'Lying' council told to pay developer £48m damages

James Meikie Community Affairs Editor

PROPERTY developers yesterday won £48 million compensation from a council which "lied" about plans for a rival shopping centre.

Welwyn and Hatfield district council in Hertfordshire appealed to Slough Estates not to press for the damages in a way that could ruin council services. The penalty awarded by the High Court in London amounted to 24 times the £2 million held in the council's reserves.

The developers claimed they would never have built the complex i-n Welwyn Garden City if they had known about secret changes to a deal for another centre a few miles away m Hatfield.

They did not know that restrictions on the type of shops provided by the competition were abandoned in 1987. The centres opened within a year of each other, in 1990 and 1991.

Mr Justice May said that in July 1987 the council resolved, on advice from senior officers, to relax conditions on the Hatfield development but "to keep this relaxation secret and pretend to all other interested parties, including Slough Estates, that the restrictions were still in force". From July 1987 onwards the council "were nursing a lie and had set themselves a time bomb."

The court heard that a nucleus of councillors had steered the rest in what happened. "There was a policy to tell lies about the TMA [tenant mix agreement] if it was necessary to do so. The lies were watered down wherever possible, but they were conscious lies," Mr Justice May said.

Sir Nigel Mobbs, Slough Estates' chairman, said yesterday it had taken longer than hoped to fill the 55-shop development because of the competition. The compensation took into account the costs of the whole scheme so far, less the present value of the property.

"We should be able to rely on what a local authority says it will do," he added. "This case serves as a warning to all local authorities."

Only 10 of the 47 councillors now on the authority, which plans to appeal against the decision, were in office when the relaxation of the rules was agreed. Chief executive David Riddle said: "A local authority cannot be wound up, and it is highly unlikely that either council tax or business rates could be raised to meet any damages."

Options for paying were limited, but the Department of the Environment had refused to become involved. "We hope, in the event of our appeal being unsuccessful, we will be able to work with Slough to protect our services," said Mr Riddle.

Guardian July 12, 1996
DIDN'T THEY DO WELWYN?

WELWYN HATFIELD council faces a £48 million legal bill and the prospect of a services wipe-out over the next few years after over-zealous planning officers signed agreements with two firms to build rival suburban leisure and shopping developments.

Slough Estates won council approval to build a retail centre, while the Carroll Group was given the chance to develop a leisure centre, the Galleria.

When the Carroll Group started finding it hard to fill the Galleria, a council sub-committee (of mainly Labour councillors) relaxed the Carroll Group's conditions and allowed it to include shops. Slough Estates, who had already built its centre, claims it would never have gone ahead had it known there would be a rival. M'learned friends agree and the high court has found in Slough's favour, awarding compensatory damages of £48 million which the council--ie taxpayers in the garden city and not the inept officers or councillors-- must pay.

From The Rotten Borough Advertiser page in Private Eye September 6, 1996.
WELWYN: Sued for £50 million by a property company after the council gave a rival developer permission for a similar project, no one at the council would accept any blame — until the last Eye when Labour bosses at John Smith House intervened and resignations followed. Ray Little quit as leader, along with deputy Mike Mably, personnel chair Alan Johnson, community care chair Phil Johnson, various other Labour officers and a couple of Tories. The district auditor is looking at the idea of surcharging the former council leaders.

From The Rotten Borough Advertiser page in Private Eye November 29, 1996.
My understanding is that Welwyn Hatfield should have appealed and would probably have won. My dad said the chief executive (David Riddle?) caved because he hated appearing on television. Apparently he died three months later (possibly of a heart attack).
DIDN'T THEY DO WELWYN?

MORE trouble is in store for Labour-controlled Welwyn Hatfield council, recently sued by a property company because it gave a rival developer planning permission for a similar (and competing) project.

Damages were £50 million, a massive sum for a council with a budget of only £9m. So who in Welwyn is to blame for this monstrous cock-up? Step forward council leader Ray Little, planning director Tony Moore and chief executive David Riddle.

