The £1.5m grant that swung Burberry’s decision to move its services centre to Leeds

burberry

It’s only a minor footnote in the history of Burberry’s ongoing bromance with Leeds, but hey, I didn’t know how this stuff worked before this morning, so I thought I’d share it in case anyone else was interested.

It turns out that when Burberry were looking to cut costs by consolidating their business services operation in a new centre outside London, they had two options in mind, Leeds and Krakow in Poland.

The Krakow option was going to cost the international luxury brand £3.8m less than the Leeds one. So Burberry asked the powers-that-be in Leeds for £1.5m towards the overall project cost of £17.7m, and made an application for that amount to West Yorkshire’s regional public funding bodies.

According to papers released recently by the West Yorkshire Combined Authority (WYCA), the application made it clear that “without a grant of £1.5m the project would not take place within the proposed location”.

“If the grant application is not approved it is unlikely that the scheme would be
located in Leeds, and would instead be located in Krakow,” the papers add.

 

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The reason they wanted the money was not just to narrow the cost gap between the two competing locations, but to “demonstrate to the organisation’s (Burberry’s) board that Leeds City Region is supportive of the company’s investment plans”.

Oh, and Burberry needed a decision pronto too.

So, no pressure, then.

The application – code-named “Project Primrose” to keep the applicant’s identity under wraps – was duly pushed through the system at speed in March and April, with final approval delegated to the WYCA’s managing director.

He gave it.

When Burberry made their announcement at the beginning of May, Leeds council leader Judith Blake said it was “hugely exciting that we are the clear choice for Burberry to locate their newly-created shared service centre.” (ed: my emphasis)

Whether Leeds would have been “the clear choice” if we hadn’t coughed up the necessary £1.5m in double quick time is probably debatable.

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Time to ditch the Leeds Visitor Centre? And while they’re at it …

Leeds visitor centre1

2012: shortlisted as “one of the best in Yorkshire”

Remember how baffled everyone was when the council decided to shut the tourism information centre at the city’s railway station and move it to the art gallery’s shop?

“Ridiculous … idiotic … ludicrous … leave it where it is,” summed up the general response to the decision.

It seems they had a point.

Figures released by the council earlier this month show a dramatic decline in the use of the service following the move from the concourse of the busiest rail station in the north of England to a relative backwater in the city.

The service lost over two thirds of its users in its first year of operation at the art gallery shop, down from 490,000 to 150,000, and fell further in the second year to 114,000.

In January 2015, the month before the move, 34,500 people visited the centre. In January 2017 the number had crashed to 6,300.

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2017: tourism boom, visitor centre bust 

The collapse in the numbers using the service has coincided with a boom in the numbers of people visiting the city, rising 5% in two years to 26.21 million “tourism visits” in 2015.

Go figure.

When the decision was taken, the council promised a review within 12 months to see how the move had gone. Guys, if you’re still thinking about it, don’t bother. It hasn’t gone well.

Time to pull the plug?

To be fair, the cash-strapped council was in a bind when it decided on the move two years ago: its lease at the station was up for expensive renewal; the city’s (now defunct and discredited) investment and tourism quango, Leeds and Partners, wanted shut of the service; and face-to-face tourism services all over the country were already losing out big time to online.

It’s a national trend. Councils have no statutory obligation to provide visitor centres, so they’ve been paring them down or shutting them for years now.

In light of the dismal figures above, maybe it’s time for councils like Leeds to pull the plug on tourism services and let the private sector take over.

Privatisation? Let’s not be squeamish.

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Here in Leeds (as in most other major cities) we’ve had some of the council’s meet-and-greet, marketing and promotional functions ceded to the local business organisation, the Business Improvement District.

BIDs (here and elsewhere) sub that tourism work out to private companies like The Welcome People whose jolly, bowler-hatted droogs now offer identikit “street concierge services” throughout the country (you can tell what city you’re in by the colour of the hatband).

Maybe now’s the time for the council to think about ditching the visitor centre, throw in the council-run tourism websites for good measure, and just do what it HAS to do (what the private sector can’t). It could save a bit of cash.

