The Chronicle (South Tyneside and Durham)
£4m of public money spent on bust Orca homes
COMPANY WITH PREVIOUS TIES TO COUNCIL LEADER WAS STRIPPED OF CONTRACT TO BUILD 14 HOMES
MORE than £4m of public money has been spent on a controversial housing development at the centre of a political drama on Tyneside – almost double what was originally planned.
Newcastle City Council has revealed the final costs of completing a contentious scheme that previously saw a builder linked to the city’s Labour leader stripped of a multimillionpound contract.
Orca LGS Solutions was paid more than £2m to build 14 houses in Gosforth and Throckley, but the local authority terminated its agreement with the North Shields-based firm in 2022 as it was “not meeting required contractual performance”.
The Chronicle revealed at the time how, prior to him becoming council leader, Nick Kemp had lobbied the council on Orca’s behalf – telling civic centre officials in emails that the company offered a “fantastic opportunity” and was “keen to develop a strong relationship” with the authority. After Orca was removed from the project and subsequently went bust, the council stepped in to finish the modular homes in Aln Crescent and Broomyhill Road.
The 14 houses are now completed and have been let, but it has now been confirmed that the final bill for the scheme has come in at £4.06m – with inflation, weather damage, and the need to find “specialist” contractors to finish the works being blamed for the escalating costs.
Colin Ferguson, leader of Newcastle’s Liberal Democrat opposition, said: “The council must urgently provide clarity on whether this is a prudent use of public money and whether it represents good value for the taxpayer. Otherwise, this move risks looking like throwing good money after bad”.
The council previously confirmed that Orca was paid £2.247m for the scheme, payments which the authority said in 2022 “properly reflect the cost of the works which have been undertaken”.
A spokesperson said this week that the original agreed budget for the 14 houses was £2.2m and that multiple increases to that had since been agreed, most recently this month, to push the eventual total beyond £4m.
They added: “This project to build 14 new homes for affordable rent is now complete.
“They are all let, and tenants have now begun to move in.
“We can confirm there has been an additional cost to the project.
“The reasons for the increased cost include additional work caused by adverse weather, the cost of securing some contractors with specialist knowledge and the impact of inflation pushing up the cost of labour and materials.”
Coun Kemp was previously listed as Orca’s director of new business and housing strategy and was the subject of a public complaint regarding the fact that his role was not declared on the council’s register of interests.
That was dismissed on the grounds that he was not directly employed by them and was given his title for the purposes of “outward facing activity”.
Orca was instead a client of his PR and lobbying agency, NKA Public Affairs, and the council concluded he was not required to declare the role on his register of interests and that no rules had been broken.
The council spokesperson said that it had “made clear in the past that Coun Kemp was not required by the code of conduct for members to declare any interest” and that “all council processes have been followed and Coun Kemp has had no involvement in the making of this decision”.
Information on Companies House shows that Orca went into liquidation in March 2023 with £3.9m worth of debts. The city council was named among the list of creditors owed money, but only for the sum of £1.