UPDATED: Cost of putting Granville New Homes right rises to £25m. Brent Council purchased them for £17.1m

 

Tucked away in the Housing Management Update tabled for next Thrsday's Scrutiny and Wellbeing Committee is the above paragraph, devoid of context.

Granville New Homes were built via  partnership between Higgins and Brent Council in 2009, and purchased by Brent Council for £17.1m.

In 2021 mounting defects led to the independent Ridge report that put the costs of remediation at c£13.5m:

 

 

Philip Grant queried a report to Scrutiny in October 2021  that put the costs of remediation at £18.5m and Debra Norman replied for Brent Council LINK:

 

As you point out, page 26 of the Ridge Report gives the cost estimates as totalling £13,645,000 but the Cabinet, ASAC and Scrutiny reports refer to estimated costs of £18.5m.  You query why this is and whether there is a second specialist report on fire safety issues which accounts for the difference.

 

 

This figure of £13,645,000 is included in the £18.5m referred to in the reports.  As set out in paragraph 3.9 of the Cabinet report, that higher figure also includes the cost of fire safety work already undertaken and paid for by FWH, e.g. the waking watch over the premises and a new fire alarm system, and a contingency figure.  In addition, paragraph 3.9 make clear that the total figure is inclusive of VAT, which FWH and I4B, unlike the council, would be required to pay.  The final sentence of 3.9 should have read that the £18.5m is “based on” an estimated value from Ridge, but in the overall context of the paragraph I think the position was clear.

Brent Council had rejected various options to address the problems including a rebuild.

 Instead they settled for a complex financial arrangement with FWH (First Wave Housing) disposing of the blocks to the Council's Housing Revenue account. LINK

The Extraordinary Scrutiny Committee of October 2021 asked some tough questions, not least Ketan Sheth's on why Higgins was still being offered contracts by the Council after its Granville New Homes failure,. With superb irony Higgins having been involved with building a block that needed £13.5m/£18.5m remediation was awarded the remediation countract, for another faulty block, Merle Court.

The Committee were told that the amount of time that had passed since 2009 meant the Council were not likely to succeed in any settlement claim against Higgins. I believe that changes in the law about time limits means that is no longer the case and there are reports that the Council may be in tlaks with Higgins.

Certainly that is something that Scrutiny should take up with the Council as well as the failure to complete the works by October 2023 as first forecast and of course the rise of costs to £25m which with the original purchase price of £17.1m brings the total to c£42m. It would also be useful to know if the bald £25m is the end of the story or other costs will need to be added as in Debra Norman's response.

It may be instructive for Scrutiny Committee members to revisit the Minutes of their October 2021 meeting. Here is an extract:

The Committee queried whether the Council, as Guarantor of FWH, had chosen to challenge FWH on the issues. Minesh Patel advised that the Council’s role as a Guarantor was to meet with the Board of FWH on a regular basis to go through Key Performance Indicators and understand how the Company was running. The Guarantor had not been made aware of any issues prior to the final Ridge report.

Hakeem Osinaike (Operational Director Housing, Brent Council) advised that the properties were managed by Brent Housing Management (BHM) on behalf of FWH, and they had managed the repairs in those blocks up until the inspection. He advised that it was in rectifying the fire safety issues a decision was taken to rectify any other issues as well.

The Committee noted that Higgins had been appointed to design and build the blocks in 2009, and had heard from residents and staff that there had been problems with the blocks since they were built. They queried what legal action against Higgins, as the contractor, had been pursued, considering the roofs had been previously replaced when FWH took over the building. Peter Gadsdon confirmed that BHP had replaced one of the roofs before FWH took over, and once FWH had taken over they had done works on water ingress issues and had planned to replace all roofs over time as part of previously published business plans for the Company, with an original cost estimate of £2m – 2.5m. With regard to any legal action taken, Peter Gadsdon advised that the records showed the building had been signed off and handed to the Council, but he was unable to comment on anything before 2017 when FWH took over the buildings. He advised that FWH had not had any conversations with Higgins regarding the defects which they were made aware of in May 2021. Legal advice was previously sought about whether there was any chance of redress but due to the passage of time were advised it was unlikely. The Board’s priority was to ensure the properties were repaired back to safety.

