Hounslow Council’s £240m gamble is a ticking timebomb, says Cllr Jack Emsley

Hounslow’s wholly owned company, the Lampton Group, has made £15 million in losses and borrowed hundreds of millions – leaving taxpayers exposed to mounting financial risk

Chiswick councillor Jack Emsley, Conservative councillor for Chiswick Homefields ward, says Hounslow Council’s ownership of the Lampton Group is becoming an increasingly serious financial risk for residents.

Following a recent scrutiny session, he warns that the company’s ongoing losses and rising debt obligations could have severe consequences for the borough’s finances.

Guest blog by Cllr Jack Emsley

Last week I took part in the council’s annual ‘scrutiny in a day’ process, which saw a handful of councillors invited to a day-long event looking at the state of the Lampton Group, the council’s wholly owned business venture.

The day started at Lampton’s headquarters on Southall Lane, and involved several site tours around the company’s various locations in the borough, followed by a Q&A session with the group’s senior leadership alongside various Hounslow Council officers.

It’s apparent that it’s Halloween this week, because some of our findings during the process should scare every single resident in our borough.

What is the point of Lampton?

 As many will no doubt know by now, the Lampton Group is a company wholly owned by Hounslow Council. It was founded in 2013 to, in the group’s own words, “generate income for the council in response to financial challenges”. In other words, the council invested in this company in the hope it would offset rising costs elsewhere.

Things haven’t panned out so well – to date, Lampton has made a cumulative loss of £15 million. In fact, in the 12 years since it started, it has never once made a profit. As the sole owner, the council, and therefore all of us as taxpayers, are liable.

My first question of the scrutiny process was a simple one – has the mission changed, or is the company just failing to achieve its core, founding objective?

The answer was that Lampton is both committed to being a service provider and a revenue generator. It has certainly failed on the latter, and the level of repairs service experienced by council tenants suggests it is failing on the former, too.

Image: Hounslow Council headquarters, Hounslow House

Keep digging…

 In 2016, Hounslow Council decided to expand Lampton’s remit to include development and financial investment. A risky strategy given the group had, by this point, already made a cumulative loss of over a million pounds.

A decision was made by the then cabinet to begin loaning large sums of taxpayer money to the group in order to invest in property development – the cabinet member at the time responsible for this decision was Katherine Dunne, who was then in charge of housing.

To date, Hounslow Council has loaned over £240 million to the Lampton Group. This was a mixture of taxpayer money and, incredibly, £174 million worth of borrowing. Let that sink in – Hounslow Council borrowed a nine figure sum just to lend money to the Lampton Group, exposing our borough to huge financial risk.

It’s a loan, so it’s being repaid, right? Well, in the last financial year, the Lampton Group was late with its payments in three of the four financial quarters. It blamed cash flow problems.

Incredibly, the council’s leader, Shantanu Rajawat, agreed to give Lampton a cash advance back in June to help it overcome those cashflow problems. Yes, that’s right – he essentially gave Lampton taxpayer money in order for it to pay back the interest on the loan we originally gave them.

Is that an example of prudent financial management? I’d argue it’s playing fast and loose with our financial position.

Image: Lampton Group owned Hanworth Leisure Centre, Credit: Lampton Leisure

Are things getting better?

 Throughout the scrutiny process last week, the Lampton Group was at pains to present itself as a changing organisation. But scratch beneath the glossy virtual brochures there are alarm bells that, far from getting better, things are about to get a lot worse.

Take Lampton Leisure, the arm of the group that looks after leisure services. We were invited to look around Hanworth Leisure Centre and had a working lunch with various representatives from the leisure team. It’s true that they do a good job, and the group is one of the few parts of Lampton that is projected to break even this year.

But they’re worried – Rachel Reeves’ National Insurance hike and increases in the minimum wage will mean the group has to find nearly £1 million in additional revenue just to cover costs this year. Will it manage to plug the gap created by the budget, or will local taxpayers have to come to the rescue again?

Then we met with Coalo, the arm of the Lampton Group which deals with housing maintenance, at their site in Feltham. The issues with empty council homes are well known across the borough, but I asked specifically about Coalo’s continued missing of key maintenance targets in the borough.

Why are repairs taking so long? Instead of reassurance, they said that the council needs to lower its expectations for what the group can achieve and reduce its housing repairs objectives.

Why are we paying this business so much money to deliver worse services?

The reality is that these issues will never get better, because the current council administration refuses to take tough decisions on the Lampton Group’s future. The current cabinet is full of Labour councillors who backed the creation of Lampton, and they are willing to continue throwing our money at the company in order to save face.

As local taxpayers, we are liable for £15 million of Lampton’s losses, plus the nearly quarter of a billion pounds of taxpayer money loaned to the group so far. It’s a ticking timebomb that threatens to bankrupt our borough. We all deserve much better than the current crop of Labour councillors who are burying their heads in the sand at the scale of their problem.

Cllr Jack Emsley is a Conservative councillor representing Chiswick Homefields ward on Hounslow Council.