipment, plus consumables, before Mill Bay Homes was up and running.

So I think we can reasonably assume that Mill Bay Homes owes Pembrokeshire Housing closer to seven million pounds than six. How is this to be repaid? Fortunately, last week’s Pembrokeshire Herald ran an article on my recent, ahem, difficulties and in this article group supremo Peter Maggs was quoted as saying, “The target is (for MBH) to deliver £1m of surplus for each of the next five years”. Which will – if achieved – return just five of the six million plus that’s owed.

(Note that the Pembrokeshire Herald couldn’t get my name right – “Roytston”, they called me, bloody “Roytston”!!! Is that defamation? Maybe I need a good solicitor – I wonder if Ms Singlehurst-Ward would take the case?)

‘A MILLION A YEAR FOR FIVE YEARS’, SAYS YER MAN

I have no opportunity to buy the otherwise excellent Pembrokeshire Herald except when I’m visiting the county, so I haven’t seen the ‘paper myself. But someone was kind enough to send me a photograph of the article, here, and another kind act saw the piece sent as text.

Seeing as we are talking of Mill Bay Homes repaying Pembrokeshire Housing a cool million a year it might be instructive to know if any of the outstanding six million plus has yet been repaid. The figures for y/e 31.03.2016 are obviously not yet available, but the previous year’s figures tell us that the princely sum of £36,070 was received. Which leaves . . . roughly the same figure we started with. And that’s without taking interest into account.

Another way of looking at it would be that at the rate of £36,070 a year it would take Mill Bay Homes 176 years to repay what it owes.

This might make some of you think that Peter Maggs’ claim is a little overblown, but it could be worse than that. Here are a number of things to consider:

• I’m told that Mill Bay Homes is working to a 17% profit margin while the building industry usually works to a 25% margin on new builds.
• Before anything can be returned to Pembrokeshire Housing Mill Bay Homes will have to deduct its costs. In addition, it will need to buy the next development site and go through the planning process and other procedures, then pay to build that next development.
• So how much from each house sale will Pembrokeshire Housing actually see? Let’s assume that the average sale price of a Mill Bay property is £130,000. At 17% and deducting the costs just mentioned Pembrokeshire Housing might see a return of £50,000 per property.
• Of course, these calculations are necessarily speculative due to the absence of any publicly available accounts or other information for Mill Bay Homes.
• If the purpose of lending money to Mill Bay Homes is to generate income to build social housing why didn’t Pembrokeshire Housing instead of lending the money to get part of it returned use all of it to build social housing?

INTERPRETATIONS

One worry I have is that achieving Peter Maggs’ target will result in unfair competition for local building firms without the benefit of Mill Bay Homes’ inexhaustible source of funding, a source that relieves it of the need to return a profit. Is this the plan?

‘Welsh’ Labour we know is anti-business, also a ‘statist’ party that wants to control everything. So is this its way of surreptitiously making house building a state-controlled industry? If not, how else do we explain a publicly-funded housing association being allowed to set up a subsidiary that is, effectively, a no-risk private house builder?

One possibility is that we are discussing a trailblazer for a new type of business entirely. This is not idle speculation on my part, the idea has been knocking around for a while. I’m talking now of fully privatised housing associations. And it’s already started, as this article from the Guardian last August tells us.

The advantages are obvious. Housing associations have solid assets in the form of bricks and mortar, so they’ll have little trouble finding investors and securing loans. As long as the right legal safeguards are in place for all types of tenants, and the right incentives for investors, why not relieve the public purse of a massive burden by privatising social housing in Wales? These could be lucrative, profit-making businesses.

Proven by Pembrokeshire Housing itself. In 2013 it had cash reserves of £12,551,763, yet it’s one of the smaller housing associations, this is partly due to the fact that Pembrokeshire County Council retains its own council housing stock. If such a small outfit can build up such cash reserves then what is the picture with the big boys?

Though that said, some people – more cynical than I, you understand – might suggest that Mill Bay Homes was set up for the express purpose of soaking up this embarrassment of cash. For the nest-egg might otherwise have had to be returned, or might have resulted in reduced funding. Because I’m sure most people would believe that a relatively small, rural housing association with over £12m stashed under the mattress should not be receiving a penny from the public purse.

