Hey big spender: Sutton Council officials have been splashing the public’s cash, for example paying £26m for the St Nicholas Centre
Sutton’s investments, developments and procurement come under scrutiny after the Beech Tree Place débâcle. CARL SHILTON reports
Blot by blot: Richard Simpson has had a relatively smooth time in Sutton. Until now
Sutton Council continues its acquisitions and regeneration projects in the borough. But in a tough economic climate, some cracks are beginning to show.
As Sutton’s “strategic director of resources” and its Section 151 officer – a position required by law of every local authority – Richard Simpson has, to date, led a charmed life.
As one of the key figures behind the shambles that is Brick by Brick when he was working at Croydon, as well as having involvement in the fiasco of the Fairfield Halls redevelopment, Simpson is seen to have performed well since he re-emerged with a senior job at Sutton three months after quitting Croydon abruptly in December 2018.
Such was Simpson’s role in Brick by Brick and the financial collapse of Croydon Council, he got a paragraph all to himself in the Penn Report, which recommended that he be subject to a complaint to CIPFA, the Chartered Institute of Public Finance and Accountancy, his professional body.
Meanwhile, in Sutton, he has overseen an acceleration of commercial and development activity, bringing a more commercial approach to proceedings.
But there will likely always be problems when local council officials dip their toes into the shark-infested waters of construction and development.
Studied purchase: the ‘Northern Gateway’ has been bought as a new home for Sutton College
Simpson’s first black mark at Sutton came with the selection of Real LSE Ltd to undertake the construction of 92 flats at Beech Tree Place. This two-year-old company took on the £44.2million project despite having a Dunn and Bradstreet recommended credit facility of just £130,000. Council officials claimed their hands were tied by procurement rules.
Real LSE went into administration in September, adding a potential £10million to the rising costs of the development, while leaving dozens of elderly residents in temporary accommodation for, possibly, years to come.
Beech Tree Place is just one among a range of projects that Sutton has on the go, with Simpson’s hand on the finance tiller using a £100million pot of borrowed money.
The projects are loosely divided into Future High Street Fund – or FHSF – granted developments, and self-funded regeneration projects. Simpson’s financial manoeuvring in creating a 35-year £100million bond issue by Sutton Council has provided the authority with a capital project war chest.
Having come from Westfield-blighted Croydon, Simpson really ought to be familiar with the risks involved in property deals involving shopping centres, but the Future High Street Fund’s main investment in Sutton has been in the St Nicholas Centre, a 30-year-old complex that has struggled since online shopping took hold, a situation made worse by covid lockdowns.
The £26million purchase in August 2021 has reached the stage where the council is seeking a development partner to create a mixed development of retail and leisure plus more than 1,000 “affordable” homes, covering an area that extends from the town centre shopping area to the Civic Offices, library, Sutton College, Secombe Centre and Gibson Road car park. Well-judged procurement will be essential, which could cause concerns.
The council will relocate the Civic Offices, library and civic amenities within the complex. Sutton College is moving to a new site at the Northern Gateway, opposite Asda, into a refurbished building bought for about £4million and due for completion in early 2026 with 22 additional homes.
The acquisition of the St Nicholas Centre was not without controversy.
Inside Sutton understands that the council, as freeholder of the land, stepped in to snap up the property when another bidder, Hadley Property Group, was close to doing a deal supposedly for £4million less than Sutton paid.
Skate centre: the Oru Space combines an H&M store, plus 500 co-working desks, a ‘wellness centre’ and a skate park on the roof
Given that Hadley is the kind of “ethical” developer experienced in major mixed retail and housing projects that Sutton is now seeking to partner with, it will be interesting to see if Hadley pitches for the work.
There are two further developments on Sutton High Street. The council acquired the old BHS store and the WH Smith site for £8.2million in October 2018, but Simpson has since driven the project. With H&M taking the retail unit, Sutton awarded a contract to Oru Space Ltd to turn the upstairs and back offices into a co-working and “well-being” space, including 500 desks, cafés, bars and, bizarrely, a rooftop skate park.
The renovation is using FHSF grants and some capital to create the hub. A young start-up, Oru is described as a high-risk investment by Seedrs, a crowdfunding investment hub where it has just raised around £500,000. Oru operates in a market where there have been significant recent failures and where many operators are struggling, as the assumed “cultural shift” post-covid has not really happened.
Massive redevelopment: the council wants to quadruple the number of homes at Elm Grove
Even if Oru does fail, then Simpson may well have pulled off a blinder – the council would inherit a fully refurbished building at little cost to itself.
Another development by a perceived high-risk operator relying on grant funds and seed capital is at Throwley Yard, where the Really Local Group is turning the former Chicagos nightclub into a cinema and “cultural hub”. Due in 2024, this will compete with the 12-screen Omniplex cinema on St Nicholas Way, so again the risk may be high. Despite higher financial exposure, the council seems to be on to a surefire win with redeveloped premises it freeholds, completed at relatively little expense.
Of course, there would be reputational damage to the council if these high-profile projects fail. But that may be seen as a price worth paying for the bean counters, if not for the politicians.
With a housing development on the Kwikfit site stalled, or at least parked, the last major redevelopment project is Elm Grove, which comprises mainly council housing on the one-way system opposite Asda. The council went through a similar consultation process as the one devised for Beech Tree Place (for all the good that did for the residents there). The council is seeking a development partner to build 300 homes to replace the existing 73, starting in May 2025.
Away from the High Street are upcoming redevelopments of housing on the Benhill estate and at Denmark Road in Carshalton.
Since Simpson’s arrival at Sutton, the Royal Marsden Cancer Hub at Belmont seems to have received the commercial sanity needed to finally get this much-needed life-saving facility underway, with buy-in from Aviva and mixed-use developer Socius. There had been grumbling that the council’s LibDem administration was dithering over releasing some control over its £30million land investment, but when solemn promises were broken and historic buildings on the site were demolished to make the deal more attractive, the money finally came in after years of dithering.
All in all for Simpson, it’s a B-plus after four years at Sutton.
But with his chequered history at Croydon still contentious – his part in the financial collapse was raised last week at a high-profile Employment Tribunal case brought by one of his erstwhile colleagues – the similarities, and flaws, in a local authority borrowing massively to try to profit from house-building and commercial property schemes will continue to draw very close scrutiny.
Read more: Council’s stalled housing development could cost £50m-plus
Read more: #PennReport: Cover-ups and denial over Brick by Brick failure
Read more:#PennReport wanted police probe into possible misconduct
Read more: Sutton’s Simpson show can’t account for £2m SDEN subsidy
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Spooky similarities to the Croydon property adventures🤔