Continuing to discuss the contract with Higgins, the Board queried why the Council were not communicating with them on this considering they were current contractors on other blocks being built. They queried whether there was a risk of this happening in other blocks that had been built or were being built. Minesh Patel advised that he did not have the details on the construction contracts with Higgins as that was a procurement process, but nothing had been brought to his attention that there were any concerns on any of the blocks Higgins had worked on.

Councillor Southwood advised that the contractor had been awarded work by the Council through a procurement process without prejudice, the specification of which would have applied modern building control and expectations to whatever they built, and which would include monitoring on the delivery of their contracts. From a FWH perspective it was highly unlikely any other stock would have these issues as Granville New Homes were the only medium rise buildings in the assets. Peter Gadsdon added that, like the Council, FWH and i4B commissioned stock condition surveys and had Fire Risk Assessments in place and there were no issues in that regard. Councillor Southwood agreed to provide written assurances to the Committee that there was no issues in any of the blocks Higgins had worked on, and further information on the procurement process such as whether past performance of a contractor was considered before awarding a contract.

 

Philip Grant adds:

 

 

Another interesting sideline on Granville New Homes is that Brent Council is supposed to have acquired Granville New Homes (for its Housing Revenue Account) from First Wave Housing Ltd for £0 in early 2021. [That should probably say early 2022]

This was part of a refinancing arrangement that would reduce the interest payable on the £17.8m loan Brent had made to Brent Housing Partnership Ltd (as it was then called) to buy Granville New Homes from Higgins (or to pay them for building the four blocks).

It appears that the £17.8m loan is still outstanding, but according to the Charges Register in the Companies House records for First Wave Housing Ltd (as at today, 16 November 2023), that loan is still secured on a property known as Granville New Homes!

How can a loan be "secured" by a 'Fixed Charge over land known as Granville New Homes, Granville Road, South Kilburn, London NW6 0JJ', when First Wave Housing Ltd no longer owns that property?

And another odd thing from the Companies House records. Despite owing Brent Council £17.8m on a loan for a property it no longer owns, as at 31 March 2023, First Wave Housing Ltd had £11,028,334 in its bank account, up from £4,231,167 at 31 March 2022. What is going on?

Perhaps the Community & Wellbeing Scrutiny Committee should be asking Peter Gadsdon, Corporate Director of Resident Services, about that, when he makes his Report to its meeting next week. He should know the answers, because he is also a Director of, and Company Secretary of, First Wave Housing Ltd (a company wholly owned by Brent Council, but a separate legal entity from the Council).

LINK TO FIXED CHARGE CERTIFICATE

 

SCANDAL UPDATE: Brent Council's remediation costs for Granville New Homes, puchased from Higgins for £17.1m, could rise to £22m plus VAT. Number of residents due to be decanted during works is uncertain.

 

The buildings known collectively as Granville New Homes sold by builders Higgins to Brent Council for £17.1m now look likely to cost Brent Council taxpayers  £20m-£22m to bring up to standard. Market conditions, including the cost of materials means that officers warn the council that costs could rise further. If more people have to be decanted than allowed for whilst works go on, that will also add to costs.

The whole thing is a scandal and a nightmare for residentts and tenants in which Higgins seem to have got away scot free. They have even been given additional work by Brent Council:

 

The report going to Cabinet on November 14th clearly outlines the poor quality of the build:

4.0  Survey Findings

4.1  There are two main issues with the blocks. These are the water ingress at various locations in the blocks and uncertainty about the fire rating of the external and internal walls and floors. These two issues are interlinked as they are generally related to the same construction elements. Thus, both issues will be resolved in tandem.

Fire Safety

4.2  The fire risk assessment for the blocks, and the subsequent intrusive investigations have identified that the construction is poor. The blocks have two distinct methods of cladding. One is formed of cementitious panels and the other is of brick effect panels. Both of these appear to have a variety of insulation materials, including expanded polystyrene, mineral wool and void spaces. Because of this, the fire rating of the blocks is uncertain. However, they will certainly not comply with current building regulations and are unlikely to have complied with the class 0 requirements at the time of construction.

4.3  The panels and insulation will require to be removed and replaced with A1 or A2 rated materials to comply with building regulations.

Water Penetration

4.4  The properties have suffered from water penetration for many years. Attempts at remediation have been unsuccessful.

4.5  Ridge Consultants were commissioned to undertake an intrusive survey of the blocks and to identify any significant areas of defect.

