Monday 6 August 2012

London Pleasure Gardens - A Local Council Scandal?

Photo: Diamond Geezer
Since I started blogging regularly, I've also started receive e-mails from people with stories they really want told. On Friday morning, I received one saying that the London Pleasure Gardens (LPG) at the Royal Docks near the ExCel Centre, opened to fanfare only five weeks ago with a loan of £3 million from Newham council, had gone into administration. This is a project that, in July, the council had lauded as an example of its new 'resilience' philosophy, an exciting new venture that “helps to build the economic resilience of the area by attracting people to a new destination”. Throughout Friday it was difficult to find direct confirmation of whether LPG had gone bust, despite a tweet I sent out, but by the end of the day, an council statement had finally confirmed:
"The decision by London Pleasure Gardens Limited to enter into voluntary administration is regrettable but understandable. It is disappointing that the anticipated visitor numbers and revenue from recent planned events have not materialised”.
The loan to London Pleasure Gardens Limited and its three directors (John O'Sullivan, Garfield Hackett and Robin Collings) was agreed by the Mayor and his Cabinet, rather than the full council, who nodded through the Cabinet's plans during the 19 minutes it took to hold a twenty-item meeting on 27 February. A report on what had been described as “an unrivalled partnership between enterprise, culture and public sectors” was discussed by the Cabinet in January [PDF], in which much was made of the proposal's ability to “substantially persist continued momentum” in ensuring that that “the Games period euphoria does not fade away in Newham”. The report added that “the project is in line with the Council's vision for the regeneration of the Royals and indeed it is seen as a vital catalyst in making this vision a reality”. There was a promise of new employment - 300 mainly part time sessional jobs for local people over the life of the project, although only the equivalent of 30/40 full time jobs. The council's Finance Officer notes that “the proposal is not considered to be high risk.”

This "vital catalyst" turned out to be some low risk. Its failure is being blamed in part on events' organisers deciding to stay away, perhaps understandably given the débâcle over overcrowding at the Bloc Weekend event on 6 July. However, in a BBC report, Newham council has also tried to pass the rest of the blame onto the London Olympics organisers LOCOG for restricting visitors numbers. They in turn have hit back at Newham council and LPG, saying:
“Sensible business planning to allow the DLR to cope with a large influx of passengers during the Olympic events at the Excel Centre meant that temporary limitations on promoting the Pleasure Gardens at Games time were agreed with the venue at the outset and would have been factored into their business model.”
After I tweeted out a request for information on Friday, I started to receive more stories from people who had worked at LPG. They told of staff, mainly local young people, who were in tears when they heard the news that the company had gone bust. Many had not been paid. One 20-year old girl had been looking for work without success for four years before starting at LPG and was supporting her entire family on her wages from a vendor at the venue. Former staff also complained about a complete lack of communication from LPG. Publicly, some traders have come forward with complaints about promises that were made to them by the LPG management and how they felt angry and cheated.

What this looks a lot like is a full-blown local authority scandal, with wildly over-optimistic financial projections by the LPG management, who seem to have also been far from ready when the venue actually opened. Their rather high-risk business case (dependent in part of the whims of LOCOG's decision-making) was aided by the fact that Newham's Mayor had clearly been bowled over by another ill-conceived idea. The loan was almost inevitable, with few doubts raised by officers whose due-diligence was either incredibly weak or driven with half an eye on the proposal being a mayoral pet-project. As for LOCOG, it is clear from its ruthlessness that the Games and nothing but the Games - most certainly not the ambitions of a minor local elected Mayor or any impact on local people - was their only consideration.

The council insists it will recoup the £3 million of local taxpayers moneyi it has loaned, which it must at a time when it is busy making significant cuts to services. But what about the human costs? As yet, it hasn't said anything about what happens to the local people who worked at LPG, overwhelmingly poor and owed money that is due to them. Will they find themselves at the bottom of the list as the administrators from Deloitte pick over what is left from the ruins of the company?


I saw this today (6 August):
See also this BBC London report on 7 August (from the Stop City Airport Masterplan website)

[Flash 10 is required to watch video.]


Alan said...

Kevin - Brilliant as ever.
Where on the 27/02/12 was the LPG Cabinet Agreement waved through? I can see no reference to it.

Anonymous said...

LPG's administration is entirely due to the restriction on visitor numbers during the Olympics. I went there during the games and had read they were expecting 25,000 people per day where there was only a few hundred people... This was a brilliant idea that got screwed over by LOCOG who have made London a ghost town during the games and thousands of businesses struggling or going bust. Shame!!!

macuser_e7 said...

It's a bit rich Newham blaming LOCOG when the mayor himself is on the board of LOCOG.

I know some people want to use the Games as an explanation for every bad thing that happens but this descent into administration happened after one week of the Olympics. If just 7 days' poor trading caused the business to collapse it wasn't very robust in the first place.

The chances of Newham recovering so much as a penny of their investment are close to zero. That's £3 million of our money down the toilet. Does anyone have any confidence that the £40 million being 'invested' in the Olympic stadium won't go the same way? I doubt the commercial due diligence on that was any more thorough than on this LPG loan.

Anonymous said...

I have just been working in local government (not in Newham) and I want to add a bit of clarification about process. This is not to excuse anybody involved in this despicable mess but for accuracy's sake.

