Decisions Taken on 03 August (Called-in)
1.1 Noted the Council’s Cabinet agreed on 16 April 2014 to support the regeneration and economic growth of Woolwich by purchasing long leases of historic buildings on the Royal Arsenal to create a new cultural district.
1.2 Noted the Council’s Cabinet agreed on 15 November 2017 to establish a Company Limited by Guarantee (CLG) called Woolwich Creative District Trust (trading as Woolwich Works) to manage the Council’s properties on the Royal Arsenal.
1.3 Noted the Council agreed to lease Woolwich Creative District Trust, Buildings 40 and 41 in the form of a 30 year lease at a rate below market value. In return, the Trust signed a Partnership Agreement, which contained a number of key benefits for the local community in the form of key performance indicators (KPIs).
1.4 Noted Woolwich Works opened its doors to the public in September 2021 and had to content with a number of challenging circumstances which could not have been anticipated when the Council agreed to establish the Trust, namely:
(i) The Covid-19 pandemic.
(ii) The cost of living crisis, including inflation rising to the highest rate in 40 years and an unprecedented spike in energy prices, which has increased its operating costs.
(iii) The industry wide challenge to recover from these two factors.
(iv) The opening of Crossrail being delayed to 24 May 2022. The line had originally been scheduled to open in December 2018. This got moved back to a window of October 2020 – March 2021, which became as soon as practically possible in 2021, before being delayed again to an unspecified date in the first half of 2022.
1.5 Noted this has impacted consumer confidence and, in turn, it has affected the Trust’s ability to sustain itself financially in the early stages of operation.
1.6 Noted the Trust has still delivered on a number of key community benefits, in line with their KPIs as set out in 4.24, including employment and training opportunities for local residents and free school performances.
1.7 Noted that the Council has been supporting Woolwich Works during this challenging period and the Trust has reviewed and updated its business plan for the next three years (see Appendix 1 of the report).
1.8 Agreed that the Council provides a core loan facility to the Trust of up to £1,605,000 to support the needs set out in its business plan.
1.9 Agreed a further £395,000 contingency facility.
1.10 Agreed that the core money will consist of three phases and the decision to release the funding, in each case, will be delegated to the Director of Finance in consultation with the Leader, the Cabinet Member for Finance, Resources and Social Value and the Cabinet Member for Culture, Communities and Equalities, subject to due diligence. The Trust will also be subject to further support and scrutiny as set out in 1.14 and be expected to provide further community benefits as set out in 1.16. This is to minimise the risks of the council not seeing a return on the loan due to the Trust’s business plan failing, as the Council is unable to secure the loan assets.
1.11 Agreed that the first phase of the loan of £550,000 is advanced by the end of August 2022 as part of the loan agreement as part of the revenue funding support, subject to the successful completion of due diligence between the time of writing this report and the end of August. This due diligence is set out in 1.14.
1.12 Agreed that the second phase of the loan amount of up to £880,000 revenue support is released in parts, as and only when required between 2022 and 2024, on condition that the Trust continues to pass due diligence and deliver on their agreed business plan. This due diligence is set out in 1.14.
1.13 Agreed the third phase of the loan facility of up to £175,000 to provide a match funding for capital works the Trust feels will ensure Woolwich Works achieves it full commercial potential. The Council will only release the loan amount in the event:
• that a business case is produced demonstrating the need for the works / economic benefits will flow
• it gets assurances that the works would get planning permission due to the building’s listed status
• full costings are provided
• of evidence it has secured match funding.
1.14 Noted that a condition of the loan the Trust, the Council will put in place number of safeguards to protect its interests including:
• The Trust being subject to initially weekly meetings, becoming fortnightly in due course, with council officers, until it achieves a profitable trading position, to ensure it is on track to deliver on its business plan.
• The Council will use the meetings to review their bank balance.
• The Council will review their position regarding debtors and creditors.
• The Council will review the impact of their marketing plan in build their audience.
• The Council will review progress made in relation to delivering their business plan and expect to be notified of any changes made to it
• The Council will encourage the Trust to become more commercial to help it become self-sustaining
• The Council will carry out a review of whether the Trust model supports a venue of this nature achieving its full commercial potential. This will be undertaken before the release of the second phase of the loan is considered.
1.15 Agreed that utilisation of the £395,000 contingency facility is subject to the same monitoring controls, delegations and due diligence as set out in 1.14.
1.16 Noted that the Trust will also offer a number of additional annual benefits to the Council. These will be specified in the loan agreement and include every year:
• At least 1,000 £1 tickets for major shows to local residents, specifically to reach those who would be unable to afford to attend professional programme events and / or who would be the least likely to naturally engage with the organisation.
• At least 50 sessions of free studio hire to local community groups to support their work and build relationships and engagement with Woolwich Works, particularly focusing on supporting diversity and inclusion.
• Up to 3 days’ free-of-charge Main Space venue hire and 3 days’ free-of-charge small space venue hire to support Council events that benefit the Borough, strengthen community cohesion or the local economy and drive engagement with Woolwich Works.
1.17 Agreed the Trust should adopt a more commercial approach to its programming to help it become self-sufficient. To support this aim, the Trust will be allowed to agree with the Council putting some of the KPIs on hold until it reaches a profitable position.
1.18 Noted that the Trust Board and its Chief Executive have signed off its business plan and the request for financial support.
1.19 Agreed the Heads of Terms of the basis on which the loans are made as set out in Appendix 2 of the report. Early repayment conditions will be written into the loans to protect the Council’s interests should the Trust achieve a strong trading position in future. It is very much hoped that the trading position of the Trust improves ahead of the projected timelines in the business plan, as an early repayment of part of the loan would be beneficial for the Council.
Decisions Taken on 22 August 2022
Noted the decision of the Overview & Scrutiny Call-In Sub Committee at their meeting of 17 August 2022 (Appendix D) to refer the Leader of the Council’s decision dated 3rd August 2022 back to the Leader of the Council for further reconsideration and to consider amending the decision to include:
• That the feasibility of appointing an external and independent person to review the accounts and business plan be investigated and be reported back; and
• To consider whether the costs of such appointing such a person be passed on to the Woolwich Creative District Trust.
Noted the sub-committee’s comments as follows:
• That Overview and Scrutiny to discuss receiving an annual report on Woolwich Works (on the model of that for ‘GS Plus Ltd and GSS Ltd Annual Report’).
• That if it were feasible to appoint an external and independent person to review the accounts and business plan that consideration be given to that person being an arts specialist as it is a niche business.
Agreed to confirm the original decision in respect of the Woolwich Works Operational Update as approved by the Leader of the Council on 3 August 2022, for the reasons set out in section 9 of the report.