Crisis for Labour as Hammersfield admits delays until 2019

Croydon’s new council’s hopes of the £1 billion Hammersfield shopping mall development being built and on-stream speedily took another blow last night when an invited audience of local businesses was told that the scheme would not start construction until 2016 – a year later than planned – and will not be completed now until 2019 at the earliest.

One of Westfield's imagined views of how the new mall might look: much of this area will be closed off for building works for three years - beginning now in 2016

One of Westfield’s imagined views of how the new mall might look: much of this area will be closed off for building works for three years – beginning now in 2016

That means that the Labour group, which won control of the Town Hall in May and pinned their hopes on the Westfield and Hammerson redevelopment of the Whitgift and Centrale shopping centres to regenerate the borough’s fortunes, will now have to endure the town centre as a building site throughout their four-year term.

This ought not come as any surprise. In April this year, Inside Croydon accurately predicted: “It is the nature of these large-scale projects that they over-run, in terms of time as well as costs”. Last night’s down-played announcement simply confirmed what had been suspected by realists and pragmatists for some time.

Nonetheless, it will be doom-ladened news for Croydon’s ruling Labour group.

Any public and commercial backlash for the inconvenience and disruption during the construction period is likely to come at a considerable political cost for Labour’s council leader Tony Newman and the Whitgift Foundation board member in his cabinet, Toni Letts.

Westfield director John Burton: "We are not a panacea"

Westfield director John Burton: “We are not a panacea”

It will also deny cash-strapped Croydon Council, left with the legacy of a debt “black hole” (copyright Mike “#WadGateFisher) of more than £900 million by the previous Conservative administration, with a longer wait for the business rates and other economic benefits from the Hammersfield development.

No reason has been given for the delay in the start of construction until 2016, though it seems likely to be caused because of the persistent legal challenges presented to the scheme by some of the current leaseholders and freeholders in the Whitgift Centre, notably rival property owners Minerva, who retain a substantial interest in the key Allders department store site.

In February, there will be a planning inspector hearing on the status of the more than 100 Compulsory Purchase Orders, taken out on property in the Whitgift Centre by the council on behalf of Westfield and Hammerson. This may yet cause further delays.

Last night’s reception held by the Croydon Business Improvement District at Hampton by Hilton was given the bad news about the delay by Hammerson’s Peter Cole and John Burton, the Westfield director who spoke at the recent election campaign launch of Gavin Barwell, the MP for the Whitgift Foundation, the owners of the majority of the freehold of the Whitgift Centre.

Six months ago, a bullish Burton greeted Croydon Council’s announcement of the CPOs by stating that it was, “Full steam ahead”. Now, it seems to be “stop all engines”.

One Katharine Street source told Inside Croydon, “This is big news and very bad news for Labour at the local elections in 2018.

“Labour needed the extra income on business rates that the scheme offered as soon as possible, with real crisis in council’s budget by 2017 unless other bailout from government.”

Burton dismissed Croydon BID members’ concerns about the disruption to their businesses during the three-year construction phase by saying, “I’m of the view that existing businesses will actually benefit from the construction. We should be positive.” So that’s all right then.

Toni Letts spoke at last night's Croydon BID event: on behalf of the council or the Whitgift Foundation?

Toni Letts spoke at last night’s Croydon BID event: on behalf of the council or the Whitgift Foundation?

Some of the present occupiers of the Whitgift Centre might have the misfiring “Wastefield” development in Bradford in mind, where a vast hole in the town centre remained, untouched, for a decade until the Westfield developers sold the land.

Letts (whether speaking in her capacity as Labour’s cabinet member for economic development or as a board member of the dominant land-owner Whitgift Foundation was not made clear) said, “The council is going to make it easier for people who want to move their businesses to do so.”

But she did admit to being “fearful for some of the businesses”.

The air of caution, for his potential future tenants, for the council and the area as a whole, was underlined by Burton. “We are not a panacea,” he warned.

And when asked about the plans to manage the additional traffic likely to be attracted to the town centre by the new mall, the Hammersfield spokesmen were noticeably opaque. “We’ll begin discussions like that when we know which major retailers are coming into the centre, probably in 2016,” Cole said.

Robert Canning, the Waddon councillor who attended the event, said, “There was huge support for the £1 billion development.