When a report is ok'd by Cabinet (normal for a project of that sized budget) with zero discussion as one of many, many items in a meeting, that does not necessarily imply it's been waved through unread or undiscussed.

There will have been a pre-Cabinet meeting called a 'Leader's Briefing', held privately a week or so before Cabinet meets officially. At this the report would have been read carefully and the Cabinet members would have a chance to ask questions of those responsible for it. They would also all have had copies of the report for some time and some of them may even have had a hand in producing it.

Plenty of unsatisfactory Cabinet Reports get sent back after Leader's Briefing never to be brought to the rubber stamping exercise which is the public and recorded Cabinet Meeting itself.

Other points to note. All papers to be tabled at Cabinet meetings are online on the Council's website for several weeks before they are actually taken to the meeting so that the public can inspect them.

To help build a stronger democracy and prevent shit like this happening again feel free to look over up-coming reports and raise hell with your Councillor if any of them look dodgy.

In case in spite of what I'm saying any of you think I'm an apoologist for this screw up allow me to add this. Because voter turn out is so low at local govt elections Councillors are mostly self-important idiots with a bee in their bonnet about one particular local issue and no interest in anything else. They generally understand very little of what they're signing off. And many care less.

Council employees on the other hand often understand the issues they're facing very well but have their hands tied by process, horrendous risk aversion and the need to please the aforementioned idiots.

We have a crappy system and this kind of thing is the result. To reform local politicas get active in it. It's the only answer.

Anonymous said...

Not one councillor questioned this. No one is investing 3million in this economic climate. Looks like the west ham FC money may go the same way.

Newham are also paying the police (s92 officers)1.5 million a year - why are they subsidising the police? I pay for the police in my council tax.

Absolute incompetence by men out of their depth.

Anonymous said...

Did anyone go to the London Pleasure Gardens?

The London Pleasure Gardens made Newham a cool place to live. (If only for a brief period).

I am very surprised, Robin Wales signed this off?. Is this for real??? If Robin Wales "knowingly" sign off the LPG, then for the first time I applaud his decision.

The London Pleasure Gardens was a cool creation, put together by young, talented and creative people. The sort of cool people might see in Brighton or Shorditch. It is the right time of regeneration to make Newham a cool place to live. You can't engineer 'cool' in a council office.

I went to the LPG on a lazy Sunday. I had a time and I was very impressed. They had lots of cool street entertainers, a tent where couples were dancing to swing and another tent with world music.

I know LPG, was a work in progress, but it was a great vision for the Royal Docks.

It is unfortunate there was a loss of £3million.

I have a feeling there are 'forces' at work, who wanted the LPG to fail....

Kevin said...

"It is unfortunate there was a loss of £3million".

'Unfortunate' is one way of describing it...

Anonymous said...

The more people criticise things like this when they go wrong the less people will be prepared to take a chance and let these sort of things happen. The site was absolutley stifled by the Olympics, and yes there were some poor decisions taken but this is not the outcome anyone wanted.

macuser_e7 said...

"The more people criticise things like this when they go wrong the less people will be prepared to take a chance and let these sort of things happen."

Good. I sincerely hope you're right in the case of Newham council.

It's all very well for private investors to take big risks with their money, they're the ones that lose when it goes wrong. But councillors are not venture capitalists and council tax revenues are not an investment fund.

Councillors decided to put public money - not their money, our money - on the line in an extremely risky venture with a very shaky business plan. The fact that private investors could not be found to back this project should have been a big red warning light, but it was ignored.

As a result £3 million has vanished - enough to fund a decent sized primary school for a whole year.

Councillors should focus on delivering public services, not pretending to be Warren Buffett.

Anonymous said...

@macuser_e7 I generally agree with many of your comments on other topics. However, I strongly disagree with you, Mike Law (blog), Kevin Blowe (blog). All of you have all got it wrong. None of you were at the LPG. Your views would be different.

Feel free to to be critical about the money wasted on the Newham mag, or Mayor's show or the so-called "investment" in the Olympic Stadium.

The loss of £3 million was a disgrace and a tragedy.

I am not sure why LPG / Newham based their business plan on the Olympic visitors. It seems Newham believed their own hype. There was little promotions of LPG. I went to Westfield and was handed a Newham leaflet to watch the olympics live from one of the parks (kind of silly, given that people were heading into the Olympics had tickets). Why did n't they give me a leaflet about London Pleasure Gardens. (I don't know if there was a promotion at the Excel, but I did not see any adverts on the train platform etc... ). Even the volunteers in kakhi and purple at Waterloo station, knew of no events outside of the Olympic park.

The London Pleasure Gardens was a cool creation. It would have kick-started regeneration. (as it brought in the right crowd....)

Anonymous said...

Young, talented and creative people???? (A tag only given to people ticking boxes and with no track record) I showed up to trade at the Olympics festival with a bag full of cash.

That's and purple queens. The organisers couldn't take debit or credit card payment for it the pitch... I didn't smell a rat as of course the LOCOG name was being tarted around. As for that Garfield one, just a few minutes after the notes were in the bag, he breezed up to me announcing my staff were going to give him some of our services for free. (He did the disappearaing act anyway) I noticed even then that hardly any of the promised entertainment features had materialised so of course hardly any one came in and no-one stopped. What a greedy fraud.

I'm thousands out of pocket and all my staff were out of work for two weeks.

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