It won’t happen yet, of course. We can’t be seen to be cutting back on tourism services while we’re monomaniacally pursuing the bid to become European Capital of Culture in 2023.

So the agony of the Leeds Visitor Centre will be prolonged. But if the bid isn’t successful, maybe then we can put it out of its misery.

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UKIP gifts Morley & Outwood and Leeds North East to Tories?

Ed-Balls-on-Strictly-Come-Dancing-683318UKIP isn’t putting up candidates in five of the eight constituencies in the Leeds area at the forthcoming General Election, leaving some 26,000 votes they won in 2015 going begging.

They aren’t fielding a candidate in Morley and Outwood, where their 8,000-odd votes in 2015 played a big part in unseating Ed Balls, or in Leeds North East, the only marginal in the area (according to the bookies).

They’ve also withdrawn from Pudsey and Elmet & Rothwell, pretty much guaranteeing (what were already forecast to be) sizeable increases in the Tory majorities in both.

They’re not standing in Leeds North-West either – the most pro-Remain constituency in West Yorkshire, according to these estimates – where they polled 3,000 in 2015.

Morley & Outwood a marginal? Come again?

Morley and Outwood is a weird one, now a straight fight between the Tories, Lib-Dems and Labour. Weird because both Momentum and the Greens are describing it as a marginal (the Greens have stood down in favour of the Labour candidate there).

Don’t they look at the polls? And haven’t they looked at Oddschecker?

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Compare and contrast with Leeds North East, where Fabian Hamilton’s Labour seat was already looking under serious threat before today’s announcement of who’s standing where.

Under threat? Well, here are the findings of some research three days ago into how the Tories are picking up votes from the other parties.

ICMresearch

Translated to Leeds North East that would wipe out Fabian Hamilton’s 7,200 majority at a stroke and give the Tories a majority of under 1,000. With UKIP now not standing, all 3,700 votes of its 2015 votes are going begging.

Here’s what Oddschecker makes of the Leeds North East contest.  It’s a proper marginal. And when the bookies clock that UKIP’s dropped out, the odds on the Tories will shorten further.

LeedsNMEbetting

You can find chapter and verse of who’s standing where in the Leeds area here.

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And the Leeds tech hub cash goes to … developers Bruntwood

futurelabs2It’s a funny old do, this “tech hub” thing in Leeds. Just when you think you know what it is and where it’s based, another one pops up and gets you confused again.

First I thought the tech hub was at Allied London’s vibrant waterside destination, Leeds Dock.

But I was wrong.

Then, in March 2015, I thought it was going to be at the old police station at Brotherton House. That was only because George Osborne had just announced that not-for-profit Future Labs was being given £3.7m by central government to turn the building into a six-floor entrepreneurial tech hub.

Wrong again.

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Platform

This morning it turns out that the city’s new tech hub is going to be housed at John Poulson’s old City House above the station, a building that’s been substantially revamped and given the more vibrant name of Platform.

An announcement today says that developers Bruntwood (total assets approaching £1bn) are to get £2m from the council as capital to develop the hub, which will take up 28% of the building’s total floorspace of 117,000 sq ft.

No mention of Future Labs. No mention of Brotherton House, which was still languishing in the doldrums last time I looked.

Did Osborne get it wrong? 

councilSomething has obviously gone on, but what?

My guess is that back in 2015 the council were miffed with Osborne’s announcement (they greeted it with stony silence as far as I remember). Who was he to say where the Leeds Tech Hub should go, and who should run it?

Somehow, I’m guessing, the council got the £3.7m government cash (that was destined for Future Labs) turned over to it so it could decide.

So they set up a fund with the money, invited bids and, hey presto, today’s lucky winner of the biggest share – decided by a panel of experts and endorsed by the council’s Director of City Development – is Bruntwood (total assets approaching £1bn).

Did Future Labs bid? They must have done.

Nothing wrong with serious real estate players jumping on the tech bandwagon. It’s business.

And you can sort of get the council’s point when it insists that, as there’s no revenue funding attached, “the sustainability of projects without additional funding was the highest weighted criterion in the scoring process”.