“I am keen to see it completed at the earliest opportunity so that the benefits for Croydon can be realised as quickly as possible.”


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5 Responses to Crisis for Labour as Hammersfield admits delays until 2019

  1. In 2013 Hammerson forecast a start in 2015
    In 2014 Hammerson forecast a start in 2016
    I do hope that Croydon is not being misled by over optimistic developers as the residents deserve better.

  2. davidcallam says:

    These projects are intensely complicated. I hope no Croydon politician is being so silly as to base some policy decision on money being available on a certain date.
    I remember the completion of Centrale construction and the horse trading that then went on to let the various units. Smaller retailers are understandably concerned about trading position, so there is a pecking order to the letting process. Centrale already had two anchor tenants on board before building started – Debenhams and House of Fraser. As far as I am aware, no anchor tenant(s) has yet been announced for Westfield, though you can be sure all kinds of discussions are going on.
    There will also be the question of vehicle access to the new retail complex. Croydon is a notorious bottleneck that will need to be unblocked if increased numbers of shoppers are to be persuaded to come to town. Maybe the GLA has decided the necessary road improvements are too politically sensitive to be announced before next year’s General Election.

  3. Rod Davies says:

    It seems that every London borough looks to the retail sector to regenerate it’s shopping centres, create jobs for those groups that currently find it difficult to find employment and thus regenerate the entire area. This approach appears appealing to planners and policy officers whose only economic engagement is with service providers, namely shops, and have little or no contact or sympathy with other sectors. There are some who are profoundly hostile to manufacturing for a range of political and cultural reasons.

    The problem with all service sectors is that they need someone or something to provide a service to as customers. These consumers are finite and as more providers enter the market, they have greater and greater choice. However increased choice also can be expressed in the market as oversupply, and where there is oversupply prices fall, or the providers supply a product augmented with other considerations that add value.

    As we have seen manufacturing in Croydon virtually eradicated, followed by the finance sectors demise in the 1990s, I have to wonder who it is exactly that will chose Croydon over Bromley, the West End, BlueWater, etc etc. The construction of thousands of apartments in Croydon that are principally marketed overseas may not produce the demand if the owners don’t choose to let them out. Even if they are rented out, their co-location with the East and West Croydon stations may well mean that the residents simply go into the West End and burgeoning East End to do their high value shopping.

    The Croydon residents at the bottom of society probably have insufficient disposable income to make much difference to the market. They are principally impoverished by high property costs, low wages and few employment options.

    Logically it would have been better if the Council had put its efforts into developing a strong economic base in almost any sector other than retail. One major high street name after another has either been consumed in a takeover or gone to the wall. With the exception of Lidl, Aldi and Waitrose the supermarkets seem to be in trouble. Had the Council done so there might have been a stronger economic base in which to support the retail centre. The Council can be possibly forgiven because the same has been replicated across the country.

    The retail sector is also appealing because the level of investment in training is so low that it appears to provide ready employment for low skill individuals. However the retail sector applies its own distinct set of prejudices that militate against many long term unemployed from the most marginalised communities getting jobs. By concentrating on the development of the retail sector communities can make socio-economic marginalisation permanent and thereby create for themselves even greater issues of antisocial behaviour.

    Perhaps this news from Hammersfield could be a call to review the entire regeneration strategy and start to think about non-retail / service sector options.

  4. davidcallam says:

    Rod:lots of cold water, but not a single practical suggestion for an alternative. I wonder why not?

  5. derekthrower says:

    As we enter 2015 the economy is starting to slow down, real incomes are shrinking for the seventh consecutive year and with the coalition’s failure to tackle the deficit/debt crisis, more cutbacks and tax increases/new taxes in the offing. Do you detect the possibility of further delays in this development?

    The model of development that has arisen out of the neo-Liberal era is something that has completely failed Croydon. So many stalled developments and speculative land banks now dominate the area. The root cause is how the price of land and property is viewed by the policy makers. Price inflation of land and property is a good thing and is encouraged. Interest rate policy is unaffected by such inflation and with such negligible rates of interest it is possible to just sit tight and just watch the effective asset value grow beyond the costs of any required repayments.

    Until this broken model is changed unfortunately such places as Croydon will be forever dancing to the tunes of people in far away places.

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