Examination of Witnesses (Questions 1-19)
MR TOM
BLOXHAM, MR
DAVID HODGSON
AND MR
MEL BURRELL
TUESDAY 26 FEBRUARY 2002
Chairman
1. Gentlemen, can I welcome you to the first
session of the Committee's inquiry into the need for a new European
Regeneration Framework? Can I draw to everybody's attention that
we have published the evidence that we have received so far. It
is available from the Stationery Office at some substantial price,
but it is also on the web so that anybody who wants to look at
the evidence can see that. Gentlemen, can I ask you to introduce
yourselves please?
(Mr Bloxham) My name is Tom Bloxham,
Chair of Urban Splash Group.
(Mr Hodgson) David Hodgson, Development Surveyor with
Miller Developments and Barnsley Miller Partnership.
(Mr Burrell) I am Mel Burrell. I am Managing Director
of St Paul's Developments.
2. Do any of you want to say anything by way
of introduction or are you happy for us to go straight to questions?
(Mr Hodgson) Yes.
Chairman: Can I just make the point that if
you agree with each other please just keep quiet. If you disagree
please chip in as quickly as possible.
Mr Cummings
3. Good morning, gentlemen. Can I direct my
question to Mr Tom Bloxham please? In the Urban Splash memorandum
you describe Manningham Mills as a former silk mill in Bradford.
You also inform the Committee that you want to develop the Mills
and use it as a mixed scheme, and you indicate that costs are
high and values are low. Then you argue that the scheme would
have been supported under the Partnership Investment Programme.
On what basis would the Manningham Mills project go ahead?
(Mr Bloxham) On what basis would it go ahead now?
4. No, under the Partnership Investment Programme.
(Mr Bloxham) There is effectively a gap in the funding
between the values and the costs. In the previous scheme, all
other things being equal, it could potentially have qualified
for the old PIP city grant or gap funding investment. On renewals,
as I understand it, it disqualifies on at least two accounts.
One is that it has got more than 50 per cent residential element
in it and secondly, because of the location of Bradford, it is
not an assisted area and the maximum intervention given would
be about 7.5 per cent. My understanding of it is that there are
different rules in the new system than there were in the old system
which make it much harder for the intervention to work.
Chairman
5. So what is happening to the Mills at the
moment?
(Mr Bloxham) They are rotting away and really nothing
is happening to them at the moment.
Mr Cummings
6. Can I take you on to the new regime? Does
that give you any particular encouragement? Could you perhaps
tell the Committee what you believe the barriers to be within
the new regime which have stopped the project from going ahead?
(Mr Bloxham) I think the barriers in the new regime
are either technical elements, and I mentioned the elements of
residential in it—
7. But the project has been stopped. Can you
give us a reason why it has been stopped? You keep saying you
think. Could you be more specific?
(Mr Bloxham) The project has not been stopped as such.
We bought the building in a very derelict state and we put forward
a proposal to Yorkshire Forward and Bradford City Council to redevelop
it. We have got £10 million-plus of our own funds ready to
commit to this area of Bradford. The project is going forward.
It is going forward very slowly. A planning application has gone
in there and we are really awaiting an outcome from Yorkshire
Forward as to whether or not they are able to support it. The
feedback we are getting at the moment is that they are having
difficulty supporting it because of the new rules of state intervention
and the rules of the European Commission.
8. So it is the actions of Yorkshire Forward
which are preventing you from going ahead?
(Mr Bloxham) If we were able to receive support from
Yorkshire Forward or A N Other agency—and for a time Yorkshire
Forward and Bradford City Council have been having a discussion
between themselves of who is the most appropriate person to support
it—the project would be able to go ahead.
9. What sort of support are you looking for?
You say in your memorandum that it is too low to enable the scheme
to go ahead.
(Mr Bloxham) It is financial support. Originally we
were looking for some intervention of around the four to five
million pound mark. We now believe it will be around the eight
million pound mark.
Chairman
10. How much money would you be putting up?
(Mr Bloxham) We are putting in the first phase £10-12
million and then further phases we believe will be self-financing,
of probably £20 million or £30 million.
Mr Cummings
11. Have you ever considered the idea of a joint
venture or direct development with Yorkshire Forward?
(Mr Bloxham) We have already suggested this to them.
Because of the nature of the building and the fact that it is
a listed building with potentially high liability, everybody is
very adverse to owning it at all or getting directly involved
with it and feel the risk is better placed in the private sector.
