On the 15th March 2022 Derby City Council proudly announced “Plans for Derby’s new performance venue hit a new milestone as contracts are signed”.
Derby’s new £45.8m performance venue has reached a new milestone, with contracts signed this week between Derby City Council, Leeds-based developers St James Securities and world leading venue management and services company, ASM Global.Derby City Council website
Despite previous assertions by the Leader of the Council, Cllr Chris Poulter, that financial details of the £45.8m contract with St James Securities would be made public, it is still enshrouded in secrecy.
Last year, Derby City Council signed a contract with St James’ Securities (SJS) for £45.8m to build, at no financial risk to the Council, a Performance Venue. At the point of signature there was no committed design; it was stated that it would be similar to the Hull Bonus Arena which cost £10m less at £36m. Derby City Council will be paying, of the order of £10m extra, as a risk premium – there is no sharing clause should the risk cost not manifest itself in full.
This contract is known as the Forward Funding Agreement. This means that SJS incur all the cost upfront and when the Venue is complete, Derby City Council will buy it for £45.8m and lease it to the operator, ASM Global.
A previous Derby News article “Becketwell Performance Venue: subsidy could require 1.5% Council Tax increase” reported an outline business case compiled from piecing together data revealed in Cabinet papers.
Freedom of Information (FOI)
A FOI was submitted by Derby News requesting a copy of the:
- Forward Funding Agreement (FFA) – DECLINED
- Cabinet briefing papers that supported the decision – DECLINED
- Business Case – 138 page document provided with 80 pages completely redacted.
The core reason given was:
“In disclosing a negotiated contract this will hinder the local authority’s bargaining position as well as its ability to negotiate and dictate terms and conditions in future procurement.”
“The bargaining position of other parties to the contract may also be compromised if suppliers/partners are aware of the terms granted on a specific contract such as this.”FOI response FOI533156386
The FFA is a signed contract and specific to Derby City Council and not relevant to any other past or future arrangement.
The Council is subject to the “Local Government Transparency Code 2015” issued by the Department of Communities and Local Government. This details what every Council ( and other public bodies) must publish , and recommended for publication.
The Council must…
… publish details of any contract, commissioned activity, purchase order, framework agreement and any other legally enforceable agreement with a value that exceeds £5,000. For each contract, the following details must be published:Local Government Transparency Code 2015
In addition to basic details it must publish,
-sum to be paid over the length of the contract or the estimated annual spending or budget for the contract
-whether or not the contract was the result of an invitation to quote or a published invitation to tender
It is recommended that Councils should publish:
all contracts in their entirety where the value of the contract exceeds £5,000
The Transparency Code is clear in that:
“The Government has not seen any evidence that publishing details about contracts entered into by local authorities would prejudice procurement exercises or the interests of commercial organisations, or breach commercial confidentiality unless specific confidentiality clauses are included in contracts. Local authorities should expect to publish details of contracts newly entered into – commercial confidentiality should not, in itself, be a reason for local authorities to not follow the provisions of this Code. Therefore, local authorities should consider inserting clauses in new contracts allowing for the disclosure of data in compliance with this Code.”Local Government Transparency Code 2015
The Council espouses “Openness and Transparency” but rarely delivers on it and certainly not on significant projects.
The Code is clear as to what a “Transparent” Council should publish. The Code rubbishes the Council’s non-disclosure excuse by stating that there is no evidence of a prejudicial effect on commercial interests. One can only conclude that the “tender” ( although there is no evidence that this contract was tendered) didn’t insert a clause regarding disclosure – as recommended!
Nothing of any consequence, financially, has been published explaining what Derby will get for its £45.8m ( albeit that the cost of the project to the Council is at least £2.54m more when land acquisition and relocation costs are factored in). Nor has anything been published about how much SJS or ASM Global are benefitting from this arrangement.
It is certainly true that Derby needs a modern Performance Venue to replace the Assembly Rooms and this building does look impressive, however that is not enough for public scrutiny. The local tax payer should know:
- Why the Council agreed to pay £10m more than was necessary- what was the Value for Money argument.
- What is the on-going income to the Council – when does it pay back.
- What income has the Council forgone as part of the contract e.g.:
- Inner city car parking fees from the closure of the Assembly rooms
- Revenue at the Derby Arena from not being able to promote the annual pantomime
- What is the total cost to the Council’s finances for the project, including costs incurred as a direct effect of the project – most likely £50m+
The Council has an accountability to disclose information about how public money is being spent. Their constant disregard for public transparency, their obsession with serial secrecy and avoiding scrutiny, is concerning for democracy. It is clear from a number of unfolding cases e.g. the Padley re-location that they do not have a monopoly on wisdom and perhaps recognising the value of more wider, and open scrutiny, might prove very valuable for the City.
The unwillingness to share the business case and contract, publicly, is nothing to do with the commercial confidentiality; it is all to do with the fact that the Council is embarrassed to reveal how appalling this deal is for Derby.
The body language and behaviour speaks volumes!