NOT FOR PUBLICATION

North Yorkshire Council

Corporate & Partnerships Overview and Scrutiny Committee

15 June 2026

Call-In of Executive decision - Creation of a £7m Reserve for Brierley Homes

1.0 PURPOSE OF REPORT

1.1 To enable the Committee to consider the Executive decision to note the creation of a £7m Reserve to provide for the potential non-repayment of loan to Brierley Homes; and to determine whether or not the Committee would wish to refer the decision back to the Executive for reconsideration or to the full Council and, if so, the nature of its concerns about the decision.

2.0 DECISION OF THE EXECUTIVE

2.1 The Corporate Director of Resources has the delegated authority to determine whether funds are held as general reserves or in an earmarked reserve in accordance with the Reserves Policy approved by full Council each year. The Corporate Director of Resources made the decision to earmark £7m for the potential non-repayment of loan to Brierley Homes over a 5-year period and asked the Executive to note the decision. The Executive’s decision to note this matter is the subject to call-in.

2.2 Specifically on 26 May 2026 the Executive considered its Q4 Performance Monitoring Report. The report included an update on the Revenue Budget for 2025/26, which included a commercial update on the Brierley Group. The relevant extract from the Revenue Budget is shown below:

2.3 The Table below provides an early draft projection for the Brierley Group of companies. This table shows that the majority of the ventures are performing well and making a contribution towards the Council’s finances.

2.4 Work is continuing to finalise the year end position of each of the companies within the Brierley Group. Initial work to date indicates:

· A surplus in the region of £5.1m for NYH which has been used prudently to repay the loan to the Council rather than being provided as a discount to NYC Highways;

· A £0.9m profit for Yorwaste;

· A £1.9m profit for Align; offset by

· A loss in the region of £7.5m forecast for Brierley Homes.

Company	Budget (£k)	Provisional Outturn (£k)	Variance (£k)
NYnet	565	500*	(65)
First North Law	50	95	45
Brierley Homes	704	(7,472)	(8,176)
Align PP	1,947	1,875	(72)
Yorwaste	600	948	348
Veritau	40	42	2
NY Highways	85	5,222	5,137
Bracewell Homes	77	228	151
Total (NYC % Shareholding) External Companies	4,068	1,438	(2,630)
NYES	500	876	376
HCC	820	867	47
Total (NYC % Shareholding) All	5,388	3,181	(2,207)

2.5 On this basis it is anticipated that the group as a whole will be profitable in the 2025/26 financial year. Brierley Homes is the current exception to this, and the projected year end position is anticipated to be in the region of a £7.5m loss for the 2025/26 financial year (work on closedown of the accounts continues along with a review of all of the sites and so this is a draft estimate at this point). This is a further deterioration in the position and is driven by sales income being significantly under projected levels; increasing costs to complete sites; and delays in the completion of homes leading to increased overhead and interest costs.

2.6 Brierley Homes generates broader shareholder value for the Council, primarily through loan arrangements between the two parties with the loans carrying interest rates above base rate to reflect the commercial nature of the company’s operations. Following Local Government Reorganisation Brierley Homes’ objectives have evolved, largely due to the new Council’s role in increasing the supply of affordable housing units across the region. The forecast loss for the year includes £1.5m of interest above base rate which has come back to the benefit of the Council as such a rate would not be available on the temporary cash investment market.

2.7 Brierley Homes continues to deliver wider benefits for the Council through new homes across the County and in many cases through the redevelopment of brownfield sites. The focus of the business is developing so that a much higher proportion of affordable homes are now being delivered both through Section 106 agreements on sites for sale and in new projects in partnership with social housing providers such as Broadacres. The partnership approach delivers schemes where 100% of the output is affordable and therefore supporting the Council’s objective of delivering additional affordable homes.

2.2.6 The Company is also exploring ways in which it can support the investment being made by the Council into its own rental and shared-ownership portfolio run through the Housing Revenue Account. This includes the ad-hoc sale of individual units to the Council or a similar partnership approach in delivering whole schemes.

2.8 An independent external review of the company was requested by the shareholder, and the findings of that review were presented to the Executive in September 2025. A new Managing Director was appointed to the Company in February 2026 with the remit to establish a short, medium and long term plan for the Company with an emphasis on stability, cashflow management, a return to profitability and a debt reduction plan. Following this appointment, a strategy has been produced and reviewed by the shareholder to take the business forward with a 5 Year operating plan which focuses on cash efficiency, cost control and reducing the debt position. The current plan identifies that £7m of the existing loan will be outstanding at the end of the medium term (next five years). On this basis, a provision for this forecast outstanding loan amount (£7m) has been included as part of the 2025/26 closedown process. This sum has been provided for within the overall 2025/26 revenue budget outturn position as set out in paragraph 2.2.1.

