Could Croydon Council be getting the jitters over the post-referendum prospects for the town centre’s redevelopment? WALTER CRONXITE looks at a cabinet report which tries to look on the bright side, but cannot disguise the uncertainties
Croydon faces “significant challenges both for the economy and the council” following last month’s Leave result in the EU referendum, according to a Town Hall report to be discussed on Monday.
The report is to be delivered by council leader Tony Newman at the Labour-run council’s cabinet meeting.
It has a No Shit Sherlock moment when it states that “considering the unprecedented volatility in a variety of economic inputs into the development process, it is difficult to predict the specific impact on development in Croydon with any certainty”.
The report offers a litany of the immediate consequences of the vote for Brexit, including the fall in Sterling, the downgrading of the UK’s credit rating, stock market volatility and a fall in bond values, none of which are regarded as particularly helpful to a borough which is hanging on for the promised benefits of multi-billion-pound development projects.
The report tries to offer some reassurance, stating that the outlook of Croydon’s major developers and investors “post-Brexit is positive”.
This part of the report reads as if it has been deliberately drafted to avoid causing any localised panic among Croydon businesses and the major schemes, including Ruskin Square and the £1.4 billion Hammersfield redevelopment which is as-yet-unstarted.
According to Croydon Council, Stanhope Schroders remain positive about the prospects for their long-delayed development of Ruskin Square, alongside East Croydon Station. A formal announcement is expected next week over its first office block, due for completion by the end of this year, which is to be leased to HM Revenue and Customs as a new taxation super-hub.
The council report states that Westfield and Hammerson have “confirmed that it is business as usual for them, and there are no changes proposed to the Whitgift scheme arising from the decision”.
This is not as reassuring as it may first seem.
“Business as usual” for Hammersfield in Croydon has seen no demolition or building work on the vast Whitgift Centre and Centrale site in four years, while the developers still require planning permissions to their significantly revised scheme. When the global financial meltdown hit, Westfield mothballed a (more modest) shopping mall scheme in Bradford for a decade, leaving a massive crater in the town centre and blighting the shopping district, seemingly permanently.
There remains a real risk of Croydon suffering the same fate.
Because elsewhere in the same Croydon cabinet report, it contradicts its own balmy reassurances over Hammersfield with a clear warning: “Development and construction – major schemes in some markets which have not yet started on site…” thems our italics “…are likely to be delayed until there is more clarity about the level of demand in the economy.”
Or put another way: “business as usual”.
The report goes on to state: “Planned office development is most likely to be affected in this way, while residential development is least likely to be affected. Infrastructure and public sector development are also less likely to be affected, at least in the absence of any further public spending controls.” Yet, with Chancellor Gideon Osborne at the helm of the economy, the possibility of more austerity measures being passed down the line to local authorities, like Croydon Council, cannot be dismissed.
The report admits this: “The council has been planning on the basis of the Autumn Statement 2015 and consequential four-year settlement for local government, it is clear that from various announcements that there is potential that public sector spending will be reviewed as part of an Autumn Statement and this could lead to a revised settlement for local government. It is clear that funding for local government is inexorably linked to the strength of the British economy and therefore any relatively small adjustments could lead to further cuts for local government.” Again, our italics for emphasis.
“The plan to allow councils to retain 100 per cent of business rates by 2020, phasing out government revenue support grant, will make councils bear 100 per cent of the risk of a reduction in business rates and feel a more immediate impact of any downturn in the economy.” You can almost sense the report’s author wincing as they typed that sentence.
Elsewhere, the cabinet report reveals that “an announcement is expected very soon” for “a development partner” for the site of the former council offices at Taberner House, which has been standing vacant for two years.
And the report also suggests that demand for housing in London and the south-east is so high that the Brexit vote is “unlikely” to impact what it calls “suburban” house-building plans, such as with the council-owned Brick by Brick company.
“More formal market advice points towards a relatively stable environment in the short-term,” the report states. Citing just a single source, CBRE, the multi-national real estate business, the cabinet report states “that the Leave vote doesn’t reduce the pent-up demand in the UK housing market, so while it is likely to be a quiet summer for new residential sales, forced sales and/or a marked negative impact on property prices are unlikely. Indeed, if developers scale back and new housing supply contracts significantly, there may even be upward pressure on prices.” Which is hardly likely to cheer up those still seeking to to buy their first home.
The cabinet report reveals that Croydon Council has borrowed £25.745million from the European Investment Bank for schools projects and has a facility for £102million in total, to be drawn by December 2018.
“The availability of these funds is not expected to be affected by leaving the EU; there is now an added uncertainty of the interest rate although we still expect it to be better value than the Public Works Loan Board.”
But the prospect of Brexit means that there’s a diminishing chance of more European cash coming our way: “The ability of the council to borrow a further sum in support of our regeneration programme will depend on future exit negotiations.”
Croydon has also received £2.856 million from EU Corporate Social Responsibility funding for projects that have supported growth in small and medium-sized businesses and increased the employability of young people and the long-term unemployed. The council has a proposal under the European Regional Development Fund for a business growth programme with a total project value of £2 million.
“The outcome is pending,” the report states, which doesn’t sound particularly hopeful.
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