Lambeth council is to award a multi-million contract to manage the demolition and rebuilding of the Cressingham Gardens Estate to the giant multinational consultancy, Mott MacDonald.
The cost of the fixed-price contract, at more than £6.5 million, will come out of the total £25 million budget for the bitterly contested “regeneration” of several Lambeth estates.
A report on the decision says there is enough money in this budget to take the Cressingham Gardens project to the stage of securing planning consent and compulsory purchase orders. This is stage one of seven for the entire project. The budget for this first stage is £600,000.
Any spending after this will need the council’s Homes for Lambeth “special purpose vehicle” (SPV) to be up and running.
An SPV is a private company owned and run by a local authority. Lambeth council plans to use its SPV to both build council accommodation and also to “undertake commercial development for the benefit of local people”.
Lambeth says it will use the Homes for Lambeth SPV to build council-rent properties at about a third of market rent through its own housing association – currently being set up with the advice of giant property company Savills.
At the same time, acting as a commercial property developer through Homes for Lambeth, the council says it can “use the 15-20% development surplus that private developers normally make” to build more homes for local people.
Lambeth council’s contract with Mott MacDonald will contain a “break clause” at each stage in the redevelopment of Cressingham Gardens.
At the end of a stage the council’s estate regeneration board will consider progress. Agreement to go to next stage “will depend upon the available budget at that time”.
The council report says the £6.5 million contract represents less than 8% of the total cost of redeveloping Cressingham Gardens – putting it at over £80 million.
Council consultation in the earlier stages of its Cressingham Gardens plan was found to be unlawful by a judicial review sought by residents.
The council report goes into detail on how residents of the estate were consulted on the award of the contract to Mott MacDonald.
It says resident representatives were involved in the process, with four of them on the interview panel.
Mott MacDonald, which is said to be one of the largest employee-owned companies in the world, has completed projects including the Channel Tunnel and Hong Kong International Airport.
But it was also involved in one of the greatest UK public sector procurement disasters in recent years – the FiReControl project.
This was a plan to close 46 local fire brigade 999 call response centres and replace them with nine regional centres.
This idea surfaced in a report by Mott MacDonald, which put the capital cost of the project at £100 million. The project was abandoned with its expected eventual cost standing at £1.4 billion and £245 million already spent.
A report by the official National Audit Office said: “FiReControl was flawed from the outset because it did not have the support of the majority of those essential to its success – its users”.
Councillor Matthew Bennett, the current Lambeth council cabinet member for housing and the environment, will be succeeded in this post by councillor Jenny Braithwaite after council’s annual meeting on 24 April. He will become the council member for planning, regeneration and jobs.