One thing’s for sure, housing associations as we know them in Wales are discredited. For a start, there are just too many of them, receiving inordinate amounts of funding, with too much of that money going on inflated salaries and administrative costs, and with very little effective oversight by the ‘Welsh’ Government. Housing associations are out of control, like some over-indulged adolescent forever finding new ways to get money out of his parents.

In addition, and perhaps especially in rural areas, housing associations waste money on new properties for which there is no local demand, then they import tenants, many of whom have ‘issues’, because of course they can charge more for housing problem families, petty criminals, drug addicts and other undesirables than they could ever charge hard-working, law-abiding locals.

Unless I receive important new information on Pembrokeshire Housing and Mill Bay Homes this may be my final post on the subject. I think I’ve said everything I need to say at present.

If those who claim to be managing Wales still see nothing wrong with the parent – subsidiary arrangement I’ve described, and if they believe that the current plethora of publicly-funded and competing housing associations is the cheapest and most effective way of delivering rented accommodation, then Wales is in a bigger mess than I had ever imagined.

UPDATE 17.06.2016: Surprise! Surprise! After all the attention Mill Bay Homes has been getting of late the Annual Return and Accounts for y/e 31.03.2014 and y/e 31.03.2015 are finally available on the Financial Conduct Authority website. They were added just a few days ago.

As I’m tied up for the next few days I won’t have time to give these accounts the attention they deserve, but perhaps my analytical readers would like to peruse them and give us their interpretations. Here are the accounts for 2014 and here for 2015.

Quickly skimming through them I was struck by the fact that in the 2015 report, in answer to question 1.19, Mill Bay Homes claims to be a Community Benefit Society because it benefits, “People seeking housing accommodation” (as opposed to any other form of accommodation). If Mill Bay Homes is accepted as a Community Benefit Society then I suggest the FCA gets ready for a rush of applications to join the club – from Wimpey, Persimmon, Redrow and all the rest.

But of course MBH would defend its claim to be a Community Benefit Society by the answer it gives to 1.21, which asks how surpluses or profits are used. The answer reads, “Surplus was transferred to the parent Registered Social Landlord to invest in affordable housing”. Why not just say ‘the parent company’, why stress that it’s a RSL? And why “affordable housing” not ‘social housing’? MBH claims to build and sell ‘affordable housing’.

Though these considerations bring us back to the underlying idiocy of this model. Pembrokeshire Housing, a provider of social housing, has £10m in spare cash. Rather than use that money for the purpose it was given the money is loaned to Mill Bay Homes to build and sell houses. Then perhaps £1m of profit is returned to PH for social housing. Why not use the original £10m for its intended purpose of social housing?

Could it be that Pembrokeshire Housing had more money than it needed, or knew how to use, and rather than admit to that embarrassment, it came up with the absurdity that is Mill Bay Homes?

UPDATE 21.07.2016: In an e-mail of July 18th Simon Fowler of the ‘Welsh’ Government’s Housing Directorate, had this to say: “We have had sight of a confirmation from the FCA that Pembrokeshire Housing and Mill Bay Homes submitted all their regulatory returns by the given deadline. It went on to confirm that due to an error at the FCA, the returns were not published. We are satisfied that PHA and MBH have not acted inappropriately – either deliberately or mistakenly – when submitting the returns required by law.”

Today, my co-investigator, Wynne Jones, received an e-mail from Nazmul Ahmed at the FCA, he had this to say of the Mill Bay Homes returns: “I have spoken to my colleague and we can provide the dates we received the annual return and accounts – 2013/14- 2 June 2016, 2014/15- 2 June 2016′. 

The timing is significant. I published posts on Mill Bay Homes on the following dates, April 25th, May 20th and May 23rd. These were taken down under threat of legal action conveyed in a letter from Ms Tracey Singlehurst-Ward of Hugh James Solicitors of May 31st. I can imagine Ms S-W saying to MBH, ‘OK, I’ll try and put the frighteners on him, but you’ve got to get your house in order, don’t give him ammunition’.

But where does this leave Simon Fowler? I think the kindest thing I can say of Mr Fowler and his colleagues is that they make it up as they go along. What I and others have learnt in recent months suggests there is no oversight of housing associations by the ‘Welsh’ Government, little regulation, and that they are free to do as they like – with hundreds of millions of pounds of our money.

       ~~~~~~~~~~~~~~~~~~~~~~~~~ END ~~~~~~~~~~~~~~~~~~~~~~~~~

NEXT: The promised article in which I explain why I’m voting Leave in the EU referendum