CROYDON IN CRISIS: Town Hall correspondent, KEN LEE, on the latest council bail-out for Brick by Brick over the bungled and unfinished refurbishment of the borough’s major arts centre
The Fairfield Halls: hoping to reopen after lockdown, but in what sort of state following the BxB refurb?
Croydon’s cash-strapped council is to step in and pick up another £69.2million-worth of costs associated with the bungled and unfinished refurbishment of the Fairfield Halls, according to a report going to next Monday’s Town Hall cabinet meeting.
And yet more consultants are having to be hired by the council to check on the work of Brick by Brick and its contractors, to decide quite how bad a job they managed to make of the prestigious south London arts venue and what work is needed now “to make the centre operational”.
By transferring the multi-million-pound cost over-runs from the Brick by Brick balance sheet, council officials hope to staunch their losses and make the house-builder a more attractive proposition to a potential buyer.
The council has loaned loss-making Brick by Brick £200million since it formed the company in 2015, and not a penny has ever been repaid – a significant factor in the council going bust last year.
Next Monday’s meeting will be the first in-person gathering to be held in the Town Hall Chamber since March 2020, though some special covid safety measures will be in place.
The Manchester-based property developer looks to have landed a massive bargain
The papers released in advance confirm that talks have been underway with a sole bidder to buy Brick by Brick at least since April.
Inside Croydon reported last week that the potential buyer is Manchester-based Urban Splash.
But as well as managing to build very few new homes on time and to budget, Brick by Brick’s management of the Fairfield Halls refurbishment project proved to be catastrophically poor.
The Fairfield Halls have been open for barely six months in the whole of the last five years.
In 2016, they closed for what was supposed to be a two-year project that was budgeted to cost just £30million.
And they’re back: Monday’s cabinet meeting will be the first in-person Town Hall business since the covid lockdown in March 2020
Those works over-ran by more than a year, and after a reopening ceremony in September 2019, covid-19 saw the Concert Hall, Ashcroft Theatre and the new venue, The Wreck, forced to shut again in March last year.
Yet, even in that abbreviated opening period, it quickly became apparent to staff, performers and customers alike that there were very many issues with the works, which were incomplete and unfinished. In recent weeks, for example, workmen have been on site trying to fix leaks from the Halls’ roof which, it is suggested, were caused during the refurbishment works.
The report to Monday’s cabinet meeting says the council is in the process of scrapping its contracts with Brick by Brick for the Fairfield project, and taking the matter back to get the job done, properly. “There are apparently no disputes with contractors,” the report states, with a suggestion of a sigh of relief, “but there may be some accounts that need to be settled (currently do not have estimates for) and some works that were either not fully specified or outside the scope of the refurbishment that need to be undertaken to make the centre operational.”
“The Council is appointing specialist surveyors with particular expertise in venues similar to Fairfield Halls to see what additional works needs to be undertaken to make the building usable.” Note that: usable. Suggesting that it is not so now.
Following the collapse of the council’s finances, Brick by Brick has had the College Green development – the area to the left of the Halls in the picture above – take out of their hands
Elsewhere in the report it says, “In order to ascertain what is required quickly and the likely cost, the council has directly appointed Faithorn Farrell Timms (a specialist in concert venues) to undertake a survey of the property and to review the original contract documentation.
“It is possible that additional specialist advice or exploratory works may be required.
“This work,” the report states, portentously, “will then inform the basis of a contract to complete the refurbishment of the Halls.” Which confirms the widespread assertion that Brick by Brick had left the job uncompleted.
Unfinished business: the Fairfield Halls were not finished when Sadiq Khan (right) performed the reopening with Croydon’s Tony Newman (centre)
The report, drafted under the direction of Chris Buss, the council’s interim finance director, explains the background: “The refurbishment of Fairfield Halls was undertaken by Brick by Brick at what was intended to be at nil cost to the council as the arrangement was structured in such a way that the costs would be covered by the development profit from the adjacent College Green site…
“… This arrangement is no longer taking place, which means that Brick by Brick no longer has the capacity to fund the expenditure on Fairfield Halls.
