I am writing to you to clarify a number of issues following a series of stories in the local media in relation to the purchase of Alexandra House. These stories quote an anonymous “Labour Source”. These stories provide a misleading and inaccurate impression on some key issues and I wanted to ensure that Members had a clear understanding of the factual position.
Let me start by saying, I refute any allegation that [prior to Summer 2019] I was made aware that Alexandra House was for sale or that myself, or relevant Cabinet Members, were presented with a business case for buying it. I am as disappointed and frustrated as anyone, that the systems and processes were not in place in the Council at the time to make sure that a worked-up proposal to buy/or not buy Alexandra House was brought to the appropriate decision-making fora in early 2019. As the internal audit report – which I instigated, and which has been presented to the Corporate Committee – makes clear this did not happen and it should have done.
There are formal channels, routes through which decisions are expected to be made, and none of these board minutes have any reference to any decision not to purchase Alexandra House. When Cllr Berryman spoke to the Ham & High, he said that he had notes of the Strategic Property Board Meeting and the private political Cabinet meeting where he alleged that a discussion had taken place about the purchase of Alexandra House. Nobody that I have spoken to – whether officers or Cabinet colleagues, have any recollection of any discussion to purchase Alexandra House for £10m, £14m or any other price prior to summer 2019. Alexandra House was referenced in 2 separate (and distinct) papers in November / December 2018, but these refences did not include any business case or any indication that the property was even available for purchase.
There has been a substantial programme of work to improve the governance of decisions on property. This includes new property governance reporting arrangements at officer level, and onwards reporting to Members and to Cabinet as appropriate. In addition, the council has adopted an Asset Management Plan which helps prioritise land and property uses and includes the Disposals and Acquisitions Policy so that all possible acquisitions (or disposals) are tested fully before a recommendation is made about taking the next step.
Officer corporate processes were not what they should have been. On that there is no doubt. However, there are some elements of the recent media stories on this that paint an inaccurate picture and I want to specifically address and reassure you on these matters.
- The Council had the opportunity to buy Alex House for £10m
- This is simply not the case. Whilst one of the papers leaked to the Ham and High suggests that the value of the property ‘might’ be between £10-14m, this is not the same as the property actually being for sale at £10m. It was simply an estimate. Or more accurately, a guestimate. Subsequent events prove that the market value of the building in 2019 was indeed higher. The Ability Group negotiated a price of £15.5m with the owners, Workspace. To succeed in what would have been a competitive purchase situation, the Council would always have had to pay over that price.
- Senior Members and the most senior officers turned down the chance to buy Alex House at £10m.
- This is simply not true. As the Corporate Committee were briefed, the internal audit found that no business case or report proposing to acquire or not acquire Alexandra House was brought to the appropriate decision-making fora in early 2019, and that there was no evidence that the Leader of Chief Executive had been made aware that the building was for sale. For the record, I did not turn down the opportunity to purchase Alexandra House between autumn 2018, and summer 2019 because I was never made aware that the building was for sale. Furthermore, it is a matter of fact that Alexandra House was not for sale for £10m in 2018 or 2019.
- The Council is not being honest or transparent about who knew what/when.
- Again, this is not the case. The authority’s Internal Audit report to the Corporate Committee was made with knowledge of the two reports presented to the Strategic Property Board in December 2018, which briefly reference Alexandra House, in amongst a number of “potential options for exploration”. Brief references to Alexandra House in papers from December 2018, which have been selectively quoted and taken out of context by the media, do not constitute any evidence of a business case or proposal to buy/not buy Alexandra House.
- That the Council paid £12m more than it needed to for Alexandra House.
- This is simply not the case. Alexandra House was not available for purchase at £10m in 2018 or 2019. Subsequent events prove that the market value of the building in 2019 was indeed higher. The Ability Group negotiated a price of £15.5m with the owners, Workspace. To reiterate, for the Council to succeed in what would have been a competitive purchase situation, the Council would always have had to pay more than £15.5m. Furthermore, the total eventual cost of £22.6m in 2020 includes transaction costs that would always have been payable in addition to any sale price.
The decision to buy Alexandra House
When I became aware that the building was being sold to the Ability Group, and having not received any proposal or business case regarding the Council purchasing the property, I immediately asked officers to look at what options might exist for us step in and buy the property instead, which you all know we subsequently did.
This work determined that in late 2019/early 2020 there were strong operational, financial and strategic reasons for the Council to buy Alexandra House. In doing so:
- We prevented the developer from building the kind of tiny, low quality ‘rabbit hutch housing’, that we believe has no place in our borough.
- We have ensured the availability of the office and meeting space the council needs over the next few years given the issues identified at River Park House including the presence of asbestos, the subsequent need to close the Civic Centre; and the lack of a suitable, temporary alternative accommodation in Wood Green.
- We have gained full control of the building which is of key strategic importance for the Wood Green economy and for our vision of Wood Green in the future.
I acknowledge that the way that this issue has been reported has elicited issues of concern. However, I hope this clarifies the facts that underpin this matter.