Elephant & Castle: Lend Lease deal under scrutiny

Members of the committee 'called in' the decision made by the council's executive last week to continue exclusive negotiations with Lend Lease Europe with a view to signing a full regeneration agreement next spring.

The committee resolved to continue to monitor the progress of the council's deal with Lend Lease, but will not refer it back to the executive for the time being, which allows the decision to sign the heads of terms to be implemented.

The story so far

In his introductory remarks council leader Nick Stanton outlined the history of the regeneration project at the Elephant & Castle.

"In 1998 this council decided that the Elephant & Castle represented the next major area for regeneration in Southwark after Peckham," he said.

Cllr Stanton explained that there were two drivers behind that decision: the market demand for a new shopping area in central London and the prohibitive cost of maintaining and improving the Heygate Estate.

He went on to describe the process led by the council's then Labour administration to seek a private partner. Southwark Land Regeneration was selected but the deal collapsed in 2002.

In 2002 the incoming Lib Dem administration began a new process which culminated in 2004 with the publication of the masterplan.

Cllr Stanton said that the council then adopted a three-pronged procurement process to select housing association partners, a main development partner and a partner for a multi-utility services company (musco).

"Having selected Lend Lease in July 2007, two months later the queues started forming outside Northern Rock," says Cllr Stanton. "And about a month after that people started getting very jittery about the property market. About a year after that Lehman Bros went bankrupt.

"Through that time we continued to negotiate with Lend Lease to turn their promise into a formal legal agreement."

"We would hope to sign that in the first half of next year, and hopefully more like the first quarter" he said, though he joked that the lawyers were "like weevils" and nothing was set in stone.

"Clearly the world has changed a lot since we selected Lend Lease as our preferred developer.

"Our officers are confident that the deal which the heads of terms represents is a) a good deal for the council; b) the best deal they are going to get out of Lend Lease and c) a deal which is compliant with the basis on which Lend Lease was selected back in the summer of 2007."

Shopping Centre redevelopment on hold

Cllr Stanton was quizzed by committee chair Fiona Colley on the decision to change the proposed phasing of the regeneration with the redevelopment of the Elephant & Castle Shopping Centre moved to phase 6.

"The shopping centre has always been out of the council's ownership – it's owned by St Modwen," said Cllr Stanton.

The leader set out four possible scenarios that could lead to the redevelopment of the shopping centre land.

Firstly, St Modwen could join forces with Lend Lease and the council and work together under a tripartite agreement.

Secondly, St Modwen could sell its interest to Lend Lease.

Thirdly, Southwark Council could seek a compulsory purchase order to acquire the site for redevelopment.

Fourthly, St Modwen could redevelop the site itself along the lines envisaged in Southwark's planning policies.

"One would hope that at some stage a deal can be reached with St Modwen and we don't think that we should wait for the regeneration of the Heygate Estate bit of land at the Elephant & Castle while St Modwen decide how they want to play their cards."

Deputy chief executive Eleanor Kelly told the committee that a joint meeting between the council, Lend Lease and St Modwen was being held this week to explore the way forward.

She added that the numbering of the phases didn't necessarily correspond to the order in which actual development work would finally take place. "It's not an issue of timing, it's an issue of labelling," she said.

Head of property Steve Platts explained that a retail development was not currently viable for a number of reasons, including the national decline in commercial property values.

"At this current moment in time there isn't one shopping centre scheme progressing in the United Kingdom – they've all been put on hold," he said.

He also highlighted the Mayor of London's proposal to create a new protected viewing corridor from the Serpentine bridge in Hyde Park which could restrict high-rise development on the site.

Cllr Stanton pointed out that the delay to the redevelopment of the current shopping centre didn't mean that there would not be new retail opportunities at the Elephant & Castle; the new buildings on the Heygate site will be "effectively ground floor retail with housing above".

Zero-carbon development

Cllr Veronica Ward asked about the multi-utility services company (musco) which the council intends will supply power and heating to the area.

"The council is still committed to zero carbon development at the Elephant & Castle," said Steve Platts. "The musco is important but there are other local solutions."

Eleanor Kelly added that new sites were being explored for the musco so that it could also connect up with the Aylesbury Estate regeneration.