4.6  Ridge’s findings are as follows:-

o The external envelopes on these buildings have been constructed from relatively inexpensive materials and there is evidence of poor-quality workmanship.

o There is a lack of information available, relating to the original build and it is clear that what has been installed on site has not worked.

o The doors and windows are suffering rot and timber decay, which is not, a defect readily associated with buildings of this age.

o The horizontal surfaces to the external envelopes (roofs, balconies and walkways) have been poorly finished.

o A further note is that none of the components that have been installed should have failed because of age.

4.7  Ridge’s recommendations are as follows:

o   ·  The defects noted in relation to the buildings’ external envelopes are not easily repairable in a way that will offer a guaranteed and satisfactory solution. On this basis, the only available option is to replace the facades, roof coverings and balcony waterproofing systems.

o   ·  All specified systems and products will have long insurance backed guarantees. All designers and the main contractor will provide warranties. The Council’s legal team will review these before making any appointments.

 

4.8  A key to being able to complete these works without decanting residents is being able to work without disturbing the internal blockwork leaf of the system. It is likely that once the cladding is removed, the blockwork wall behind it will remain intact. This may mean that not all residents require being decanted. Only vulnerable residents may require decanting.

Energy Efficiency

4.9  As a consequence of the fire safety works specification. The energy efficiency rating of the properties will also be improved.

5.0  Works undertaken to Date

5.1  It was identified that the blocks have suffered from a number of defects, which included fire safety issues, water penetration, window and cladding defects.

5.2  In addition to the above the Fire Brigade served FWH with Enforcement Notices, which led to a waking watch to be introduced in the blocks.

5.3  A comprehensive communal and dwelling interlinked fire alarm system has been installed into the properties. This has now been set up with alarm monitoring arrangements.

5.4  In addition, combustible materials have been removed from communal areas and additional fire stopping has being installed. The waking watch has been removed as the alarm monitoring has been commissioned and now in use.

5.5  The fire alarm system will be monitored in order that any suspected smoke or fire is alerted to the London Fire Brigade.

6.0  Budget Requirements

6.1  The nature of the works is significant and therefore costly. The estimated cost of the works and associated works and consultancy services is £19,870,804. This includes costs associated with supporting more vulnerable residents such as respite care and temporary decanting, inflation and a contingency. The works are high risk and the market is currently extremely volatile in terms of costs and pricing, hence the large contingency. In addition, it is prudent at this stage to make provision for the potential decant of a significant number of residents who may not be vulnerable but who may not be able to stay in their homes during some or all of the works. Therefore, Cabinet is requested to allocate £22M plus VAT to this project.

6.2 The difference in cost from the 6 December Cabinet report is due to ongoing uncertain market cost conditions, and the addition of VAT. Some allowance has been made for ongoing building cost inflation. However, due to several uncertainties in the marketplace and world events, there may be further building cost increases. Cabinet will be advised of this should this become apparent during the course of the project.

 HISTORICAL INFORMATION

Brent Executive Plans including Wembley and South Kilburn when there was a Liberal Democrat-Conservative Coalition LINK

Impact Needs Assessment completed by Robert Johnson, then Housing and Community Care Project Manager, South Kilburn, now a Labour councillor.  LINK

Reponse to a Freedom of Information Request re the South Kilburn Redevelopment LINK

Brent Council to spend £22m on refurbishment of Granville New Homes that they purchased for £17.1m

 

A section of the Granville New Homes development, South Kilburn

 

Brent Council's November 14th Cabinet will be asked to rubber stamp approval for the expenditure of £22m on the refurbishment of Granville New Homes that were purchased by the Council for £17.1m.

The original remediation costs were put at £18.5m.

The homes were built by Higgins Partnerships but Brent Council has not sought compensation on behalf of council tax payers for the poor quality of the build. Indeed Higgins have been awarded further work by the council:

 

 

 

The Forward Plan Item reads: 

1.    Approve the procurement of a suitably experienced Technical Consultancy that will manage the design, procurement and delivery of the refurbishment works to the properties.

2.     Approve the procurement of a suitably experienced Contractor that will undertake the refurbishment works to the properties.