2.9.1 Specifically in regard to Brierley Homes, the Executive resolved (unanimously) to:

(v) Note the creation of a £7m Reserve to provide for the potential non-repayment of loan to Brierley Homes in paragraph 2.2.6 and paragraph 2.6.7

2.10 The relevant extract from the Minutes of the Executive meeting held on 26 May 2026 is provided at Appendix 1.

3.0 BACKGROUND

3.1 On 28 May 2026 written notice was received from more than six Members that they wished the Executive decision to be called in. The notice was made by Cllr. Kevin Foster with support from Councillors: Arnold Warneken, Tom Seston, Paul Haslam, Peter Lacey, Rich Maw, Stuart Parsons and Mike Schofield.

3.2 The reasons given for the Call-In were stated as:

i. Concerns over the scale of public funding being committed.

ii. Need for greater transparency around financial risks and expected returns.

iii. Uncertainty whether alternative options or providers were fully considered.

iv. Further scrutiny required to ensure value for money for residents.

v. Importance of reviewing how the decision aligns with wider housing and financial strategies.

vi. Significant public interest justifies additional democratic oversight.

3.3 The Council’s rules in relation to the Call-In of an executive decision are set out in paragraph 16 of the Overview and Scrutiny Procedure Rule in the constitution here.

4.0 THE ROLE OF THE OVERVIEW AND SCRUTINY COMMITTEE

4.1 It is for the Committee to consider the decision which has been subject to Call-In and then to decide whether, or not, it wishes to refer it back to the executive decision-making body for reconsideration, setting out in writing the nature of its concerns, or whether, or not, it wishes to refer the matter to full Council.

4.2 If the Committee does not refer the matter back to the decision taker, or refer it to the Council, the decision will take effect on the date of this Overview and Scrutiny Committee meeting. The relevant parts of the Council's Overview and Scrutiny Committee Procedure Rules are set out below.

5.0 CALL-IN

5.1 Note: Powers of Call-In apply only to functions which are the responsibility of the Executive.

(d) If, having considered the decision, the Overview and Scrutiny Committee wishes to do so, then it may refer it back to the decision-making person or body for reconsideration, setting out in writing the nature of its concerns, or refer the matter to full Council. If referred to the decision maker they shall then consider the matter, amending the decision or not, before adopting a final decision.

(e) If following an objection to the decision, the Overview and Scrutiny Committee does not refer the matter back to the decision-making person or body, the decision shall take effect on the date of the Overview and Scrutiny meeting.

(f) Where the matter has been referred to full Council, but the Executive decides that the matter must be determined prior to the next Council meeting, they OFFICIALLY may proceed to determine the matter and shall report the matter to the next Council meeting.

(g) Subject to (f) above, if the matter was referred to full Council and the Council does not object to a decision which has been made, then no further action is necessary, and the decision will be effective in accordance with the provision below. However, if the Council does object, (note: it has no locus to make decisions in respect of an executive decision unless it is contrary to the Policy Framework, or contrary to or not wholly consistent with the Budget) the Council will refer any decision to which it objects back to the decision-making person or body, together with the Council's views on the decision. That decision making body or person shall choose whether to amend the decision or not before reaching a final decision and implementing it.

6.0 FINANCIAL IMPLICATIONS

6.1 Setting aside this provision is in line with the principles of prudent financial management and asking the Executive to note this provision ensures that it is made in a transparent manner.

6.2 The specific financial implications concerning Brierley Homes are identified in the Executive report and this report including the current estimate that £7m of the existing loan will be outstanding at the end of the medium term (next five years).

6.3 On this basis, the s151 Officer considered it to be prudent and appropriate financial management to include a provision for this amount as part of the 25/26 closedown process. By setting aside this provision, the Council is not currently providing any further funding to Brierley Homes, it is ensuring that £7m of Council funds are effectively set aside for any irrecoverable losses from Brierley Homes should they materialise in the future. The funds remain with the Council and, as with all reserves, attract interest as part of the Council’s treasury management. This is sound and responsible financial management by the Council. The provision will be kept under review in line with the progress of the company and will be released back to general reserves if it becomes clear it is not needed.

6.4 This is in line with various regulations and codes of practice including Section 32 of the Local Government Act (which requires authorities to make allowances for contingencies and liabilities) and the CIPFA Code of Practice on Local Authority Accounting.

6.5 As set out in the Council’s Reserves Policy and agreed as part of the Budget by Council annually, it is the s151 Officer’s responsibility to monitor and review such reserves. Section 12.5 of the Council’s Financial Procedures state that: “The CFO will determine whether the Council’s funds are held as general reserves or in an earmarked or restricted reserve.” In this case, the £7m is now being held as an earmarked reserve.

