Taxpayers suffer in building slump

PUBLISHED: 11:19 31 July 2008 | UPDATED: 15:04 25 August 2010

BUILDING delays at a major riverside regeneration project could cost taxpayers up to £60million.

BUILDING delays at a major riverside regeneration project could cost taxpayers up to £60million.

An Audit Commission report on the progress of the Greenwich Peninsula development revealed that a quarter of the public's expected profit from the project could be lost.

House-building on the former gasworks site is lagging after developer Meridian Delta Ltd (MDL) made unrealistic predictions about the construction speed, according to the report.

The Anschutz Entertainment Group (AEG) was brought in to develop the former Millennium Dome site, while MDL was to develop the surrounding 70 acres.

The master plan should see 10,000 homes built - 38 per cent of them affordable - as well as a new secondary school and the already-built Millennium Primary School.

The report noted that the O2 arena had been a huge success since it was taken over by American company AEG, while school and commercial building development was ahead of schedule. But as a result of the building slump, MDL's target of 4,250 homes on the site by 2016 is now at risk. One of MDL's key mistakes was a failed attempt to strike a particularly lucrative deal with a developer to build about 650 homes.

Tim Burr, Auditor General, slammed national regeneration agency English Partnerships (EP) for making deals that left it unable to fully control the speed of construction.

As a result, the slowdown will leave the taxpayer more out of pocket than MDL.

Mr Burr said: "The government should consider whether future deals can be structured to align better the interests of the public and private sectors."

An EP spokesperson said MDL could still reverse its fortunes, and that any delays would impact on all partners as Greenwich Peninsula was a "true joint venture".

Both MDL and Greenwich council will now be under pressure to speed up development to try to meet the 2016 target.

John Walker, chief executive of EP, remains confident he will return the taxpayer £550million before costs.

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