The £575m Queensway development limps on with Orbit

The Place Scrutiny meeting took place on 30th August with one of the items on the agenda being the Queensway development.

This vote was to agree for Orbit to take on the development contract from Swan Housing after their merger (or acquisition), and therefore to keep the project alive.

Before it came to the Place Scrutiny Committee to be interrogated and dissected, it had already been through two meetings: the Shareholder Board and Cabinet.

The 2 Meetings

The Shareholder meeting was first.

Orbit are required to make a revised business case.

It is hoped this will be tied up in the early part of next year, though an extension period of submission was agreed for December 2023.

On this point, and not to be too critical of minor points that have a major impact, but this deadline was a source of most of the discussion as it was originally left open-ended.

Without the intervention of one particular Councillor there wouldn’t be one. Furthermore, a fellow Councillor on the board was quoted as saying (after it was brought up on the hoof) "we must have a deadline even if it is breached". It was arbitrary and comes seemingly without consequence.

In the end the Shareholder Board had voted unanimously and decisively in 25 minutes. Not to be outdone, the Cabinet voted it through unopposed in 5 minutes - including declarations of interest! I’ve been in meetings where the cup barer, often me, takes longer to make the tea. Considering this is about a £575m project, of all the issues that surround it, never can the Council’s meeting efficiency be a source for criticism.

And so the Place Scrutiny Committee was next. This group of Councillors act as the last bastions to bring forward all those unanswered questions that may have been subject to group think at Shareholder board and Cabinet. And so began the questions, answers and comments from Councillors.

Before we get into that, what is Queensway?

The project itself was designed to better connect Southend High Street to Southchurch Road; demolish and rebuild the tower blocks with at least 512 ‘affordable’ homes and 100 ‘genuinely affordable’ homes (I cannot explain the difference); erect another few sets of high rises on top of that; create 10,000 square meters of commercial space; a central community concierge (eh?), a new ‘urban’ park (urban? eh?); and tree-lined roads and cycle lanes. Oh, and also to fill in the road underpass. (See https://www.betterqueensway.co.uk for full details)

In its entirety the cost was budgeted at £575m. However, given estimates for the Seaway project have increased by almost 40% it may be likely the cost will be upwards of £700m.

Queensway, as a concept was born in 2014 and Swan Housing became the Council’s preferred partner in 2019, agreeing to a 30 year joint venture.

They were the only organisation to step forward at the time, and so it would have been interesting to know why everyone else decided to stay away.

Swan Housing have since faced serious financial difficulties and were unable to complete the project, and so in came Orbit to try to rescue both Swan and the Queensway development.

A bit about Orbit and Swan Housing

According to their accounts, Orbit appear to be a financially robust company. Their operating profit, excluding fixed asset sales, was £90m from a turnover of £355m this year. Their revenue reserves are £740m. My only concern would be the extra £500m increase of creditors from 2017 to now, and the £2.4bn in creditors overall. Granted they have £2.7bn in fixed assets, but the question might at least have been raised given the Swan's finances were actually fairly strong only a short time ago

(https://www.orbitgroup.org.uk/media/2601/annual-report-2021.pdf).

Swan’s annual reports for 2020/21 showed an operating surplus of £32.9m against a record turnover of £190m. The Group had reserves of £274.1m, and a credit rating of BBB, which means they were expected to be able to pay their financial commitments.

What would also have been reassuring is that they even included the infamous ‘building back better’ in the report! (https://issuu.com/swanhousing/docs/ara_2020_21_final/2?ff).

Still, in the end they were rated non-compliant on governance and financial viability by the Regulator of Social Housing (RSH), who said “There has been a material deterioration in Swan’s financial position since its last business plan was submitted to the regulator. Increased development costs coupled with delays to sales has increased pressure on Swan’s finances.”

Incidentally, the merger or acquisition is due to take place in October.

Back to the meeting

To Acquire or not to Merge? That is the question

£575m to change the face of Southend forever and when asked whether Orbit had merged with Swan or had acquired them, the councillor responsible for Housing had to revert to giving a written answer - in other words he didn’t know. No one knew, hence the written answer. I cannot highlight enough how concerning this point is. Due diligence is a term used for carrying out a comprehensive appraisal of an organisation to establish its financial position and to verify facts and details. In this case the council did not even know the fundamental structure of the company.

A merger is a very different proposition to an acquisition. Ownership, power-structures, leadership, culture, and financial structures couldn’t be more different. If they missed this, what else have they missed?

A speculative thought and I like to think that this was the only aspect that got away.

Having said that, there was another oversight a few meetings before regarding this development. The same councillor responsible for Housing was unaware the road underpass was to be filled in because, in his own words, he was so focussed on the housing element. This was a bone of contention as one Councillor brought up the irregularities surrounding the underpass.

And to the vote

Although there were Councillors who wanted it sent back to Cabinet, all but ending the development, the Place Scrutiny Committee agreed the item.

Had it been sent back I find it hard to believe discussion would have crept into double figures anyway, so as long as there is a successful merger or acquisition between Orbit and Swan, the Queensway lives on.

Long live the Queensway!

But, do Southend Residents really want it?

Our Council have a habit of conjuring schemes that no one asked for. We have humble needs, and one of them is to fix what we’ve got first. The Kursaal, the High Street, the roads, pavements, our hospital and our sea to name but a few.

I do not recall having any conversations with anyone crying out to fill in the road underpass. In fact it is quite the opposite. Granted the underpass walkways could do with more lighting, CCTV, and fumigating, but that doesn’t need £575m!

It involves re-housing hundreds of families, changing the roads, disrupting businesses on Southchurch Road, the high street and the seafront, ruining visitor experiences, and managing the expectations of the residents over the years of chaos. And this aside from the enormous risk of failure to complete the scheme.

Yes the plan is to build in 3 stages, but it might be argued that the project is just too ambitious and wide in scope with only marginal benefits to the city. Certainly there will never be a financial return.

And do the tower blocks really need to be demolished?

Would it not be better for the residents to have each property gutted and re-fitted now rather than over the course of a decade, where instead they will need to be re-housed? And where exactly will they be placed considering we are reportedly short of homes already.

Is the structural integrity of the buildings in question? If not, the aesthetics can be managed separately if that is the problem. Because re-building tower blocks, as the plan suggests, will merely put the same people in the same property and the outcomes such as anti-social behaviour and drug dealing will be the same.

Given that Swan Housing would no doubt have had the necessary due diligence at the time, it does seem an almighty risk to continue to rely on one developer to complete this project. It may be worth breaking down the project into smaller and more manageable parts mitigating the risks for the Council and the companies involved.

Supporting Southend

In essence, any scheme that can enhance Southend should be supported wholeheartedly. The broad concept of this one looks exciting, but there are now too many questions and so much more to scrutinise.

With all these schemes there is always this constant threat that the funding will be withdrawn and so something becomes better than nothing. However, we have seen time and again what happens with that philosophy.

Confelicity have stated in our previous manifesto that we would support it aside from filling in the road underpass. However, given the Swan collapse I find more difficult to support the situation, rather than the project itself.

However, the deal, it seems, was already done. The time spent in all 3 meetings did not come to more than one hour. The debate was timid and seemed not to begin the scratch the surface. It can be assumed Orbit will produce a satisfactory business case in super-quick time and so, like Seaway, it will continue to scrape along.

As one wiser than myself once said: "there is always another deal". In this case it seems only one will do.