Inquiry into Newbury London Road Industrial Estate EU law breach findings published
Task group to present findings into council process
AN INQUIRY investigating how West Berkshire Council entered an unlawful agreement to redevelop the London Road Industrial Estate (LRIE) has said that there was a piecemeal approach to the project, which lacked a clear business case and clarity over who was in charge.
A report going before councillors next week said the council did not intend to act unlawfully in the saga that has cost more than £900,000.
Redeveloping the LRIE has been a long-term ambition of the council and was first outlined in 2003.
Six bidders were considered for the scheme and a cross-party group of councillors and officers unanimously decided that St Modwen was the best candidate.
Faraday Development Ltd (FDL) challenged the decision as the council had previously approved its plans for a £50m regeneration of the estate.
The permission expired and FDL submitted an identical application.
However, this was refused and the council then signed a development agreement with St Modwen instead.
The High Court rejected the challenge but FDL was allowed to appeal over whether the development agreement was a public contract, meaning the council should have complied with the relevant public procurement legislation.
In November 2018, the Court of Appeal ruled that the council had breached EU procurement law by signing the contract without following the correct process.
The ruling did make it clear that there was “no evidence and no suggestion that the council had acted at any stage in bad faith”.
However, it added that by entering the agreement, the council “effectively agreed to act unlawfully in the future”.
As a result, the agreement was declared ineffective and the council has had to start the process again.
It has appointed Avison Young to work on a new development brief and masterplan for the LRIE.
The total cost of the project and litigation came to £946,000.
The council spent £156,000 on property consultants and £58,000 on legal advice on the development agreement.
Its legal team spent more than 200 hours working on the project, to the value of £27,000.
The council spent £378,000 on legal costs for the High Court and Court of Appeal challenges.
Its legal team recorded 135 hours on the litigation, costing £18,500.
The construction of an access road from the A339 incurred costs of £5.2m, which was part-funded by government and developer contributions.
The council ruled out an independent inquiry, saying it would be “a waste of time and money” as the issue had been tested in the courts.
Instead, an independent cross-party task group was established to “better understand the advice and guidance” the council received.
The task group sought contributions from St Modwen but the company did not respond.
The task group’s findings have been outlined in a report going before the council’s overview and scrutiny management commission on Tuesday.
The taskgroup said that there was a piecemeal approach to the project and found no evidence of a clear business case for redeveloping the LRIE.
“Whilst there was a clear goal to secure redevelopment of the site, the route to that goal was not clear in the evidence presented to us,” the report said.
Some records requested were not available, including a risk register and the minutes of the internal project group.
There was also a lack of clarity over who was in charge of the day-to-day management of the project.
There was no clear project budget or evidence of formal project management meetings, and no clear evidence of management of external consultants.
Officers questioned indicated that the project had progressed in a piecemeal manner and that there had not been a holistic approach.
Some said that the project was “being rushed with unreasonable pressure on some officers to progress it quickly”.
The report says that “clear unequivocal advice” stated that the deal would not be subject to EU procurement law as it was a land transaction and not a public works contract.
The task group said it was clear that the council did not intend to act unlawfully and tested the advice it had been given.
The report said that although the council sought support from external property and legal advisers, this was procured on an “ad-hoc piecemeal basis.”
A procurement exercise was carried out via a written invitation to quote, issued to four legal firms.
The firm which submitted the lowest quote, Bond Dickinson, was appointed.
However, the task group said there was no evidence demonstrating how the submissions had been assessed in order to ensure sustainability, efficiency and cost savings.
Councillors involved in the process said that St Modwen had been the best choice and that, even in hindsight, there was little to suggest that they would have done things differently.
The task group said that the council “had not closed its eyes to the question of procurement”, and it was openly discussed and considered in executive meetings.
“There was no intention to avoid compliance with any legal duty to undertake a procurement exercise,” the report said.
The report said that the council was “acting properly in proceeding in the manner that it did”.
It said: “There is nothing to suggest that the advice received was irrational and there was evidence that what was proposed was not unusual.”
