Will Kingston follow Hackney on possible path to financial ruin with plans for new leisure centre?
Kingston and Hackney Councils have similar plans
Both councils want to subsidise the cost of building a new leisure centre by building and selling off flats in high rise residential towers on adjacent sites, in the case of Kingston, involving towers possibly up to 23 storeys high on the ancient Cattle Market site
People living at the top of the towers would have amazing views over Richmond Park, the River Thames and Hampton Court and – doubtless – the towers will be visible from those places. The towers would also loom over the almshouses in Old London Road that have stood there for over 300 years and the adjacent Conservation Area around The Fairfield
The difference between Hackney and Kingston is that Kingston Council has not yet started any development – including demolition of The Kingfisher Leisure Centre and still has time to stop its plans
Hackney Council built a new leisure centre which opened in 2021, subsequently demolishing its existing leisure centre. The council agreed to invest nearly £42 million of its own funds in what it calls The Britannia Project of which the new leisure centre is part. The plan was that the new leisure centre, a school and 81 “affordable” homes would be subsidised by the later development of 400 flats for private sale mainly in high-rise towers. Hackney Council is acting as the developer in The Britannia Project and taking on the risk on the project, including from sales of the private flats
The trouble is that the council's plans have gone awry, and Hackney Council has now said that they may need to invest up to £65 million to deliver The Britannia Project and that they will be exposed to a whopping £220 million of debt to fund the project by the end of 2024
Meanwhile, Kingston Council has agreed to allocate £40 million in its budget this spring towards the undisclosed costs of building its proposed new leisure centre. This figure does not include costs of keeping The Kingfisher closed for nearly two years, the cost of demolition and the cost of professional fees associated with the demolition and rebuild. What is known is that the council’s contribution towards costs was calculated back in 2020 and the world is now a completely different place
Current cost estimates for replacing The Kingfisher, including professional fees, have never been disclosed and are likely to have soared. No recent consideration has been made of the development that will be needed on The Cattle Market to subsidise the new leisure centre, including housing numbers, the likely height of towers to accommodate the number of flats for private sale needed to make the desired profit, to whom Kingston Council intends to sell the properties, the cost of the development and the debt that Kingston Council will need to take on to finance it
Whether Hackney Council will be able to sell 407 flats for outright sale and 51 shared ownership properties over the next couple of years in order to rid themselves of over £200 million of borrowing and to service the debt and whether they will achieve predicted sales prices is anyone’s guess
But the fact Kingston Council really needs to note is that Hackney Council has said that it has no choice but to continue with the Britannia Project now because it will cost the council £118.5 million - not including the interest payments and other costs associated with borrowing that money - to extricate themselves from the project, a sum which they simply cannot afford
Once stepped in, it seems that returning is no longer an option.
The decision is an even more important one for Kingston Council than for Hackney, as Kingston Council’s total usable reserves in March 2021 – the latest draft accounts available – at £134 million, were only 45% those of Hackney’s usable reserves of £300 million. Kingston Council’s finances were not looking good even over a year ago and financial accounts for 2021 to 2022 are still not available at all
Hackney Council has also had to go back on its promise not to build flats for private sale before the affordable units have been occupied and is now going to sell private flats off-plan to international investors, ignoring any local need for the properties, on the basis that domestic demand “would not sustain the level of sales required…”
Despite current market uncertainty, Hackney council assigns only a low risk to the likelihood that it will not be able to sell the private market flats, and uses now out-of-date data from December 2021 to calculate the likely costs and income that the project will generate
Surely Kingston Council must learn from Hackney Council and abandon its plans before it is stepped in them too far
It must mend the roof of the Kingfisher Leisure Centre for the estimated amount of £5 million, improve the centre as needed and abandon plans for development on the Cattle Market
That is the only sensible option
Macbeth: "I am in blood stepped in so far that, should I wade no more, returning were as tedious as go o’er."
Macbeth - Act Three, Scene Six