Friday, 10 July 2009

RBS to blame for collapse?

Two key projects are under threat in Southport and some are wondering if it is the nationalised bank RBS who are to blame for closing a line of credit to the developer who has now gone in to administration.

Scarisbrick Ave is in the heart of Southport's tourist quarter linking Lord Street with the Promenade. Blythe Homes were developing the site and it was to accommodate the borough's Independent Living Centre and some social housing. To most folk the level of guaranteed investment should have ensured that the project was completed. Rumours persist that the attitude of Blythe's bankers RBS has led the scheme into difficulties

I had understood that we owned RBS as it has been nationalised. How come projects like this are grinding to a halt for want for credit? It would seem to me to illustrate two things; firstly the need for the government to take a more direct approach to the nationalised banks and secondly that when the banks return to profitability and are ( I hope) broken up and disposed of by the state that establishing regional banks so that locally based financial institutions can make informed local decisions is considered .
Below is an extract from the report made in public session to councillors this week. The full report is in the download section of the website:


Southport Commerce
Park

2.39 The Bus Link Road
project, which would provide public transport access improvements to Southport
Commerce Park, and at the same time bring forward a further 2.9 hectares of the
remaining 20 hectares of development land within the Park, has now completed its
first phase, which is the removal of topsoil, and the compaction of the base.
The second phase is expected to start in July, which entails the actual
construction of the road surface. The project is expected to be completed by
November 2009.

2.40 The second
project on the Commerce Park involves bringing forward a new office development,
which would create some 5,776 m² of commercial floor space (1.2 hectares of
land) in order to provide quality office accommodation to meet potential local
demand. The total cost of this project is approximately £9,773,000, and due to
additional costs associated with land remediation works, Blythes Development
Ltd, the company responsible for this project, is seeking some £1.3 million from
the new European Programme. However, this project is now at risk as a result of
Blythe’s other company undertaking the Scarisbrick Avenue development project
going into administration, as indicated in paragraph 2.48
below.

2.41 Members may be aware that on
the back of the proposed Blythe’s development above, Sefton Council was able to
‘secure’ £3.07m of RDA funding for the provision of electric power supply and
some remediation work. However, if Blythe’s proposals to create additional
commercial space does not progress then the argument for needing additional
electric power capacity will not be accepted by the RDA, thereby putting the
project at risk. Officers are currently working with the RDA and Blythe’s to
explore potential options.

An Independent
Living Centre

2.42The White Paper ‘Our Health, Our
Care, Our Say, provides a framework for the future delivery of health social
care, and imposes a statutory duty on local authorities to provide Independent
Living Centres by 2010. The Cabinet at its meeting on 30th October 2008, agreed
to the development of an independent Living Centre on Tulketh Street Car Park
(West), Southport. However, the location of the Centre at this site would have
resulted in loss of car parking income, and would have entailed the relocation
of the Cleansing operation, the cost of which were not quantifiable at the
time.

2.43 Cabinet at its meeting on
26th February 2009, considered a report setting out the background into the
development of part ERDF/HLF grant funded 19–35 Scarisbrick Avenue, Southport
project by Blythe's, and the difficulties the developer was encountering as
result of the current economic climate. In order to ensure the completion of
this project, and minimise the possibility of claw-back of grant Members agreed
to the location of the Independent Living Centre on the ground floor of this
development.

2.44 Unfortunately, the
developer Blythe’s has recently been put into administration, and officers are
currently having discussions with the appointed administrators,
PriceWaterhouseCoopers to explore potential options for the completion of this
project...........................................

2.48As
indicated in paragraph 2.40 above, the developer undertaking Scarisbrick Avenue
Project as gone into administration as a result of the current economic
downturn. Consequently, the project is not yet completed, and unless Sefton
Council as the accountable body can demonstrate before the end of June 2009 that
the project will be completed, not only will the Council lose outstanding grant,
but will be required to repay the grant already claimed to date.