“… It is proposed to treat all the costs incurred by Brick by Brick on the refurbishment as council capital expenditure rather than as a loan. The existing total expenditure is £69.261million… The impact of this is to reduce the level of indebtedness of Brick by Brick to the Council to £163,042,060.
“The existing contracts between Brick by Brick and contractors and consultants involved in the original refurbishment will be novated to the council to ensure that the council is able to enforce any warranties or guarantees under the contracts. There are however outstanding works to complete the refurbishment.”
How the cost breakdowns on Brick by Brick’s failed refurbishment of the Fairfield Halls are detailed in Monday’s report, including ‘loan from generic council loans’
Elsewhere, the borough’s elected councillors – few of whom will actually get to attend Monday’s in-person meeting in the Chamber because of covid restrictions – are given a stern warning. “In taking decisions under this report,” they are lectured, “members will need to be careful to separate what is in the interests of Brick by Brick from what is in the interests of the council…
“Fundamentally, these decisions need to be made solely having regard to what is in the interests of the council (allowing for the fact that the interests of the company are intertwined with those of the council).”
Councillors are also cautioned that “the exact mechanics of how this transfer will take place is still to be determined” and that it will “need to ensure that it does not inadvertently generate a tax liability for either the council or Brick by Brick”.
Read more: Conflicts of interest, incomplete contracts, unlawful payments – how the Fairfield Halls refurbishment cost Croydon £50m-plus
Read more:Making a Splash: big bailouts behind Brick by Brick’s buyers
Read more: ‘An accountant could have foreseen this more than a year ago’
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When will the car park reopen? I presume if they spent all that money on it they will reopen it? What is going on with the College Green site?
It’s not really Croydon’s cash-strapped council that will pick up another £69.2million-worth of costs. It’s us, the residents who pay Council Tax and taxes that fund the borough that are saddled with the bill.
Your report in December 2020 about the £30m Fairfield Halls project that never went to competitive tender tells us how that decision was made that got us into this mess.
“The cabinet report was prepared by the then assistant chief executive, Richard Simpson, with the responsibility falling jointly on councillors Alison Butler, the cabinet member for housing, and Simon Hall, in charge of the borough’s finances.”
Hall resigned and has left the council. Butler is still a councillor, being paid £11,692 as if nothing had happened.
We know that a number of senior managers in the council got the sack for their contribution towards the borough’s financial collapse.
Why hasn’t Croydon Labour chucked Butler out? Does what passes for the party leadership not have the brains or the balls to do what’s right? Or is there an assumption that Her Ladyshit has done no wrong?
Refurbishing a post-war arts venue of the size and complexity of Fairfield Halls requires a specialism that many architects do not posses. Enlightened clients seek out specialists architects with a track record in this work in order to avoid cost overruns and get design and technical certainty.
The very stupidly naive Croydon Council ignored normal practice and instead gave it to the Brick x Brick’s in-house architects who have an average age of n-n-nineteen.
A very stupid error that once again, costs Croydon residents dearly. Is there anything Tony Newman’s cabinet has not wholesale f**ked up?
Great work – shining a light on mismanagement and incompetence. But it’s not just residents who have to pick up the tab – most of Croydon’s income comes from central government. That’s everyone in England! And that’s why this should be national news.
Ha ha ha ha. This is the first time I’ve seen the word ‘enlightened’ used in a story about Croydon Council.
I have heard so much about the eye-watering losses at Brick by Brick that it all begins to get a bit meaningless. Thinking that £69million is about £170 for every man, woman and child in the borough brings it back into perspective.
The losses are more than that, Kev. Much more. That’s just the overspend on a single project…
Well after all its only £69m, who cares? The Council Tax-payers will stump up. They don’t have a choice.
Try going past the Halls at, say, 11pm – why is it necessary to have internal lights burning and exterior flood lighting?
One wonders just where or by whom the massive overspend was reported and authorised. Council financial regulations cover variations and overspends very well. Did the outsourcing of the work mean there were no controls over expenditure and BxB could spend an undefined/unlimited amount? I used to have unlimited spending powers as Engineer for Council civil engineering contracts but I had to obtain authority from the Council first in order to exercise those powers were there to be a budget overspend.