In February, Manchester council had a spat with the coalition government. Faced with making expenditure savings of £110m, rising to £170m in 2012-13, in line with Westminster’s austerity drive, council leader Sir Richard Leese announced measures that would see headline-attracting services, such as libraries and public toilets, getting the chop.
A clearly irritated prime minister David Cameron accused the Labour-led council of “politically driven” cuts, and suggested they might instead start with council chief executive Sir Howard Bernstein’s £200,000 pa-plus salary.
But Bernstein, who recently travelled to Cannes to fly the Manchester flag at MIPIM, insists that things have not, and will not, get nasty between the council and Westminster. Indeed, Bernstein has no time for claims that the local authority will struggle to find common ground with the coalition government.
“If the government has an interesting approach, then my message to it is that Manchester is a good place to make that approach work,” he says. “And we’ve plenty in common with the government. Its growth agenda is along our way of thinking, for instance, so is its approach to sustainability and improving productivity. We have shared ambitions.”
Bernstein, a veteran of long and ultimately fruitful talks with John Major’s government about rebuilding the city centre after the 1996 IRA bomb and hosting the 2002 Commonwealth Games, thinks a change of political colour in Westminster makes no difference.
“Remember, our relationship with the Labour government wasn’t a marriage made in heaven,” he remarks.
The question on many people’s lips in Manchester is whether the usually proactive and pace-setting Manchester council will have its wings clipped by Westminster’s austerity drive. “Of course, public spending is being seriously curtailed,” says Bernstein. “The challenge for us has to be to anticipate that, and to develop alternative funding methods.”
The European-backed Evergreen Fund – which is designed to leverage up to £500m of development finance – of which Bernstein is key proponent, could prove to be a crucial source of money for the property industry (see box). “We’ve got a number of quick-win projects on the table ready to fly,” he says.
It seems appropriate that the Evergreen Fund should be Bernstein’s latest project.
Chief executive of the council since 1998, he enjoys the confidence of most in the city’s business circles. And he will, he insists, remain an active figure in Manchester’s development, despite budget cuts. “Evergreen” seems to suit him perfectly.
Fire station
A key example of the council rolling up its sleeves is the ongoing saga of the London Road fire station. The public inquiry into the council’s plans for the compulsory purchase of the building is to begin soon.
Cheshire-based Britannia Hotels has long-standing plans to redevelop the Grade II listed landmark next to Piccadilly railway station, with a four-star hotel as its centrepiece.
But a 20-year dispute between the council and the owner over the lack of progress is reaching a head.
In 2009, after years of growing tension, the council threatened a CPO due to slow progress. Simultaneously, it launched talks about the future of the site with other developers, including Argent.
“Several economic cycles have come and gone since Britannia bought the fire station in 1987. The council has approved several planning applications, but we are not convinced there is any genuine intention to develop,” says Bernstein.
Dislodging Britannia could be expensive, as Bernstein confesses: “The CPO is funded. It is part of our growth plans. We have the money, though we hope we won’t have to spend it.”
Such tenacity has won Bernstein many fans in the industry.
Shelagh McNerney, a former town hall insider now working for consultant DPP Shape, has been involved in major regeneration schemes in the city.
She says: “Manchester did not so much respond to government thinking on regeneration, as invent it in the first place, and I’m sure the city council will continue to adapt to whatever happens in Whitehall.
“What it will try to do now is organise around the private sector and recognise that, under the new government, and with spending cuts, regeneration is not so much about structures as about trying to bring people together, including the big property developers.”
Damian Masters, director at GVA in Manchester, agrees that the council remains on the right track. He says: “The council will be looking at using its own covenant to promote regeneration. And we will see more direct council intervention.”
He points to last year’s council decision to buy the freehold of 1 and 2 Hardman Square and 2 and 3 Hardman Boulevard from Allied London on the understanding that the developer will build a further 580,000 sq ft of offices and shops on the site by 2015.
Bernstein’s confidence is hard to resist. Public spending cuts? Serious, but not deadly. Regeneration slowed down? No, just changed. There is still everything to play for in Sir Howard Bernstein’s evergreen world.
Sir Howard forever?
SHB, as Sir Howard Bernstein is known in town hall circles, has resisted the temptation to leave his post as chief executive of Manchester council for other top jobs.
A local man, raised in the north Manchester district of Cheetham Hill, his roots are firmly in the city. A 20% pay rise in 2004 headed off immediate fears that he would leave after the triumph of Manchester’s Commonwealth Games.
Insiders say only a very good and worthy government position with a Manchester focus could tempt SHB to leave.
Even so, speculation is beginning to swirl around the names of eventual successors. The two most hotly tipped are Frances Done and Eamonn Boylan.
Boylan was SHB’s deputy, and has many supporters in the council’s ruling Labour group.
An opportunity to run the Homes and Communities Agency took him out of the city, but he is now back up north, as chief executive of Stockport council (see p98).
Done rose through the city council ranks to become chief executive of the 2002 Manchester Commonwealth Games organisation, and is now chair of the government’s Youth Justice Board. That is soon to be abolished, meaning Done could be available if needed.
How the Evergreen Fund might benefit Greater Manchester
The Evergreen Fund – a mixture of European regional development money, £100m from local council pension schemes and senior debt from Barclays – is intended to provide up to £500m of mezzanine finance for commercial property development in the North West.
Over three years, it could kickstart some mighty schemes.
The Carlyle Group’s 400,000 sq ft plans for the former Colgate site at Salford Quays – Soapworks – is understood to be high on the list of potential beneficiaries. Although that project is outside Bernstein’s jurisdiction, plenty more sites within Manchester’s boundaries are also being tipped.
Bernstein says: “Evergreen works with the local government pension funds in Lancashire and Greater Manchester to provide backing for projects stymied by market failure in the finance sector.
“Get the mezzanine finance right and we can release equity too. This could be a really strong platform for investment, and an excellent way to control the risk profile of new developments.”
CB Richard Ellis was appointed fund manager earlier this year and with legal paperwork close to completion, Bernstein expects Evergreen to be lending by May. “As many as six developments could be funded in the first 12 months,” he says.