Little, according to high court judge Mr Justice May, was one of six Labour councillors who "steered the rest" in setting up a "policy of lies". Planning director Moore, said Judge May, "peddled lies", while chief executive Riddle "perpetuated the decision he inherited".

Of course none has any intention of resigning — not even Little who has been implored to quit by Labour party officials, some of whom recently came up from London and camped out on his lawn for the weekend to change his mind.

Meanwhile the council is desperate for ways to make huge savings. Having started by handing over the £10 million it gained from selling council houses, the "Labour" council will next try to hive off the town hall to a hotel group, close public toilets and sell off rubbish bins and lamp posts to the highest bidder. That's if the government doesn't send in commissioners to run the place.

* The council, which runs one of the largest firework displays in the country at Stanborough Park, has another problem: the event has become so popular, safety rules for crowd control are being breached. Rather than implement new measures to manage the crowds and organise ticket entry, the council has come up with a cheaper solution. Every year the firework display is held on a Sunday. This year, with no advertising to inform the public of the change, they will hold the event on a Saturday. This should, councillors point out, drastically cut numbers.

From The Rotten Borough Advertiser page in Private Eye November 1, 1996.
Council backs down

WELWYN Hatfield council has withdrawn its appeal against a judgement forcing it to pay £49 million in damages to Slough Estates, the property group headed by Sir Nigel Mobbs. The High Court had accepted Slough's claim that it had gone ahead with its Howard shopping centre in Welwyn Garden City only after being told that a shopping centre in nearby Hatfield would not be competing directly. The value of the centre, which cost Slough £77 million, fell by £49 million after the council relaxed its rules for the Hatfield centre without telling Slough. — Ian King

Guardian December 10, 1996
LITTLE AND LARGESSE

DESPERATE council officers (and councillors who face surcharge) in Welwyn Hatfield have been trying to scrape together some of the £50m they owe in damages to developers Slough Estates over the grand retail centre cock-up (Eyes passim).

They want to sell the borough's 11,500 council homes to raise £30m, and a likely buyer has emerged in the shape of the Network Housing Corporation housing association.

Coincidentally, former council leader Ray Little, who was forced to resign the position last year when the £50m disaster emerged, is a housing needs officer for NHC.

Three years ago, when Little's hardware business went bust, Network bought his house and gave him a job. Soon after, the council tried to sell its housing stock and put a bid out to tender. Little declared an interest, but NHC was still chosen — the deal only being scuppered after tenants campaigned against.

Much more embarrassingly for the council, it now transpires that Welwyn didn't really need to pay out £50m of council taxpayers' money in damages at all. Four days before the hearing. Slough Estates offered the Labour council an out-of-court settlement which Welwyn refused. It would have cost just £16m.

From The Rotten Borough Advertiser page in Private Eye February 7, 1997.
Welwyn Hatfield

A SECRET inquiry by the internal audit team at Labour-controlled Welwyn has uncovered details of financial favours meted out to Ray Little, the council's former leader.

Little was forced to resign last year when the council lost a £50m court case after reneging on a deal with property company Slough Estates (Eyes passim). At the same time Little's hardware firm ran into debt (all the Tory government's fault, apparently), and he approached housing director Allan Gray for help.

Gray arranged for a mortgage rescue package on Little's Hatfield home, and then arranged for a housing association, Aldwick, to buy the property for £75,000 (not a knockdown price) on the understanding that it would come with vacant possession. It didn't. No sooner had Aldwick bought the house than it was occupied by — you guessed it — Ray Little.

Since there was only £25,000 left on the mortgage. Little received a lump sum of £50,000, which helped pay off his business debts. Averting bankruptcy court also meant Little could continue as a councillor.

The records show Little went on the housing waiting list on 16 August 1993 — the day the sale was completed. As the report indicates, this does look a little, ahem, "contrived". Strangely, other documents which might shed more light on this fascinating story of a council's generosity of spirit to one of its own have now gone missing from the town hall. How odd.

Private Eye 926, June 13, 1997