Jacob Williams
Wednesday 22nd November, 2017

Millions down the drain

Millions down the drain

Cherries may be out of season as we approach Christmas but the following concerns a costly punt, not punnet.

This is Pembrokeshire County Council’s large Cherry Grove office complex, which has so far swallowed up £3m of your hard-earned cash – and counting.

• Bryn’s pet project swallows £3m so far
• Another fortune needed for ongoing repairs
• Demolition is one option being considered
• Saga could end with £4m+ down the drain

As white elephants go, Cherry Grove takes some licking. Almost everything connected with this sprawling Haverfordwest premises has been unplanned and unbudgeted.

Formerly the tax office, this inelegant 1960s property was sold by the government in 2002 as part of its controversial UK-wide property portfolio rejig.

It was among six hundred sites purchased by offshore company Mapeley Steps Limited, many of which, including Haverfordwest, the government then leased back as tenants.

The arrangement with the Bermuda-based entity allowed both parties to reap financial benefits.

The irony that the UK’s excise agency sold its assets en bloc to a tax haven drew additional attention when HMRC had to correct its claim that the purchaser was a UK firm.

In 2008 Gordon Brown’s government announced Haverfordwest’s would be among nine tax office closures in Wales.

The story goes that when HMRC deserted the chronically unfit building, our offshore friends could find no new tenants foolish enough to lease it.

With no suckers to let it to, they decided to flog this liability – but still couldn’t, for love nor money.

Enter the magpie-like Bryn Parry-Jones, PCC’s erstwhile chief executive whose appetite for ‘investments’ and acquisitions with your money throughout his near twenty year reign is well documented.

In 2011 the council’s then leader Cllr. John Davies and his cabinet signed off Bryn’s purchase of the run-down premises for £631k, claimed to be a bargain price well under market value.

If market value is only what someone’s willing to pay for something, they saw Parry-Jones coming.

As we’ll see, the purchase cost of this titanic office space is only the tip of the iceberg.

Had Bryn given more than a second’s thought to the ‘cheap’ price tag, he might have concluded it was because this cherry’s pit was of the bottomless money variety.

But this was his pet project, and practically unbridled it’s led to catastrophic levels of waste – the chief critic of which has been the very capable Cllr. Vivien Stoddart.

The member for Milford Haven Hubberston objected to the 2011 purchase, and, although shunned, has led scrutiny of the debacle since.

Critical of the project’s absence of financial planning, in 2013 she tabled questions to Cllr. Davies’ successor as leader, Cllr. Jamie Adams, who said it was “good value for money,” seemingly blaming the then comparatively modest renovation costs on an “initially poorly designed building.”

Two years later Cllr. Stoddart requested an analysis of all costs PCC pumped into Cherry Grove and sought “more information on where we are going with this building.”

It emerged that the authority hemorrhaged cash on ballooning renovation expenditure – by then said to be £1.8m.

Alongside Cllr. Stoddart on the opposition backbenches, Tenby councillor and serial property developer Mike Evans claimed Cherry Grove’s true value was “only 20%” of what the council had “poured down the drain so far.”

And the purchase price plus ongoing maintenance and other costs to this day top the £3m mark.

This fails to account for what Cllr. Mike Stoddart often reminds the council is ‘opportunity cost’ – what else could have been done with the money – and other things like the facility’s true worth to the council and its liquidity.

But there was another hidden cost – to the outside world at least – in pointless upheaval.

The council has no need for the huge office block and never has, despite claims it allowed ‘streamlining’ of operations.

Although visible from County Hall, Cherry Grove is a long walk away, or much longer car journey – over a dual carriageway and through two roundabouts.

Not only were staff and departments from some of PCC’s satellite premises around the county moved there, but many were decanted from County Hall, too.

The latter was an unconvincing effort to conceal how empty and unnecessary the purchase was.

But Bryn’s switcheroo only served to render two large PCC buildings in the county town with sub-optimal occupancy, a gap which the intervening years’ cuts and lay-offs has only widened.

Number 1, Cherry Grove, Haverfordwest

Having spent a fortune at Cherry Grove (including incorporating a register office and marriage suite) PCC’s outmoded facility is under-utilised and the cause of a constant headache.

