Revelations around the sale of Liverpool City Council land to a local building contractor have attracted controversy and concern.
Liverpool's The Flanagan Group (TFG) paid 'zero' for around nine acres of council land. Over 36,861 square metres of land was passed to them, the equivalent of around five football pitches.
The fact that nothing was paid for the land was confirmed by Liverpool Council in response to a Freedom of Information Act request in 2021. The land granted to the company covered a range of sites across the city.
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The disposals of land to TFG took place in 2016 and 2017.
The plots granted to the group included land on Upper Parliament Street, Birchfield Street, Coleridge Street, Church Flags, Tatlock Street, Walton Lane, Hill Street, Northumberland Street, Parkview Road, Oak Lane and Selbourne Street. The company received four plots in the Hill Street area, and three plots on Parkview Road.
The largest disposal was on Parkview Road in Croxteth, which was 9622 square metres. The site on Upper Parliament Street in Toxteth was 7936 square metres, the second largest disposal.
TFG was founded by brothers Julian and Paul Flanagan in 1991. The Sefton Street company began buying property in Liverpool city centre after the millennium, including New Zealand House where the brothers launched the high profile Newz Bar venue.
Big price increases
After identifying the sites sold to TFG the ECHO later revealed how some of the plots increased in value. Flanagan Building and Maintenance (FBM) bought land on Park Street in Dingle for £1 in December 2016.
FBM sold the land to housing association Liverpool Foundation Homes (LFH) on July 26 2019 for £1,610,000. This was after the contractors built 14 terraced homes on the Harrington Row site.
LFH was formed by Liverpool council to build homes for low-income families. When the ECHO revealed the price increase a city solicitor expressed concern at the deal.
He said: "The council should have paid the builder to build the houses not sell them the land. This allowed the builder to benefit from the appreciation once planning permission was approved and the houses built."
The ECHO also revealed how a site on Sterling Way in Kirkdale was sold to TFG for £1 increased in value. The builders bought the site in November 2017 for a £1, but then sold the land to a sister company Sterling Park Developments Limited for £900,000 in February 2020.
The new price reflected a price rise of £899,999 over a three year period. In February 2018 TFG received planning permission from Liverpool Council to build 29 houses on the land at Sterling Way.
Councillor Richard Kemp, leader of Liverpool's Liberal Democrats, also expressed concern when approached in January of this year.
He said: "The sale of this land and 13 other pieces of land to the Flanagan Group was one of the three case studies highlighted in last March's Best Value Inspection Report from Max Caller.
"The report showed that the council had failed to achieve best value for the council's taxpayers either by selling the plots of land separately or by commissioning development of the land and then sharing in the profits made by the land's development.
"Caller estimated that the council gave up more than £1m in lost income because of the way it mishandled the land sales".
Sold on for a profit
The ECHO also documented how TFG sold on some of the sites that they had bought for a £1. The transactions allowed the Liverpool builders to make a profit on the plots.
Land Registry records reveal that TFG sold land on the south side of 4 Walton Village to Church Flags Limited for £65,000 on August 31 2016. TFG had received the land in January 21 2016 from Liverpool Council
The records also reveal that TFG sold land on the east side of Coleridge Street to MK Developments Northwest Limited for £50,000 on October 14 2016. TFG received the land for zero in January 2016 from Liverpool Council.
Church Flags and MK Developments Northwest appear to have paid the market rate for the land.
Government funding
Emails seen by the ECHO revealed that TFG received assistance from the government. TFG received a loan from Homes England in relation to the development of Sterling Way. Work is yet to start on the site.
A spokesperson for Homes England (HE), a government body focused toward increasing the supply of new homes, said that TFG received a loan through their Home Building Fund in relation to the Sterling Way scheme. HE declined to reveal any more information about the loan.
On January 29 2020 an internal email from TFG read: "xxx from HSBC is requesting the following information would you know from xxx Homes England name of their bank account and how much they are initially depositing?
The trail of correspondence was revealed in response to a Freedom of Information Act request.
Max Caller
Government Inspector Max Caller was critical of the land disposals to TFG in his Best Value report.
Mr Caller said that the council's policy allowed a local contractor to build houses without exposing itself to any risks. Mr Caller said the policy failed to create 'capital receipts' for the city.
The final section of the report stated: "In conclusion, despite the positive policy objectives seeking new and innovative approaches to housing delivery expressed when the Small Sites scheme emerged in 2014 this has not been achieved. What is clear is that this extended project has achieved no capital receipt for LCC yet has resulted in material sums being outlaid by the Authority to deliver housing on some challenging sites. In particular, the scheme has enabled a local contractor to construct housing (but only where it chose to) at no risk to itself or its profit margins. This has left numerous sites undeveloped, but now LCC no longer owns or directly controls them."
A spokesperson for Liverpool council said: "We have no comment to make on this due to ongoing legal matters."
Unite Union controversy
TFG was the lead contractor on a hotel and conference centre in Birmingham which is now surrounded by controversy. Unite general secretary Sharon Graham said the union's new Aloft hotel and conference centre in Birmingham was now worth less than it cost to build.
Last year former Unite general secretary Len McCluskey confirmed that the total costs escalated from an estimate of £57m to £98m. In December last year Ms Graham commissioned an independent inquiry into the cost of building the new hotel and conference centre.
Ms Graham said that Unite was facing a "significant loss" in relation to the project. According to information on the TFG website the company started work on the Unite scheme in August 2016.
TFG said they were involved in the project from its "inception" and carried out demolition and clearance work of the existing site.
The ECHO has approached TFG for a comment.