3.    Approve the allocation of £22M from the existing capital budget to fund the Technical Consultancy services and the Works.

 

  Granville New Homes Scandal

 

Scrutiny Committee Considers the Issue 

 

 

Granville New Homes and the Ridge Report – Brent Council explains “discrepancies”.

 A “report back” blog by Philip Grant:

Some Granville New Homes images from the Ridge Report.

 

There was great interest in October, when Martin shared details of the scandal over Granville New Homes, where repairs to these South Kilburn flats would cost more than the blocks cost to build, only twelve years ago.

 

Proposals for these homes to be taken over by the Council from its company, First Wave Housing Ltd (“FWH”), were considered at an extraordinary meeting of the Community and Wellbeing Scrutiny Committee on 7 October. Committee members were told that the repairs would cost £18.5m, but had to rely on a report which had been prepared for a Cabinet meeting the following week, and on information and answers given to them by Council Officers and Cabinet members. 

 

Title page of the Ridge Report.

 

The committee had not been allowed to see a copy of the report by the consultants, Ridge and Partners, who had carried out a detailed survey of the Granville New Homes buildings. Martin obtained a copy of that Report from Brent Council, under the Freedom of Information Act, and published it on “Wembley Matters” in November.

 

When I read the Report online, there seemed to be discrepancies between some of the details it showed, and what the Scrutiny Committee, and an earlier Audit & Standards Committee meeting, had been told. I added a comment below the 11 November blog, and sent a copy of that comment in an email to the two Committee Chairs involved, to draw those “discrepancies” to their attention.

 

I heard nothing more about it until 7 December, when I received an email from Brent’s Legal Director, saying: ‘The councillor, the Independent Chair and the Chief Executive have asked that I consider your email and respond and I will be in contact with you as soon as possible.’ I’ve now received her response, and as my original comment is “in the public domain”, I think it only fair that Brent Council’s explanation for the “discrepancies” should also be publicly available. I will set out my original comment, and the Council’s response below.

 

I will not comment further on them, other than to say that when a small number Senior Council Officers and Cabinet Members have so much power, I believe that they should provide full, accurate and clear information to the elected councillors whose scrutiny of their decisions is an important safeguard on behalf of the local community. You can judge for yourselves whether they did so over Granville New homes and the Ridge Report.

 

My comment of 12 November 2021 (under published copy of the Ridge Report):

 

‘There appear to be some discrepancies between the Ridge Report above, and how it was presented to Cabinet on 11 October 2021, in a report signed off by Brent's Chief Executive.

The opening paragraph of the report to Cabinet members says:

 

'First Wave Housing (FWH) has commissioned a report from Ridge Consultants to investigate water penetration, cladding, fire safety and window issues at FWH’s Granville Road, Princess Road, and Canterbury Road blocks (otherwise known as Granville New Homes). Ridge have recommended that works be carried out at the blocks to remediate these issues. It is estimated that the cost of works will be £18.5m. This makes the FWH business plan unviable.'

 

This clearly states that fire safety was investigated as part of the Ridge Report; but the report itself (see bottom of page 24 of the document in the blog above) says:

 

'Fire safety matters, relating to the cladding have not been commented on in this report as they are excluded from the scope. From what was seen, during the opening up of the cladding, there are a number of issues which should be further investigated by a façade specialist and fire engineer. These include possible combustible insulation and seemingly a lack of cavity barriers within the cladding system. The cladding systems should be reviewed, from a fire safety perspective, as a matter of urgency.'

 

Page 26 of the Ridge Report gives the budget cost estimates of the work identified as a result of this consultant's investigations:

'TOTAL COSTS by block:

Granville Road East £2,185,000
Granville Road West £2,475,000
Peel Square £4,550,000
Pilgrims Corner £4,435,000

TOTAL £13,645,000'

 

Clearly, there is a difference between the £13.645m figure in the Ridge Report which has now been disclosed under FoI (and which was not made available to the members of the Audit or Scrutiny Committees, when they considered the problems and proposed solutions over Granville New Homes), and the £18.5m figure in the report to Cabinet.

Was there a second specialist report on the fire safety issues, with the estimated cost of that remediation making up the almost £5m difference between the two figures?

 

If not, what is the explanation for that difference?

 

And if there was a separate fire safety defects report, why was that not mentioned in the report to Cabinet, and why has that report not been disclosed to councillors, or made public?’

