Thursday 13 April – What Happens Next?

Berkeley Homes’ latest phase of the Chelsea Creek residential development is now complete.  This is the 415 new flats built since June 2020, mostly (60%) luxury flats, most of which, I Iearned from the Project Director during my site visit in November, sold to overseas buyers for up to £3.5m in which probably no-one will live (see And what do you do?).

The Chelsea Creek development on the day of my visit in November 2022.

Berkeley’s Rhino hadn’t sent me evidence of their Employment and Skills contributions because their lawyer, Kimberley, declared it would be a breach of their employees’ data protection (see Introduction).  So she and her colleague rhino invited me back to the site in February to verify the names and postcodes from their records without them leaving her office, a compromise that worked well (except that I had to go all the way back to Fulham) insomuch as I wanted to monitor the evidence of the S106 contributions and they wanted me to discharge these obligations and, therefore, charges, from their planning permission.  I verified they exceeded their targets.

Under the umbrella of Economic Development, I am also responsible for monitoring local procurement contributions: including businesses based in Hammersmith and Fulham in the supply chain of the construction of the development.  Reasonable endeavours must be made to spend at least 10% of the build cost with businesses in the borough.  In their final monitoring report, no money was spent locally.

Can I really justify discharging this obligation when not one business in the borough has been included in this development?  The obligation is only to make reasonable endeavours to do so, so it is possible.  Endeavours that were agreed between Berkeley’s and the council are in the Local Procurement Strategy that we insist developers draft in advance of construction commencing.  In it, they said, and the council agreed, they would work with the council’s appointed construction business engagement consultant (from MTW Consultants) and make contract packages available to local businesses as well as favour their bids if they were able to do the work and the prices were at least viable.  But, after agreeing this plan, MTW’s contract was not renewed during Covid lockdown and lockdown naturally restricted all developers from reaching out to local and small businesses.  These are mitigating circumstances and force majeure.

On the other hand, the council’s Business and Enterprise Team did reinstate MTW’s contract in 2020, less than six months after the development commenced.  On another hand, many packages are procured before construction can commence, right in the middle of MTW being stood down.  But, then on the fourth hand, Berkeley did procure a supply chain despite lockdown and not having MTW’s support, and finished construction on time, so why not a local supply chain?  Hammersmith and Fulham wasn’t locked down alone, the whole world was.  On the fifth hand, the plan agreed was that MTW was core to delivering the contributions and both parties are bound by what was agreed.

Ultimately, I decided that it came down to what they reported.  As evidence of endeavours made, the Rhino recorded all the local businesses that Berkeley’s' quantity surveyors did engage in their procurement process.  With the help of MTW, including through their Meet the Buyer events, the Rhino diligently recorded that Berkeley’s invited 12 local businesses to bid for contracts.  They were small contracts (since the major tier 1 and 2 contracts are usually agreed before the start of construction), but throwing a bone to local businesses would appease the Planning Committee that at least some locals are benefitting from their decisions.  But none of them were successful in their bids.  Cemex, a concrete supplier based in Fulham, was invited to bid for a £3.4m contract but was unsuccessful.  No reason was given in the monitoring report despite there being a heading for reasons.  Tag Services, a building site cleaning company based in Olympia was unsuccessful with their £346,000 tender because they were “not competitive with final bid”.  What does that mean?  The planning agreement was not to use the most competitive bid but to use local suppliers.  Bids have to be viable and the supplier able to do the work, but if competition is the only determining factor, then we didn’t need to agree the S106 contribution in the first place because Tag would win the bid anyway for being the most competitive.  Bell Decorating & Building based in Fulham was unsuccessful for a £1,356,000 contract because “Contractor not on Call off contract Enquiry issued”.  What does that mean?  This is Berkeley’s' report to me of endeavours made.  Do they really want me to understand this as “we tried, but what can you do?”  Or is this just a word salad?  Harrington Porter, a soft landscaping contractor based in Fulham was unsuccessful for a £3.2m contract despite the comment that Berkeley’s would “notify [their] contractors tendering about the company”.  So what happened?  Did they forget?  Did their contractors invite a tender but it wasn’t competitive?  The Rhino didn’t say suffice that she claims in retrospect that this was a reasonable endeavour.  Aspect, a soft flooring contractor based in Fulham, was unsuccessful for an £827,571 contract because “Contractor not on Call off contract”.  I can’t see from this how this local business was supported to successfully tender for a contract as was agreed in the Local Procurement Strategy.

No explanations were reported for why the remaining local businesses were unsuccessful.  And the stark reality is that Berkeley’s didn’t just fail to hit 10%, they finished on absolute zero.  They can’t claim that they weren’t supported by MTW or that circumstances out of their control meant they couldn’t engage local businesses, because that they reported they did.  They just didn’t include them.  I decided that reasonable endeavours were not made.

A perversity of Hammersmith and Fulham Council’s planning policy is, unlike Employment and Skills, and all other S106 obligations I am aware of, there are no financial remedies for local procurement.  Therefore, non-delivery cannot be remedied.  I don’t know how this omission slipped through the net in the council’s Local Plan but I expect it has never been an issue before.  Has any planning obligation with no remedies ever been determined by a S106 officer to have not been satisfied in the history of planning since the Town and Country Planning Act was published in 1990?  I’m not aware of any precedents.  So what happens next?  Technically, while a charge from an authority remains on a property, the owner cannot sell it until the obligation has been discharged.  But, as I learned from my site visit in November and the tour the Project Director gave me and the rhinos of the luxury flats, most of them are already sold.  Do these new owners know they legally don’t own the flats that they have paid £3.5m for as an investment and are only worth £3.5m because they can sell it again for £3.5m to someone else as an investment?  But they can’t because the council holds a charge on it.  But Berkeley’s sold them to unsuspecting buyers.  They did so in the expectation that the council would discharge the charge on practical completion of the development, that is, now.  But I can’t justify doing that.