But … but …

It’s just that if I were a member of the Leeds tech community I think I’d be going “whaaaat?!”

Reaction so far has been muted (there’s still £1m of the fund that hasn’t been allocated, so keep your heads down, guys).

tech hub

futurelabs

My guess is that there’s more to all of this than meets the eye.

Anyone in the Leeds tech community out there? What do you think?

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Councillors complain that Headingley stadium deal is being railroaded through

Headingley_redevelopmentA group of councillors have complained that the leadership of Leeds City Council is railroading through a decision to back a new funding agreement for the redevelopment of Headingley stadium.

Members of the council’s executive board are set to rubber stamp the decision at a meeting this coming Wednesday, with a stipulation that the decision be exempt from what is known in council-speak as “call-in”.

That means bypassing the normal procedure whereby councillors with reservations can ask to have the decision discussed at one of the council’s watch-dog scrutiny boards.

In a letter to the council leadership published on Facebook last night, the councillors – representing the Morley Borough Independents, the Green Party and three (former Labour Group) Independents – say there are “anomalies (in the deal) that we feel are worthy of scrutiny”.

Under the £35m-£40m deal Leeds City Council is going to take out a 40-year head lease on a new North-South stand at the stadium from an unnamed financial services company who will pay for the stand to be built. It will then sub-lease the stand to Yorkshire County Cricket Club (YCCC) and Leeds Rhinos over that period.

Why should the council take on the lease?

chamberThe letter asks:

“Why are LCC (Leeds Council) head leaseholders? If the investor does not believe that either Leeds Rugby or YCCC are in a position to hold the head lease then why should we?

“Are we convinced that a private members club, YCCC – already with 24 million pounds worth of debt – will be in a position over the next 40 years where literally anything could happen RE test status will be able to honour their debt to us over that amount of time?”

“This is not about any deal not progressing but we do collectively feel as members of council that this is being railroaded through,” the letter adds.

“Essential part of democratic process”

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Cllr Mark Dobson

The deal has been (and is still being) put together in a rush after an attempt to fund the redevelopment by selling off two plots of greenbelt land fell through earlier this year.

The reason for the speed is that the new stand has to be ready to host YCCC’s allocated matches at the 2019 Cricket World Cup (income that, with over £24m in debts, it can’t afford to lose), so building work has got to get underway in June this year.

It’s the stipulation that the decision be “exempt from call-in” that has the complaining councillors most concerned. They want it removed from the recommendations.

“We feel that the call-in process is an essential part of the democratic process and, in this case where the whole matter has been progressed very hastily, there are anomalies that we feel are worthy of scrutiny,” the letter says.

“The argument that time is tight, whilst valid, is only because the last set of proposals were so poorly constructed as to leave us in this situation and is, therefore, no reason to bypass any reasonable due diligence process.”

The letter ends by expressing the hope that “the democratic process and the protection of Leeds Council Tax payers will be observed”.

The party groups signing up to the letter have a total of 11 councillors, including former executive board member Cllr Mark Dobson, who left the Labour Group on the council in February this year complaining that “questioning decisions and requesting meaningful debate have proved impossible”.

None of the groups is represented on the council’s executive board. It will be interesting to see if the request is acknowledged.

There’s some background to this Wednesday’s decision in this earlier post.

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Council adds to “investment portfolio” with new industrial units at Logic Leeds

Logic 862_5Leeds City Council has added to its “investment portfolio” by buying land on which it’s going to build three industrial units at the Logic Leeds site just off Junction 45 of the M1.

The purchase, for an undisclosed sum from Muse Developments, is the fourth addition to the council’s portfolio in a year.

The main thrust of the portfolio has been to buy existing buildings with secure tenants. This time, it’s more speculative: the council will have to find tenants to fill the units (totalling 100,000 sq.ft) when they’re ready in late spring 2018.

What, you may ask, is the cash-strapped council doing, spending millions on real estate?