Compliant with few modern disability access regulations, the dated building is also riddled with asbestos which the council sealed up for health and safety reasons.

Windows – the dominant feature of the complex’s ten aspects – need replacing, while sprouting buddleia prettily underlines the ugly truth that a new roof is due.

When the council moved in it was under a roof judged to be within five years of its lifespan – begging obvious questions over what all the money was spent on.

It all means that dealing with the really tough decision – what to do with this liability – could be on the horizon, as the new administration considers Cherry Grove’s future.

JW understands serious consideration is being given to demolishing the site.

That could cost another half million – but who’d bet against County Hall engaging a contractor for twice the price?

And if the saga continues in the same vein, hands could shake on a deal where the contractor assumes ownership of the highly developable plot left behind.

I intend to table some questions at the next council meeting over the future or non-future of the Cherry Grove project, which I fear has serious potential to reach the £4m mark, demolition or no demolition.

Cutting one’s losses and breaking Bryn’s Cherry Grove curse may well be the best option – and demolition is what cabinet member Cllr. Bob Kilmister openly mooted at the council’s recent series of public consultation events.

Bryn’s long gone and thankfully the elected administration who signed the cheques for his vanity project are no longer in power – but taxpayers continue to fund their costly legacy.

I guess smart-suited Bermudans touting abandoned sixties office blocks really mean it when they sell for “knock-down prices…”

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  • Martin Lewis

    Please, for the love of God, let the present administration break from past indiscretions and make sure this land is sold at a realistic price that reflects the development potential and not handed over on the cheap where accusations of corruption and back handers may abound from the public clamour.

  • John Gibbs

    Excellent article…again, well done Jacob Williams proving the point.

    It proves you cannot take a cheap white elephant, slaughter it for proposed profit, gut it, paint it pink, pack-it with sage and onion stuffing at great cost, and then expect to “resell or let” it at a “vast profit”.

    It is, and will remain forever a “cheap white elephant, maybe of a different colour, with an increasing smell of rot”.

    And now we may all have to pay for its removal! What ever happened to Risk Assessments?

  • Keanjo

    This just follows the Bluestone fiasco and various other grants and loans the council has thrown down the drain.

    I hope lessons have been learned and financing dodgy development will be left to bankers and property developers.

    It is frightening to think of how many £millions have been lost by the council. Old Grumpy has the figures, maybe he could ask Badger to list them together with the economic results before he (Badger that is) beds down for the winter.

  • Malcolm Calver

    You would think ex council leader Cllr John Davies would have had a better understanding of the property market, considering his expertise in planning matters (farm worker’s bungalow planning permission saga) before signing this off in cabinet.

    The problem we have is Cllr Davies is still I believe playing a leading part on some sort of committee.

  • John Hudson

    As a former government building, it was exempt from all Offices Shops and Railways Act requirements. These standards would have needed to be met when occupied by non-government staff.

    Viv managed to establish this this had been acquired (under delegated powers?) in the expectation or grand plan that it would be occupied by all voluntary organisations in the county. It may have come as a shock to the IPG that they had acquired it on our behalf.

    As a councillor are you able to access the contract and terms?

  • Goldingsboy

    I remember that it wasn’t that long ago that you, Jacob, rebuked me for suggesting that our political system was institutionally corrupt.

    Your excellent piece on the former tax office in Haverfordwest reminds me that Private Eye was the first to reveal that tax offices, and not just the redundant ones, were flogged off to that very company, mentioned in your article.

    Which meant that the Inland Revenue then found itself in the utter farcical position of paying its substantial office rents to a company registered in the tax haven of Bermuda.

    Do you still have difficulty, Jacob, in recognising just how far the cancer has eaten into our political class?

  • Goldingsboy, your claim that I rebuked you for suggesting our political system was institutionally corrupt didn’t ring true to me, so I’ve looked back through our past exchanges.

    I can only guess you’re referring to the time, earlier this year, you wondered aloud if senior PCC officials had gained access to my website with GCHQ assistance, which I dismissed as a conspiracy theory!