6.6 Over the past 5-years, the Council’s commercial portfolio has delivered more than £60m in shareholder value to the Council and the scale of the funds being set aside (and not necessarily being spent) should be seen in the context of this figure.

7.0 LEGAL IMPLICATIONS

7.1 The process for dealing with Call-Ins is set out in the Council Constitution. The current decision is too call-in the Executive’s decision to note a decision made by the Director of Resources to make a £7m provision in line with his duties under the Constitution.

7.2 With regard to governance of companies that the Council has an interest in, the Council has a Shareholder’s Committee that has been delegated functions to exercise its ownership rights.

8.0 EQUALITIES IMPLICATIONS

8.1 There are no equalities implications arising from this report on the Call-In process.

9.0 CLIMATE CHANGE IMPLICATIONS

9.1 There are no climate change implications arising from this report on the Call-In process.

10.0

10.1

RECOMMENDATION

The Committee is asked to consider the decision taken and called in and determine whether, or not, it wishes to refer the decision back to the Executive for reconsideration or to the full Council and, if so, the nature of its concerns about the decision.

Daniel Harry

Head of Democratic Services

County Hall

Northallerton

5 June 2026

Report Author – Melanie Carr

BACKGROUND PAPERS: None

APPENDICES:

Appendix 1: Minutes Extract of the meeting of the Executive held on 26 May 2026

Members are invited to contact the author in advance of the meeting with any detailed queries or questions.

Extract from Minutes of Executive meeting held on 26 May 2026

The full Minutes of the meeting can be viewed at: Printed minutes Tuesday 26-May-2026 11.00 Executive.pdf

918 Q4 Performance Monitoring and Budget Report

Considered – A joint report of the Chief Executive and Corporate Director Resources bringing together key aspects of the Council’s performance on a quarterly basis.

The Executive Member for Corporate Services, Councillor Heather Phillips, presented the report which covered the period 1 January 2026 to 31 March 2026 and provided details of performance at the end of year outturn.

The Leader welcomed members of Scrutiny Board to the meeting. In response to questions to Executive Members from Scrutiny Chairs and Member Champions the following was confirmed:

Thriving Places and Empowered Communities

· Numbers of households in temporary accommodation remained high due to reduced movement in the housing market, pressures in the private rented sector and social housing, and increased demand. Cases were equally split between Harrogate, Scarborough, and the rest of the county. Funding had been made available to deliver further temporary accommodation.

Sustainable and Connected Places

· Performance in relation to missed bin collections had improved overall, with earlier issues in some areas now largely resolved, although some challenges remained, notably in Scarborough. Officers were confident that service changes and ongoing improvements would address remaining issues.

Safe, Healthy and Living Well

· Referrals to children’s social care had reduced while cases had become more complex due to a shift towards early intervention and enhanced screening, enabling resources to be focused on the most complex cases.

· Increases in adult safeguarding referrals reflected both higher reporting and activity levels. Demand was being managed through strengthened front door capacity, clear escalation processes and training. It was confirmed that there were no significant emerging trends in types of safeguarding concerns.

· A follow-up question sought detail on categorisation and risk groups within safeguarding; it was confirmed that data was monitored in detail across standard categories, with proportions remaining broadly consistent and no major trends identified.

· The Council was managing increasing care home placement costs and market instability through active market management, commissioning frameworks and partnership approaches. Costs were improving relative to benchmarks though pressures remained, particularly for older people’s care.

· In response to a question on whether lower than expected referrals for children and young people indicated issues with the model it was explained that this was due to implementation factors and delays in embedding the new all-age model, with referral rates now improving following better communication and engagement.

· It was asked what financial impact the expansion of free school meals auto-enrolment might have on eligibility for free home to school transport. It was reported that eligibility for free transport remained subject to a low income threshold in addition to a free school meal entitlement and only a small number of additional cases were expected to qualify under existing income thresholds, with limited anticipated budget impact.

Maximise the Potential

· In response to a question about the rising levels of elective home education and whether this was linked to issues such as school performance, mental health services, or schools’ ability to meet children’s needs, it was explained that the main reasons remained consistent, including mental health, stress and anxiety, lifestyle choice or philosophical reasons, with no direct link to school performance identified. The numbers becoming electively home educated were lower than last April, with numbers leaving home education increasing.

Revenue Budget, Treasury Management and Capital Plan

The Corporate Director Resources, Gary Fielding, introduced each section of the report and reported an overspend of £1,020k at the end of Quarter 4, and highlighted the following key points:

· Underlying pressures remained significant, particularly within people-related services, with continued overspends in Health and Adult Services and Children and Young People’s Services, partially offset by improved positions in Community Development, Environment and central budgets.

