SeaChange’s North Queensway business park is getting more and more expensive. From a starting point of £4.5m in September 2020, the projected cost has now increased to £6.4m – a staggering 42% increase.
Although this is modest compared, say, to the 100% cost increase of the ill-fated Queensway Gateway road, it is still a remarkable increase given that the project has yet to even secure planning permission.
Why the cost increase?
A report for funders the South East Local Enterprise Partnership says that the cost increase is due (p145) to ‘increased materials costs and adverse site conditions’. To which one can only say, shouldn’t a contingency have been put in for increased materials costs?
And as for ‘adverse site conditions’: a planning application for preliminary work on the site was first submitted (by SeaChange’s predecessor company, SeaSpace) in 2007. You’d think that in fourteen years they’d have had time to work out that the site conditions were ‘adverse’ and to put in sufficient funding to cover this, but apparently not.
Where will the money come from?
The project is funded with £3.5m from the government’s Getting Building Fund, and £1m from SeaChange. Whether SeaChange will be able to retain the £3.5m funding is a yet to be determined question. Without it, the project will clearly not be viable. But where will the extra £1.9m come from?
In SELEP’s accountability board agenda pack for its November 2021 meeting it says (p130):
In appendix B, it is noted that costs have increased by approximately £1.9m since submission of the business case and the award of funding by the board. It is envisaged that these costs will be funded through a private sector Joint Venture Partnership, and work is ongoing to assemble this partnership. At the time of preparing this report, a full funding package to secure delivery of the project is not in place.
‘Joint venture partnership’
Setting aside the issue that SeaChange appears not to be able to find a partner in this mad scheme, what exactly is a joint venture partnership? One definition is ‘a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. In a JV, each of the participants is responsible for profits, losses, and costs associated with it’.
It’s not clear what the ‘rewards’ of entering into a joint venture with SeaChange might be. The project is on the very edge of viability, and SeaChange has a terrible reputation for failing to deliver on its promises. The leader of the Conservative group on Hastings Borough Council recently described SeaChange as ‘an unmitigated disaster’ – strong words from a party which has had nothing to say about SeaChange over the nine years since it was set up.
More public funding?
And the £1.9m increase may not be the end of it. The SELEP report states (p130) that ‘At the time of the GBF funding award, the Benefit Cost Ratio (BCR) calculated for the Project was 2.29:1 based on the level of public sector investment in the Project. Should any further public sector funding be invested in the Project, this BCR will need to be revisited to ensure that the Project continues to offer High value for money’ (italics added). This suggests that SELEP has not ruled out chucking more money into the project if necessary.
It’s hard to imagine any company wanting to enter into a partnership with SeaChange, to fund a controversial, environmentally damaging and hugely delayed project where there is a strong possibility that the main source of funding could be withdrawn, or that SeaChange will fail to deliver the project as planned. And most crucially, to put itself in a position where it was jointly liable for any losses incurred. It would be a very foolhardy company that would put money into this particular white elephant project.