  • Malcolm Calver

    Jacob, whilst your articles on financial incompetence in the past with grand schemes by those in power at the time are welcome and concerning, I do feel since the new order has come into being the funding of of Pembrokeshire County Council’s services have become unacceptable.

    The latest proposal by the Liberal member Cllr Bob Kilmister to inflict Liberal Party policies on Pembrokeshire ratepayers need resisting, I refer to his latest suggestion in regard to increasing council tax by 10%.

    A root and branch investigation into services provided and not even needed should be the priority by councillors such as yourself.

    It is alleged that the Head of Transformation is leaving after twelve months and if this the case please do not appoint another one, just get on with reducing the burden of Pembrokeshire County Council.

  • Chas.

    I listened with dismay to the BBC Radio Wales report today of Bob Kilmister’s ‘drip’ that PCC “may have to raise council tax by 10%”.

    What the devil is going on? PCC wastes our money daily, employs people on salaries in excess of £100,000 plus “perks” and as you have written, continue to spend on Cherry Grove.

    Can we get the Wales Audit Office or Fraud Squad to examine this outrageous waste of our money?

  • Keanjo

    The county council is now reported to be considering a 10% increase in Council Tax at a time when many people are on frozen wages.

    This council needs to set up a committee of members to find ways of reducing the cost of administration.

    Don’t be fooled by the lowest Band D story either. If an authority has a high proportion of properties in higher bands, clearly the Band D charge will be low. A more realistic guide would be average per household.

  • John Hudson

    Is it too strong a statement to make that this council is now financially unviable and that this situation can be laid at the door of previous IPG led administrations in pursuit of “the lowest council tax in Wales” accolade?

    I do not think that even this council can waste money it has not got and that years of salami slicing has now really got to the bone. I note the current year’s reduction target is unlikely to be met and officers have been instructed not to incur unnecessary expenditure, again.

    Further reductions or savings of the scale now required cannot be made without stopping the provision of some or all non-statutory services.

    The thoughts of officers, and it appears cabinet members, are turning to stiff us with increased charges on the basis of an accounting concept of full cost recovery.

    This manages to include notional costs that the council does not actually incur in real money terms, but which if included in charges, we will have to pay for with our real money.

    Is this fair and/or reasonable?

  • Loobeloo

    Council austerity? PCC want to increase council tax, cut services because money is so tight? Then why is it reported they want to spend money on Withybush aerodrome for an instrument landing system that the hundreds of planes landing daily (or is it 10 or so a week!) have managed without for all the time it’s been there.

    Every household needs its bins emptied. Let the high fliers pay for it, not me.

  • John Hudson

    The Wales Audit Office have been involved in the certification of the council’s books throughout the BP-J/IPG era and are on record of complimenting the council on its “strong corporate steer”.

    Similarly, the IPG have been congratulatory about the audit process, when nothing untoward was found. The only contention appears to have occurred over the Cleddau Bridge, where the auditor questioned the council’s view of a £68m debt.

    The council was required by the auditor to obtain independent legal advice “to support” its treatment of bridge finances under the Dyfed Act 1987. Unsurprisingly, the council was able to obtain this legal view, which was accepted by the IPG and the auditor, without scrutiny.

    The use of toll profits for non-bridge matters was questioned by some councillors and remains unresolved. By this time a financial review of the bridge established that rather than a £68m debt, an accumulated profit of some £11m had accrued, used to subsidise council tax.

    Following the decision of the IPG, this subsidy of about £2m per year continues. Incidentally an O&S committee chairman explained this away on the grounds that the committee had accepted the advice of the formed director of finance and head of legal services “on face value”.

    The potential danger, now apparent, of a low or subsidised council tax has never been pointed out by the council’s officers, the IPG, let alone the Wales Audit Office.

    A lot could be learned from an independent inquiry into the way the former council was run and control exercised by both officers and members of the council, as well as the role of the WAO.

  • John Hudson

    I have just remembered the BP-J pay off controversy, where the auditor found that part of it (£28k was it?) was “unlawful” which the council did and does not agree with.

    We still ended up paying for it, as councillors who voted for it can no longer be surcharged.

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