'No Black Hole' in Lampton Group Accounts
Hounslow Council dismisses suggestion that probe is sign of financial distress
The Lampton Group owns over 500 housing units in the borough. Picture: Lampton Homes
June 6, 2024
Suggestions of a major financial deficit in the Lampton Group of companies owned by Hounslow Council have been dismissed.
Concerns were raised after a request was made for £100,000 to pay for an analysis of the group’s operations. The Lampton Group delivers services on behalf of the Council that are funded from the council’s general fund and Housing Revenue Account revenue budgets and capital programmes. The council also provides loans to Lampton Group to support its activities in areas such as housing, leisure and recycling. The Lampton Homes Investment business owns and manages over 500 housing units with plans to quadruple that number. Most are being let at Local Housing Allowance rates or less.
The accounts of these companies are not published but the council has acknowledged deficits in the past, particularly in the leisure company where there was a significant shortfall in revenues compared with the budget during Covid-19. The housing group has also been acknowledged to have been having difficulties getting some of its projects off the ground.
The request for funding was made by Jake Bacchus, the council’s executive director for Finance and Resources. It stated that the Lampton Group has been reporting ‘adverse financial performance against their business plan’ and that the council needs to consider how likely it is that the companies will be able to recover losses through future trading and the consequences for the council finances if it is not. The funds requested were for external experts to carry out this analysis and would be drawn from the Performance Improvement Fund.
The Conservatives in Hounslow said they had been unable at this stage to see the detailed numbers on the finances of the Lampton group.
The leader of the group Cllr Peter Thompson said, “Lampton’s continued poor financial performance should be of concern to everyone in the borough. The council’s recent decision to allocate £100,000 for external consultants to review the company’s finances is further proof that Hounslow Labour presides over the creation of a significant financial black hole. I’ve asked for a copy of the full Lampton business plan so that we can properly scrutinise the figures and understand just how bad the situation has become over the past few years.”
Sources at the council categorically dismissed that this was any indication that the borough was in any sort of financial distress and ruled out of hand any suggestions that there was any imminent danger of a Section 114 notice which is the local government equivalent of bankruptcy. It was also confirmed that the council is not considering a referendum to allow for a council tax increase higher than would otherwise be allowed.
It was pointed out that the sum required was relatively small in the context of a group of companies which has a combined turnover of £73million and the extra funding was required due to the complexity of the work involved not any potential risk to the borough’s financial stability. In addition, the timing of the report would coincide with the closing of the accounts and therefore it was necessary to bring in outside expertise.
The move was described as an important piece of probity in the context of other local authorities that have been badly exposed by losses in their wholly owned companies. The stated intention is to provide assurance on the situation in Hounslow and improve its governance arrangements with Lampton.
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