The future of a company set up by Swindon Borough Council to build houses for profit and to generate income for the authority is in serious doubt.

And that’s according to the council’s own audit team who looked into the way it was operating.

Members of the council’s audit committee heard a report from auditor Lorraine Sarson into Swindon Housing Company which had originally been produced in late 2023 and held back some months because of personnel changes.

And the report says the company may be at a critical stage: “The auditor considers the Swindon Housing Company Ltd has reached a ‘tipping point’ in terms of commercial viability and financial sustainability.

“This is because the company has had no active development of projects on site for the last 19 months, or any expected before 31st March 2023.

Because of the lack of activity, the report says: The company is sustaining financial losses, with these forecast until the end of its current business plan.

“In 2021-22 the company’s trading loss of £0.4m included £235,000 of operating and financing costs. In 2022-23 the projected trading loss of £0.5m is estimated to include £253,000 of these related costs.”

The report with the full audit report concludes: “An urgent review is required of performance against its business plan and the viability of projects/sites allocated by the council to establish its future status and potential options. There is currently no exit strategy in the event of liquidating the company.”

Slightly strangely the state of the company still makes the council a surplus which was projected to be £1.2m by the end of the last financial year. This is because council staff and financial support to the company is charged at a higher rate to comply with state aid rules.

But if the company does not generate a profit from its operations that surplus to the council would be lost as a bad debt.

The council’s Director of Inclusive Economy & Sustainability Brian Pinchbeck said: “The company needs an ongoing flow of land and opportunities to consider for building. There are two businesses cases being assessed by finance and the likelihood of a positive outcome is that one probably will and one won’t”.

He added: “The feasibility of the company is questionable if you don’t have parcels of land coming forward.

“If that doesn’t change then the council will need to look at the company - it’s a fundamental question of its viability.”

The last houses to be completed by the company were six houses in Sparcells Drive in 2020 and 14 bungalows in Pilgrims Close in Shaw in 2019.