Well, the rationale behind the portfolio is pretty simple: the council says it can generate extra income for services by borrowing at low interest rates to make the acquisitions, and then letting the properties for more than it’s paying for the debt. A second aim is to “assist in the regeneration of the City and to invest in employment generation opportunities”.

It’s the second time the council has purchased from Muse at Logic Leeds. Back in August it bought an 80,000 sq.ft unit occupied by retail giant Amazon.

In July it spent £44m on buying a city centre office block on Sovereign Square, and in December it bought an office building at Thorpe Park.

The council says it’s been advised that demand for units of the sizes proposed at Logic Leeds “is currently very good with few competing new build opportunities”.

“The property has been offered to the council to acquire on a one to one basis off the market rather than being put to the open market,” says a council report on the purchase.

What are the four acquisitions in the “investment portfolio” worth in total? So much of this stuff is shrouded in secrecy that it’s difficult to say.

 

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Councillors sidelined as Headingley stadium deal set to be rushed through

Headingley_redevelopmentWe now know the broad outlines of the “seat of the pants” deal that’s being put together to guarantee funding of the new North-South stand at Headingley stadium.

An unnamed financial services company is putting in either £31m or £35m (depending on whether £4m of public money gets approved by the Local Enterprise Partnership). For that they get a 140-year lease on the new stand, which sounds to me like they’ll effectively own it.

Once the stand is built, Leeds City Council will take out a 40-45 year under-lease on it, paying the unnamed company rent to the value of the cost of the redevelopment. Plus a return on the company’s investment, obvs.

At the same time, Leeds Rhinos and Yorkshire County Cricket Club (YCCC) will take out sub-leases on the stand from the Council (either individually or as a joint company), paying a higher rent to the Council than the Council will be paying to the investor.

If everything goes smoothly, and everyone pays everyone what they’re supposed to, after 40 years the Council and/or the clubs will be able to buy the remainder of the lease from the investor for £1. That’s in 2059, folks.

That’s the broad plan, and it’s what senior councillors are going to sign up to when they meet on 19th April.

Council to underwrite £500,000 of immediate costs

fst and huttonThe trouble is that all this has been done (and is still being done) at a gallop, after the attempt to fund the redevelopment by selling off two plots of greenbelt land fell through earlier this year.

The reason for the unseemly speed is that the new stand has to be ready to host YCCC’s allocated matches at the 2019 Cricket World Cup (income that, with over £24m in debts, it can’t afford to lose), so building work has got to get underway in June this year.

But there are loads of details that need working out before any final agreement is signed.

So, if they’re still dotting the ‘i’s by the end of June the Council is going to underwrite £500,000 of the £1m the clubs say they need before a formal contract start on site. It’s not clear (to me at least) whether this will be just a guarantee, or a gift from the council to the clubs, or money that will be recouped at some stage.

(Hang on, I hear you ask, wasn’t there an assurance only 10 days ago that there would be “no cost to the council tax payer”? There was. )

What’s left to do before the deal is signed?

jackhobbssutcliffeAs a report prepared for the senior councillors’ meeting on 19th April says: “further work and due diligence is required”.

They’ve still got detailed discussions ahead, for example, on the terms of the leases and on how the council can mitigate the risk it’s taking on in the event of the clubs defaulting on their payments.

The council has yet to seek independent advice too on how much it can charge the clubs in rent, on whether the clubs’ financial guarantees pass muster, and on whether the proposed deal is compliant with EU rules on state aid.

And who knows how and when the LEP will decide whether it’s going to stump up that £4m?

Councillors sidelined

chamberIn the normal course of council events, such significant deals don’t get taken to senior councillors for approval with so many unknowns. And in the normal course of council events, ordinary councillors can call for such deals to be looked at by a scrutiny board if they’ve got reservations.

Not in this case.

Because of the rush, final approval of the terms is being delegated to two senior council officers in consultation with council leader Judith Blake and executive board member Richard Lewis.

And there’ll be NO opportunity for the deal to be looked at by any scrutiny board.

Do your run-of-the-mill councillors mind being sidelined like this? Enough to make a fuss about it?

As if.

 

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