On 15 March, the Rhino emailed me asking me for an update on the discharge status.  I tried one last time to give her the benefit of the doubt and asked if she could re-articulate the monitoring report so that it could or would make more sense why local businesses engaged were not used.  I replied the following day asking her,

“The biggest issue is, not just that the development has not hit the 10% target, but that no local business was included at all as per the last monitoring returns.

·       Can you confirm that this report is correct?

“And, if it is, to help make a case for reasonable endeavours:

·       Can you say anything about how any local suppliers were accommodated to be included in the supply chain even if this was ultimately unsuccessful (e.g. local SMEs were supported through the complexity of the tendering process, reasonable bids would have been accepted even if they were not the lowest price, or packages were broken down to favour SMEs rather than, say, tier 2 contractors)?”

 

She replied on 20 March:

“Hi Paul,

"Thank you for your email and feedback on our procurement obligations.

"The report you have is accurate and there are various reasons as to why our remaining packages (once [MTW] was re-appointed) were not awarded to the SME’s [Small to Medium Enterprises] [MTW] referred.

"As you have pointed out, it was not stipulated within our [Local Procurement Strategy] to make provisions for local SMEs in the procurement process however, [our]… Senior Development Surveyor made continuous efforts to reach out to every referral MTW made and recorded any feedback from this engagement.  The number of bids we have reported on does not necessarily reflect the effort that was made by [the Senior Development Surveyor] to engage with local businesses and support them to give them the best chance at being appointed.

"[The Senior Development Surveyor] met with [MTW] on a regular basis which began once [MTW] was re-appointed by the council at the beginning of 2021 [he was reappointed in 2020] when he participated in the Meet the Buyers event. I know from regular conversations with [The Senior Development Surveyor] that he made contact with each referral, he considered breaking down packages to allow the smaller businesses to tender and considered every element of their ability and pricing but essentially, had to make decisions that aligned with the business criteria and needs.

“I think it’s also important to consider that the majority of our packages were awarded whilst [MTW] was not providing the service we paid our financial contribution to, meaning that a much smaller build cost value was accessible to the SME’s that he would have referred had [MTW] been in post.

“I can confidently say that [The Senior Development Surveyor] made every effort to support the SME’s as we have done on our other developments within the borough and will continue to do with any future projects in the borough.

“I look forward to your feedback and thoughts on the above.

“Kind regards,

“[Employment & Skills Coordinator]”

 

I think that is the best written and most coherent case I have ever received from a rhino.  But it still doesn’t come close to addressing the concerns I raised.  She says there are various reasons why packages were not awarded to local SMEs (or any business).  But it is these reasons I am asking for.  This is what would demonstrate reasonable endeavours.  Don’t assert there are various reasons, just tell me what they are!  There is a heading in the monitoring report for this.  Instead, in it, she has written either nothing or gibberish.  And she confirms here that “The report you have is accurate”.

She goes on to say, “As you have pointed out, it was not stipulated within our [Local Procurement Strategy] to make provisions for local SMEs in the procurement process”.  No, it didn’t stipulate SMEs.  It did stipulate local businesses (regardless of their size), and you have not addressed this here.

“[Our]… Senior Development Surveyor made continuous efforts to reach out to every referral MTW made and recorded any feedback from this engagement.”  But the feedback either says you didn’t favour local businesses as was the obligation, the feedback is gibberish or there was no feedback to record.  She adds, “The number of bids we have reported on does not necessarily reflect the effort that was made by [the Senior Development Surveyor] to engage with local businesses and support them to give them the best chance at being appointed.”  Why?  The whole point of the report is to reflect the endeavours made.  When the obligation is based on endeavours, why wouldn’t she necessarily reflect those made?  More fool her that she didn’t.  And I just don’t believe a huge conglomerate like Berkeley’s is this foolish.

“[The Senior Development Surveyor]… made contact with each referral, he considered breaking down packages to allow the smaller businesses to tender and considered every element of their ability and pricing but essentially, had to make decisions that aligned with the business criteria and needs.”  My decision is based on whether the Senior Development Surveyor made decisions that aligned with his planning obligations.  Here the Rhino confirms that he did not.

“I think it’s also important to consider that the majority of our packages were awarded whilst [MTW] was not providing the service we paid our financial contribution to…”  No they didn’t and I have explained this to her twice previously.  The S106 financial contribution to the council that was spent on commissioning MTW was to fund the council to generally support business and enterprise in the borough.  It is not a payment by Berkeley’s to MTW to support them.  That she continues to insist that they paid for MTW and the council subsequently let her down by not using “their” money to commission MTW thus absolving her of her obligations to the local economy, she already knows is plain wrong.  She can consider it but the council and the Planning Inspectorate won’t.  I think it is telling that her job title is Employment & Skills Coordinator and her colleague is the Employment Strategy Manager.  No-one was ever responsible for local procurement.

I replied to her on 4 April with my feedback and my decision to notify Planning that reasonable endeavours were not made to spend 10% of the build cost in the borough, reflected in no local spend at all.

Then, today, her colleague rhino sent me an email asking me,

“Hi Paul,

“Are you able to send me the contact details for the person in planning [to whom you sent your decision].

“We are keen to know where we stand…

“Kind regards,

 “Employment Strategy Manager”.

 

Me too.  And I’m sure the planning officer will have no better idea than he or I.