Richard Digard: Decoding the Leale’s Yard fiasco

Forget blame for a moment. The only significant question in the collapse of the Leale’s Yard project – which would have provided 300 desperately-needed new homes, new green space in a derelict former industrial area and vital regeneration for the Bridge generally – is how we got to this sorry stage.

And my reading of the entrails is stark and simple. Yet again, the States doesn’t know what it’s doing. Another failure to progress big picture projects and further evidence of its inability to pursue infrastructure projects – even one with an income stream baked in.

Yes, I know there are many who will see this as a narrow escape. A wise and far-seeing States extracting itself at the last minute from the rapacious clutches of a couple of developers, finally seeing sense and not bailing out the Coop from a multi-million pound mess of its own making.

But step back and what’s actually been lost? The best opportunity the island had for a significant number of new homes during an acknowledged housing crisis, creating economy-enhancing new business units, a new supermarket and community parking, plus rescuing Guernsey’s second retail centre from continuing decline.

Instead, P&R’s decision means there are no immediate or particularly credible plans to start building homes. As a result, regenerating the Bridge falls to pie-in-the-sky unfunded and unplanned proposals from the Guernsey Development Agency and a 15-year scheme to reclaim land at Black Rock off the Vale Castle.

Accept this analysis and I think you’ll agree that trying to get Leale’s Yard over the line was worth a bit of effort. And, yes, a bit of risk. So what went wrong? The best reading from the documentation so far in the public domain is that P&R got cold feet – ‘shifting political sands’ as P&R president Lyndon Trott reportedly (and has not denied) told the developers in March.

Again, you ask, why buyers’ remorse at this late stage after getting Omnibus to spend £700,000 over more than four years to secure a development framework, two outline planning permissions, and commissioning thousands of pages of due diligence, designs, appraisals and technical reports?

In a word, risk. Government doesn’t get it. Or, if it does, it’s as something to be avoided at all cost. It also, through its civil service advisers, doesn’t understand the private sector, developers, public-private partnerships or the role of profit in driving projects.

The first thing that strikes you on seeing the happily leaked letter of rejection from P&R to Omnibus is how it’s been prepared with a possible judicial review or other legal action in mind. It is off-the-scale defensive… ‘no reasonable person could find fault with us…’ sort of thing.

Read that alongside Omnibus’s reaction and you sense the genuine shock and outrage at what’s been thrown at it.

‘After years of engagement, it is deeply disappointing that the process has concluded with a [P&R] letter so heavily weighted toward blame. Throughout, Omnibus has faced delayed responses, inconsistencies, and risk-averse decision-making from the States. When external market conditions changed, we adapted. When asked for more detail, we delivered. When suppliers fell away, we restructured. The development was never simply a commercial venture — it was a strategic opportunity to address Guernsey’s number one priority: housing.’

Fundamentally, then, was government looking for an excuse to pull the plug on something it didn’t understand, didn’t like (at a civil service level at least) and felt it couldn’t control?

Before answering that, let’s consider control for a moment. Recent States’ projects – hospital, education and Alderney runway – can be categorised as rigid. Specced to blazes, tendered and out for completion. Job done. Hang on, what’s that? Damn, costs have risen. Ah, well, we’ll just pay more (thanks, taxpayer) and get it done anyway…

In contrast, for a one-dimensional bureaucracy, Omnibus was a shapeshifter, constantly adapting to changing circumstances. Trying, as it saw it, to meet its client and partner’s needs. Supplier of modular housing gone bust? OK, we’ll switch to light gauge steel construction and redesign the whole scheme for you instead.

It’s pretty clear from the correspondence that the States side couldn’t keep up with the speed of change. The delays in responding appear all on the side of government – for instance, six weeks with no further word after Deputy Trott’s bombshell ‘shifting political sands’ and admission P&R had £900m. in capital commitments and only £150m. available to fund them.

Was government simply out of its depth? This, I think, is an instructive comment from Omnibus: ‘It is important for a number of reasons that the public sector always retain the private sector’s confidence surrounding PPP [public-private partnership] tendering arrangements.’

So, was an increasingly flustered SoG looking for an out and based that on whether 90 new homes for £35m. (which could be rented, thereby paying for themselves) represented value for money?

Read this from Omnibus: ‘We have addressed this [valuation dispute] extensively in prior correspondence [with you]. The States’ refusal to disclose the identity of its valuers, share their instructions, provide the valuation reports, or supply comparative market evidence made meaningful negotiation impossible.’

Assuming that to be accurate, it hardly smacks of a partnership approach or one where there’s trust on both sides. Omnibus, in frustration, asked Savills to value the properties and presented that to the States. Despite that, government couldn’t or wouldn’t say to what extent, on what grounds or on what recognised criteria it disputed Omnibus’s figures.

Is that indicative of a government acting in good faith within a partnership to achieve agreed ends?

Oh, Digard, you utter fool I hear you cry. Poor, sweet innocent. Omnibus were out to rip off the States, make a killing on the 90 units and boost profits on the rest of the development. Thank the good lord wiser minds prevailed.

Well, yes, I’ll acknowledge that potential interpretation some may place on this. But, and it’s a big but, how could the States of Guernsey have got into bed with private developers in the first place if it wasn’t clear on what it wanted or without the relevant due diligence?

I think we have to assume these hurdles had been cleared. Otherwise, government had screwed up before it even started. And, after all, Omnibus’s bankers, insurers and advisers had also gone through those same hoops themselves, with its lenders happy to back the £130m. regeneration scheme.

So, let’s take as we find and look at the bigger picture. Leale’s Yard would have created a total of 300 homes, a mixed use environment, with shops, a large green space and a civic square. Government would have received 90 units with a 50% car parking ratio and large balconies in 28 months for somewhat less than £35m. while the island and Bridge would have benefited from a largely privately-financed scheme to rejuvenate the Bridge.

Instead, after months of States-approved intensive partnership work, we’re left with a site that’s now mothballed, a less than convincing explanation from P&R and a deeply hacked-off developer ‘partner’.

In addition, relief for the housing crisis is further away than ever and any hope for making the Bridge a better place to live, work and visit appears to have vanished for ever.

How on earth could this have happened from a States not so long ago promising action this day? Official explanations have been poor, to say the least, and serious questions remain to be answered. Hello, Scrutiny?

So say what you like, but none of this looks like a successful government outcome to me.