Monday, November 22, 2010

Every little helps

Councillors in Birmingham have voted to give Tesco an early Christmas present of £300,000, which will come as a bonus to the chain that recently posted first-half pre-tax profits of £1.6 billion.

This is a result of the delays over the construction of the chain's new store at the Swan Island in Yardley, Birmingham, which is now not scheduled to open until Spring 2012, despite the site having been cleared in readiness for some considerable time. John Hemming waded in on the side of the developers against one landowner who was refusing to sell and found himself being threatened with libel over a Focus leaflet (which he then withdrew and for which he issued a full apology).

The original approval included a £3 million s106 agreement to compensate for the loss of part of the playing fields to allow for redirection of the road and space for car parking for what will be a giant store. All of that money has been promised for development of the Oaklands recreation ground adjoining the site, but the delays mean that this agreement has now incurred interest charges of £300,000 and Tesco doesn't feel that this is fair. The original agreeement shrewdly recognised the risk and put it fairly and squarely onto the party that will see the most profit - Tesco accepted that they would be responsible for interest on the s106 monies, which aren't due to be paid across for some time yet. Now the depth of the problem has been revealed, Tesco returned to the Planning Committee last week to plead poverty and ask that they be released from their interest charges and if they could pay the money on completion rather than when work started.

Unsurprisingly, the committee caved in, although Labour's Ian Ward argued that Tesco should not be allowed to dodge their commitments at this stage. Conservative Peter Douglas Osborne worried that Tesco might walk away rather than continue with the development - an exceptionally unlikely outcome given that they have already invested millions in the development costs and to pull out now would give a head start to Sainsbury's, who are looking at a new store not too far away.

Given that we are sacrificing playing field space and the damage that this store will inflict on local commercial centres, an extra £300,000 does not seem too high a price to extract from a store chain that makes that much profit in just 50 minutes and that proffered only the weakest of excuses for non-payment. People in Yardley have every right to feel let down by this poor decision.

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