EXCLUSIVE: A year-long investigation has uncovered multi-million-pound payments by the council on its arts centre, largely because of the bungled refurbishment managed by Brick by Brick. And it is now suggested some payments may have been unlawful. By STEVEN DOWNES
Between July 2019 and August 2020, Croydon Council spent an additional £3.5million on the Fairfield Halls – even though the borough’s flagship arts centre was closed for almost half of that time.
Those figures include nearly £1million paid as “liquidated damages” to operators BHLive – effectively an admission by the council that the refurbishment of the Halls, which took three years and cost £43million-plus, were handed over incomplete and unfinished.
These latest figures emerge as it is being suggested that some payments made during the council’s bungled refurbishment of the Halls may have been unlawful.
As Inside Croydon revealed last week, the refurbishment project was managed by the council’s loss-making house-builders, Brick by Brick, under a licence which was never put out to public tender, as is required by law. The council has admitted it has no records of any tendering process, conducted by its wholly-owned Brick by Brick with private contractors.
Our year-long investigation also discovered that a £3million grant to provide a gallery at the arts centre was diverted to subsidise other parts of the refurbishment’s creaking budget. The then council leader, Tony Newman, was a board member of Coast2Capital, which provided the grant.
The Halls re-opened in September 2019, 15 months later than scheduled. Less than six months later, they were forced to close again due to coronavirus.
But as the figures obtained by Inside Croydon show, Croydon Council continued making payments towards the costs of running the Fairfield Halls well into 2020 – and long after senior council officials had declared a serious financial crisis at the Town Hall.
Among the payments made to BHLive in 2019-2020, according to council documents obtained by Inside Croydon, is a £200,000 fee paid in August 2020, “To operate the refurbished Fairfield Halls for an initial period of 10 years with option to extend for a further 5 years under a concessions contract OJEU compliant tender”.
This payment was made at a time when the Halls had been closed for nearly six months due to coronavirus, and when BHLive had laid off most of its staff and was avoiding government furlough payments to keep other employees in work.
It is not known whether BHLive has even signed its operating agreement with the council.
Last March, Oliver Lewis, the Labour-run council’s cabinet member for closing arts centres, libraries and swimming pools, told a council meeting that BHLive had yet to sign the agreement. Just days later, the first national lockdown was announced and BHLive announced that the Fairfield Halls were going into “hibernation” for an indefinite period.
Under the original operating licence, Bournemouth-based leisure centre operators BHLive were supposed to receive no subsidies from the council, but were expected to produce the Fairfield Hall’s shows from income from ticket sales, sponsorships and catering revenues.
BHLive took the keys to the Halls in September 2019, after several postponed re-openings because of delays in the refurbishment works. Even as the curtain went up on the Fairfield’s new era, though, it was obvious that not all the tasks expected of the refurb had been completed.
This may explain the £920,679.16 paid to BHLive by Croydon Council in six instalments between December 2019 and April 2020 for “liquidated damages”.
The biggest single payment under this category was in March 2020, when the cash-strapped council managed to hand over £495,000 to BHLive in liquidated damages.
Liquidated damages are a payment made between parties to a contract where one side agrees to provide compensation upon a specific breach (such as late or incomplete delivery).
The payments demonstrate that the council, under Lewis and the council leader who appointed him, Newman, was well aware that the £43million refurbishment project under Brick by Brick had gone very badly, and expensively, wrong.
Since our report last week, Hamida Ali, who was part of Newman’s cabinet that approved the expenditure on the Fairfield Halls and is now council leader, has remained silent over the multi-million-pound scandal.
But Chris Philp, the Conservative MP for Croydon South, said, “This sheds further light on how Labour’s incompetence has driven Croydon into bankruptcy.
“This has exposed huge cost over-runs, how they bungled the planned project which was to include flats, and confirms what may residents have long known – that the ‘refurbishment’ of the Fairfield Halls was cosmetic at best and was certainly not worth the tens of millions of pounds of public money paid for it.”
Croydon, with an arts centre with no art gallery thanks to Newman, Lewis and Ali, is London’s “Borough of Culture” in 2023.
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