Transport improvements

It was revealed at the meeting that the council, Transport for London and Lend Lease Europe are jointly appointing consultants to examine the approach to (and cost of) transport measures at the Elephant & Castle, including the remodelling of the northern junction and a possible rebuild of the Northern line tube station.

"It does concern me that I don't have the impression that we're any clearer on this now than we were a year or two years ago," said Labour's Cllr John Friary.

Lib Dem Cllr Lorraine Zuleta asked whether – if Transport for London "refuse to play ball" that a new tube station might not be built. "That is clearly a risk," replied Cllr Stanton. "It has always been a risk".

Affordable housing

The committee pressed the council leader and senior officers about the likely extent of new affordable housing to be provided under the Lend Lease deal.

Eleanor Kelly emphasised that a clear distinction between the council's role as a landowner and its role as a planning authority was necessary when discussing questions of affordable housing.

Public space v private space

Lib Dem Cllr James Barber asked about the provision in the heads of terms for a management regime for the "maintenance, cleanliness, quality of public realm and community safety" of the privately owned development on the Heygate land and sought reassurance that this wouldn't create an environment where some parts of the community felt excluded. "They will feel like public highways," replied Cllr Stanton.

Leisure Centre

Asked about the prospect for a new leisure centre and swimming pool at the Elephant & Castle, Cllr Stanton replied that "there are lots of options and lots of questions".

He explained that it had always been assumed that the current Elephant & Castle Leisure Centre next to Metropolitan Tabernacle would be kept open "in all its grotty glory" until a new facility was built, but he hinted that the council could "bite the bullet" and close it down sooner. A new centre could either be built on the current site or elsewhere in the area.

Cllr Stanton gave a personal commitment to driving forward the inclusion of a new leisure centre in the regeneration process: "If I'm the leader of the council in June 2010 then the masterplan will include details of the leisure centre," he said.

Council leader denies "indolence" and "incompetence"

"I think this is the biggest deal that any of us politicians are ever going to sign up to in our political lifetimes, and it's probably the biggest that most of the professional officers round this table are going to sign up to in their professional lives," said Cllr Stanton.

"I think it's more important to make sure that we've got it right than it is to make sure we've got it signed by public deadlines or milestones.

"We've so far slipped on each and every milestone we've set ourselves for that. There are good reasons why that has happened: they are not indolence, they are not incompetence. It's because this is a very hard thing."

He concluded: "I would very much hope that the basis of the deal has now been done".

Other developments at the Elephant

Cllr Stanton was asked about progress on other developments at the Elephant & Castle outside the council's direct control, including the 360 London tower at the London Park Hotel site.

The leader confirmed that that development was not going ahead and the ball was now back in the court of the landowner, the Homes and Communities Agency

Asked about the impact of the failure of that scheme on Southwark Playhouse's plan to relocate to the Elephant, Cllr Stanton restated his belief that there should be things to do at night in the area that "aren't just drinking in bars and eating kebabs".

Political reaction

"I welcome the committee's decision – which exposes Labour's calls for greater transparency as simple political posturing," says Cllr Jane Salmon, Lib Dem councillor for East Walworth.

"I now hope the Council and Lend Lease can come quickly to a detailed agreement and get on with the job of demolishing the Heygate and putting something much better in its place.

"For 45 years – since it was built by Labour – the Elephant & Castle has been a symbol for everything wrong with the grand socialist planning vision with shoddy design, bad workmanship and poor maintenance.

"I and my Lib Dem colleagues are determined to rebuild the Elephant and return the area to its historic role as the vibrant shopping and leisure destination for the whole of South London."

But Labour councillors are still sceptical: "The deal as it stands has major gaps in it with, for example, no agreements reached on the future of the shopping centre, transport improvements or the long promised new swimming pool," says Cllr Fiona Colley, chair of the overview & scrutiny committee.

"The council and Lend Lease must make significant steps forward on these issues before they sign the next agreement – the Regeneration Agreement – which unlike the heads of terms will be legally binding.

"The council must not rush into signing a sub standard agreement just so that the administration can be seen to have done something before the elections in May."