 

Relevant extracts from the Ridge Report.

Brent Council response of 9 December 2021:

 

‘Dear Mr Grant

 

 

Your email below was shared with David Ewart, the Independent Chair of the Audit and Standards Advisory Committee, by Cllr Lo.  It was also drawn to the attention of the Chief Executive by Cllr Sheth.  The Chief Executive, Cllrs Lo and Sheth and the Independent Chair have asked that I consider your email and respond.

 

 

Your email references reports considered by three council bodies, Audit and Standards Advisory (22 September 2021 (ASAC)) Community and Wellbeing Scrutiny (7 October 2021) and Cabinet (11 October 2021) and raises three areas of concern which I address below.

 

1. Commissioning of the Ridge Report

 

You are concerned that the Scrutiny Committee Report referred to the Ridge Report as being commissioned by First Wave Housing (FWH) while the Ridge Report itself refers to the report being commissioned by FWH and Brent Council.  You seek clarity as to who commissioned and paid for the report.

  

 

The council provides housing management services to FWH.  Therefore, FWH asked the council to commission the report on its behalf and the cost will be borne by FWH.

 

 

2. Ambit of the Ridge Report

 

You refer to the first paragraph of the Cabinet report, part of which reads: 
“commissioned a report from Ridge Consultants to investigate water penetration, cladding, fire safety and window issues”and to the Ridge Report which refers to: “Fire safety matters relating to the cladding” being excluded from its commission. 

 

The paragraph you refer to in the Cabinet report is a summary paragraph and the detail behind that summary appears later in the report.  Paragraph 3.6 of the Cabinet report refers to the council’s own Housing Property Services presenting the result of fire risk assessments and intrusive investigations into fire safety concerns and to Ridge presenting the result of intrusive investigation into water penetration, cladding and window issues.   I consider this corrects any misunderstanding as to the scope of the investigations commissioned from Ridge that the summary paragraph may have led to. 

 

 

Further, the Ridge Report, makes reference to fire safety issues which happened to be observed during Ridge’s investigations and suggests that cladding systems be reviewed from a fire safety perspective as a matter of urgency.  The review had effectively already been undertaken following the Fire Brigade Improvement Notice and therefore included in the presentation by Housing Property Services referred to in the report.

 

 

3. Discrepancy in figures given for estimated costs of repairs

 

 

As you point out, page 26 of the Ridge Report gives the cost estimates as totalling £13,645,000 but the Cabinet, ASAC and Scrutiny reports refer to estimated costs of £18.5m.  You query why this is and whether there is a second specialist report on fire safety issues which accounts for the difference.

 

 

This figure of £13,645,000 is included in the £18.5m referred to in the reports.  As set out in paragraph 3.9 of the Cabinet report, that higher figure also includes the cost of fire safety work already undertaken and paid for by FWH, e.g. the waking watch over the premises and a new fire alarm system, and a contingency figure.  In addition, paragraph 3.9 make clear that the total figure is inclusive of VAT, which FWH and I4B, unlike the council, would be required to pay.  The final sentence of 3.9 should have read that the £18.5m is “based on” an estimated value from Ridge, but in the overall context of the paragraph I think the position was clear.

 

 

Although these elements are not explicitly referred to in paragraph 3.4 of the Scrutiny report, the Cabinet report was in the papers presented to the Scrutiny Committee and did contain this information.  This level of detail was not in the report to the ASAC, but as the report was a general update report of which this particular issue was only one element and pre-dated the matter being put to Cabinet as the decision maker, this is unsurprising.

 

 

At the time when Ridge were commissioned, they were aware of the fire safety issues identified through fire notices and the test results of the combustibility of the external wall system which had been carried out previously.  The Ridge Report and their cost estimate included the work to remediate these issues. The report of the test results does not include any costs.

 

 

In light of the above, I do not consider there is any reason to fear that members were misled by the reports as to the essential issues.  These were that the estimated costs to FWH of dealing with the issues identified in relation to Granville New Homes would render the company’s business plan unviable and an assessment of options for dealing with the situation was required as set out in the report. 

 

Best wishes

 

Debra Norman 

Director of Legal, HR, Audit & Investigations’

 

 

 

Prepared on behalf of: