Maximising the Opportunities of the OPDC

Questions to the Mayor of London – answered on 29th July 2019.

Alert me about debates like this

Photo of Tony Devenish Tony Devenish Conservative

How can the Mayor and the Government help you “sell” OPDC to sovereign wealth funds with the necessary long-term perspective to unlock billions of pounds and therefore tens of thousands of homes and jobs by the mid- 2020s?

Photo of Tony Devenish Tony Devenish Conservative

If we are genuinely Europe’s largest regeneration project, are we not really doing it on the cheap at the moment?

David Lunts (Interim Chief Executive Officer, OPDC):  We certainly have been doing it on the cheap because we have not really had a meaningful capital budget and, happily, that is beginning to change now with the HIF allocation. That is important because, unless there is some credibility behind the public sector offer to start to acquire the land and deliver the infrastructure, then sovereign wealth funds or any other investment fund is going to be slow at coming forward for a project that is pretty long-term and risky without a strong public sector commitment.

Because we are through or nearly through that stage and hopefully very soon we will have a strong planning position and we will have the HIF funding in place and we will start to bring the phase 1A development forward, this starts to become a very marketable proposition indeed. As we all know, large strategic sites with excellent transport infrastructure in this capital city do not come along very often. I would not say that Old Oak is unique but it is very unusual because at the moment there are no major development interests there.

Whether the ultimate solution to bringing in large-scale long-term equity and project finance into the regeneration of Old Oak is, strictly speaking, sovereign wealth money or whether it comes from other quarters I am completely open-minded about. We have seen sovereign wealth money moving into some of the major regeneration sites in London from overseas. Indeed, City Hall is quite a good example, More London Development with Qatari money. On the other hand, there are plenty of opportunities at Old Oak for more domestic funds and domestic partners. There may well be some interesting opportunities for major housing associations and others.

Personally, I am pretty open-minded to who comes in, so long as they are going to be trusted partners, so long as they are in for the long term and so long as - most importantly - they share the vision that we have been talking about this morning for really high-quality growth and a commitment to doing this thing in the best possible way. As I said, how much of that money comes from overseas and how much of that money comes domestically I am pretty open-minded about.

Photo of Tony Devenish Tony Devenish Conservative

In terms of the Mayor’s ambitions, I have never heard the Mayor talk about this project in the way he talks about other things. Do you think there is a poverty of ambition? It is not really in the Mayor’s top one, two, three, four or even top 20 projects at the moment. How can you make the case? He does not seem to ever show any real interest. It is almost like a football team that does not have 11 members in it. David, the question is about you personally and the fact that you do not have a very substantial team in size to pump-prime a project of this size.

David Lunts (Interim Chief Executive Officer, OPDC):  Liz and I spent an hour and a quarter with the Mayor a couple of weeks ago to really get him properly briefed and up to speed. That is an indication of how much interest he is taking in the project, getting an hour and a quarter of face time to specifically talk about this and ‑‑

Liz Peace CBE (Chair, OPDC):

To interrupt, I asked him. I said, “I need to know you want this to happen”. He was absolutely clear that he is fully behind this. He wants this to happen. He is enthusiastic about it. That is why he detailed off his budget and finance people to make sure that we got what we needed to move forward the work on the HIF implementation. Sorry, I interrupted you.

David Lunts (Interim Chief Executive Officer, OPDC):  Yes, but that is exactly the point. The fact that he has been very clear that he wants to press on at pace with our plans and is willing to recommend and approve additional funding to enable us to do that is an indication of the fact that there is strong mayoral support for this particular project. As we get through the process of nailing down the draft plan and it becomes adopted and drawing down the HIF funding, I am very confident that Old Oak will emerge as a much higher profile project for London generally.

Photo of Tony Devenish Tony Devenish Conservative

You touched on a couple of times now the meeting you had with the Mayor’s finance team. Can you tell us any more detail of exactly what they said to you?

Liz Peace CBE (Chair, OPDC):

No. There is not a great deal more to be said until you see the Mayoral Direction, which I understand, under your processes and procedures, will be available as soon as the Mayor has signed it. We are keeping our fingers crossed.

We went in and we explained to him how we thought the HIF process was likely to pan out and what we needed over the next three to six months while we nailed the HIF bid. Needless to say, the finance folk were very robust in quizzing us about this because they wanted to make sure that this was a sensible investment of their money. It will in due course, provided all goes well on the HIF, be refunded from the HIF money when we get it but, again, they wanted to interrogate us on the certainties of that. On the back of that, they and David’s finance team went away to draw up the details of a Mayoral Direction.

Photo of Tony Devenish Tony Devenish Conservative

I will not go back to Cargiant and the ransom strip discussion at this meeting now, but it would help if you could, certainly in the near future, write to the Assembly with what plan B is if that does go on. We all know a CPO process is going to go on - if it does happen to be a CPO process - for at least, let us say, a large part of the next mayoral term. It would be nice to know what plan B is if you have to go down that long and protracted process.

The point that the industry is making, as you know as well as I do at the moment - and a lot of Assembly Member [Tom] Copley’s points I disagree with on one basis - I do not believe that land values are going to keep going up. A lot of the discussions we have at the moment are based on the public sector and land bodies keeping on subsidising more and more public sector projects. I do not believe that is going to happen and so I would like to understand what plan B is, particularly in terms of this ransom strip going forward. Will you be able to mull that over and perhaps write to us in due course?

Liz Peace CBE (Chair, OPDC):

We will do that.

David Lunts (Interim Chief Executive Officer, OPDC):  Yes. This is going to be a major question in front of the planning inspector at the EiP hearing on 18 July [2019] and so I am very happy to report back on that with more information in due course.

Photo of Tony Devenish Tony Devenish Conservative

Thank you. Just finally - and you may want to write to me again - I appreciate that this is an industrial project and not just residential units, as much of the rest of our obsession in this building rightly is about, but can you remind me? What is the figure by, say, 2024 of the number of residential units you at the moment are committed to build?

David Lunts (Interim Chief Executive Officer, OPDC):  By 2024?

Photo of Tony Devenish Tony Devenish Conservative

By the end of the next mayoral term, in five years’ time.

David Lunts (Interim Chief Executive Officer, OPDC):  I am very happy to drop you a note on that.

Photo of Tony Devenish Tony Devenish Conservative

Great. I will leave that there. Thank you.

Photo of Jennette Arnold Jennette Arnold Labour

Thank you. The Conservatives are the only group with time. Do I see any questions? No questions, OK.

Can I thank you, Liz and David, for your full and informative answers that you have given us here today? There were a couple of points where Members have asked for follow-up information. That will be sent through to my office and then distributed to all. That leaves me to wish you well in the next phase of this remarkable development that you are both heading. Thank you very much.

Liz Peace CBE (Chair, OPDC):

Thank you very much indeed.