12. Have you really though examined in detail
and in great depth the possibility of joint ventures? Within the
five new schemes there are joint venture powers.
(Mr Bloxham) We have spent a lot of time and energy
talking to Yorkshire Forward and we would be happy to explore
any route that successfully sees Manningham Mills being redeveloped.
13. Where is the blockage here? Is Yorkshire
Forward not playing ball? Are you yourselves being too shy?
(Mr Bloxham) I do not think we would be accused of
being too shy by anybody there. I think you are taking evidence
from Yorkshire Forward. From our point of view we are committed,
we have the funds, we are the people pushing forward, and we are
very eager to invest in it. From our point of view the blockage
is with Yorkshire Forward or Bradford City Council.
14. How would you see a way round it? Are you
just going to leave it there?
(Mr Bloxham) We have invested the best part of a million
pounds now on this and we have been going for three years and
we have had a series of deadlines when everyone says it is going
to be sorted by. At some stage we will have no choice but to withdraw
and go and find somewhere else. These projects are so complicated,
so difficult, it is so much easier for us to do a scheme in Manchester
city centre which requires no grant funding, which you can get
on and actually do. If these sorts of buildings are going to be
saved, buildings in areas where the market has totally collapsed
and there are all sorts of other problems in the areas, it needs
the public sector and the private sector to work together and
to invest heavily and take risks.
Christine Russell
15. Does it probably mean that in the future
you will be less likely to invest in these more difficult sites
and buildings than you have been in the past because of the new
funding regime?
(Mr Bloxham) Yes is a very easy answer to that.
16. Having read your memorandum, Mr Burrell,
can I ask you how have the funding changes affected the locations
and the sites that St Paul's Developments are thinking of investing
in in the future?
(Mr Burrell) To date they have not affected them in
any detrimental way. We have been relatively successful in accessing
Objective 1 funding which is now available in South Yorkshire.
With regard to the other sites that we are pursuing, we have not
so far pursued the replacement to PIP for funding for those, primarily
because we will endeavour to access Objective 1. In South Yorkshire
at least there is an interesting difference between the replacement
funding that may be being talked about here and Objective 1 and
how those two come together. I find it a little difficult to differentiate
with regard to the manner in which Yorkshire Forward is managing
them, but, in direct answer to your question, we have not found
a difficulty because we have been able to access Objective 1.
17. Can I move on to David Hodgson because in
your memorandum you do seem to indicate that in the current climate
of uncertainty there is evidence that developers are moving away
from some of these difficult, challenging sites in inner city
areas?
(Mr Hodgson) The difference there would be that we
are aware of the projects that Mel is pursuing. Mel is after large
strategic sites and Objective 1 is to put infrastructure in which
is, as I say in my memorandum, what Objective 1 is all about—opening
up large strategic economic drivers for a region. Where I was
coming from was small, individual projects, say, a one-off office
building or something like that, where values have decreased to
the detriment of Barnsley, for example, and where there is this
cost/value gap and you need to secure a tenant, secure a funder,
secure the site, get everything else moving forward, and also
in the background of all that, go through what is a lengthy Objective
1 application process when you are talking about one single stand-alone
project.
18. Is it speculation on your part or have you
actually got any hard evidence of developers turning their backs
on sites which they may have been interested in under the former
funding?
(Mr Hodgson) It is really anecdotal evidence, talking
to other developers who have said, "We have tried Objective
1 on that basis and it did not work for us because it just took
too long." I am personally involved in a 10,500 square foot
office building in Barnsley so it is not going to suddenly lift
the region, but it is a big thing for Barnsley because that quality
of office development does not happen in the town because there
is this cost-value gap. I secured a tenant back in September and
I am still progressing an Objective 1 application. I have found
the application process so lengthy, and I have involved a lot
of the council's time and you have to bring in the tenant and
the operation of their business etc, and we are still not quite
at a decision yet. This one is okay because the tenant is there,
he wants to be in Barnsley, but how many times that happens is
probably not too many.
Chairman
19. If the tenant could choose where he went
he would be away?
(Mr Hodgson) Yes. I made the point that tenants nowadays
are much more footloose and do not necessarily come to us and
say, "I have to be in Barnsley come what may on that site".
It is fairly easy for them to take the view of, "Why do I
not just go 15 minutes down the road into the centre of Sheffield?"
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