· Higher than expected interest rates had generated approximately £5m of additional income, which had been used prudently to repay debt, resulting in a recurring annual saving of £200k ahead of schedule.

· The Housing Revenue Account position reflected a shortfall in rental income and a significant overspend on repairs and maintenance, which was attributed to increased investment to address backlog issues and improve housing stock quality.

· £34.3m of savings had been delivered during the year, exceeding expectations and enabling adjustments to the overall financial position. It was clarified that in paragraph 2.5.2 commitments already in place for care and support hubs and the leisure investment strategy totalling approximately £90m should be taken into account, meaning the level of available reserves was closer to £50m, lower than headline figures suggested.

· The Council’s commercial companies had produced a mixed financial outturn, with strong performance from North Yorkshire Highways with a surplus of £5.2m enabling £5m of debt repayment and Align Property generating a £1.9m surplus.

· Brierley Homes had recorded a significant loss of £7.5m due to cost overruns, partially offset by £1.5m of loan interest to the Council, resulting in a net estimated loss of £6m. The company provided additional shareholder value to the Council, as well as providing social housing, however the creation of a £7m provision to mitigate potential future financial risk was considered prudent.

Executive Members welcomed the Housing Revenue Account overspend, recognising it as a positive result of increased investment in repairs and improvements to housing standards, and noted significant progress in performance. The role of the Council’s housing company in delivery of affordable housing was noted, with reassurance provided that governance arrangements had been strengthened and that performance was being closely monitored going forward.

The Corporate Director then referred to the Capital Plan section of the report which outlined the Council’s large capital programme, with schemes progressing despite cost pressures arising from inflation and funding allocations made prior to the cost of living crisis. He highlighted key schemes including the Catterick Garrison project, which required additional contingency funding to support delivery and the Kex Gill realignment which was reported to be progressing well with risks being effectively managed. Developing schemes included potential future capital requirements for land instability works at Oliver’s Mount, additional funding for the Whitby Maritime Hub to ensure operational readiness, and the proposed acquisition of Crosby Road car park in Northallerton to support wider regeneration and partnership arrangements. Strategic investment was being proposed to enhance the value of Council-owned land through obtaining planning permission, alongside additional funding requests to deliver previously agreed priorities such as the acquisition of equipment as part of the leisure investment strategy and children’s placements provision. The Council had a number of financial obligations in relation to preparatory work for a new special school in Northallerton to be built by the Department for Education. It was noted that capital budgets would be carried forward to future years, however the overall capital programme remained fully funded.

Resolved (unanimously)

That the Executive:

(i) notes the outturn position against the 2025/26 Revenue Budget, as summarised in paragraph 2.2.1

(ii) notes the Voluntary Revenue Provision contribution to Capital Financing Costs which will result in a revenue saving in paragraph 2.2.6

(iii) notes the outturn position against the 2025/26 Housing Revenue Account budget as detailed in section 2.3

(iv) notes the balance of the Strategic Capacity Reserve following the drawdown to balance the outturn position to budget in paragraph 2.5.2

(v) notes the creation of a £7m Reserve to provide for the potential non-repayment of loan to Brierley Homes in paragraph 2.2.6 and paragraph 2.6.7

(vi) note the performance of the Treasury Management operation during 2025/26 and the outturn position on Prudential Indicators.

(vii) notes the position on capital outturn as detailed in Appendices A to D;

(viii) recommends to the Council, the proposed carry forward to 2025/26 of the net capital underspend totalling £3.3m as set out in paragraph 4.4.2;

(ix) approves the allocation of £200k from the Capital Contingency Reserve to fund the shortfall affecting the Catterick Garrison Levelling Up project as set out in paragraph 4.3.2.

(x) approves the allocation of £823k from the Whitby Harbour Reserve to fund the fitting out of floors one and two of the Whitby Maritime Hub and a further £126k to meet additional construction costs as set out in paragraph 4.3.3.

(xi) approves the allocation of £750k from the Strategic Capacity Unallocated Reserve to support the Strategic Land Programme as set out in paragraph 4.3.5.

(xii) approves the allocation of £350k from the Strategic Capacity Unallocated Reserve to fund the acquisition of Crosby Road Car Park, Northallerton, as set out in paragraph 4.3.5.

(xiii) approves the allocation of up to £3m from the Strategic Capacity Unallocated Reserve to fund the acquisition of leisure equipment to be used in the Active and Well Being Hubs across the county as set out in paragraph 4.3.5.

(xiv) approves the allocation of £250k from Strategic Capacity Unallocated Reserve to fund the feasibility costs associated with the identification of potential accommodation arrangements that will eliminate any unregulated/unregistered provision as set out in paragraph 4.3.5; and

(xv) approves the financing of capital expenditure as detailed in paragraph 4.5.1.