Council slammed for lack of leadership after housing company collapses

Norwich City Council’s Labour-run cabinet has come under fire for a “lack of oversight and direction” after putting its housing company into liquidation.

The council ran Lion Homes to build more affordable homes in the city, but the company lost millions of pounds over several years.

Labour councillor Cali Harper claims it is now cheaper for the council to deliver housing itself to boost social housing in the city.

Lion Homes’ financial difficulties span a number of years

According to the BBC, Norwich City Council invested £3.5 million in the company and loaned it a further £6.1 million in an attempt to keep it afloat.

The BBC also reveals that in 2020, it emerged Lion Homes had lost £6 million when homes in Bowthorpe were sold for less than they cost to build.

The BBC also reports that, although no accounts have been filed for Lion Homes since 2023, Companies House records indicate that the company incurred losses of £5 million over the previous five years.

Independent councillor Karen Davis criticised the council for its handling of the situation.

She told a council meeting: “Lion Homes was predicated on a pipeline of sites that was never delivered and a loan agreement that the council never set up or allowed Lion Homes to draw down.

“With no land to build on and no money to build, how did the cabinet expect this company to remain solvent, let alone profitable?”

In response, Cllr Harper defended the council’s actions and claims it is cheaper for the local authority to deliver housing directly.

She said: “I think Lion Homes’ financial difficulties span a number of years. The fact is, it is much cheaper for the council to deliver housing itself by making use of Public Works Loan Board financing than going to the market.

“The question is, do you want us to deliver more social housing or less? That’s why we’re taking these steps.”

Lack of oversight, direction and leadership

However, a Green Party councillor Lucy Galvin, was not satisfied with the council and accused the local authority “of a lack of oversight, direction and leadership in the lead-up to the collapse of Lion Homes.”

Cllr Harper continued to defend the decision to put Lion Homes into liquidation.

She told the council meeting: “The recommendations before us are to close Lion Homes through a member’s voluntary liquidation and to insource its functions.

“It’s not just about changing mechanisms for how we deliver homes, but it’s a statement of intent about how determined we are to drive up levels of social housing delivery in this city.

“Lion Homes was established in good faith and with good intentions to build homes and generate income for our city, but the economic context has changed dramatically.”

She adds: “Let me be clear, we are not stepping away from our housing ambitions, quite the opposite, we are closing Lion Homes so that we can deliver housing better directly through the council by delivering it in-house.

“This means more democratic oversight, greater control and the ability to align every brick laid with our values and our priorities: affordable homes, sustainable communities and a fairer Norwich for all.”

Following pressure from councillors during the meeting for an inquiry into Lion Homes’ closure, the cabinet agreed to refer the matter to the scrutiny committee, made up of opposition councillors, for review.