Weyside Urban Village Update – Hard Choices Face Guildford Borough Council

Published on: 5 Dec, 2024
Updated on: 5 Dec, 2024

A CGI of the four-storey apartment blocks in phase three Weyside Urban Village development. Image: GBC

By Emily Dalton

local democracy reporter

A flagship 1,500 homes scheme could have its affordable housing reduced “as an absolute last resort” as Guildford Borough Council has to make tough decisions to reduce over a £50 million deficit.

Outline plan for the Weyside Urban Village. Image: GBC

The Weyside Urban Village (WUV) regeneration plans to create 600 affordable homes (40 per cent of total) including community buildings, employment space and improved infrastructure. The £453 million project was given outline planning permission in October 2021.

A potential deficit at the project’s end has jumped over £50 million, as of May 2024, due to high inflation and rises in borrowing rates to 5.5 per cent with a notable impact on contract costs, according to council documents.

The £50 million deficit was reported in January 2023, which the council attributed to “macro-economic factors” affecting the construction industry and the cost of materials, coupled with an increase in loan rates.

Various options to reduce the deficit were presented to the Resources Overview and Scrutiny Committee meeting on December 2. Methods included borrowing from different boards, using money from asset sales, quickly selling land to developers, long-term lending and reviewing the council’s major development programme. Reducing the number of affordable homes was floated as a “last resort”.

Cllr Phil Bellamy

Cllr Phil Bellamy (Lib Dem, Ash Wharf) said he had to “hold onto the brakes” when he saw reducing the number of low-cost housing in the report, saying they are “greatly needed” in Guildford. Changing the number of affordable homes “defeats the objective of the programme,” said Cllr Richard Mills (Con, Castle).

Any reduction to the types of homes would require a planning application, taking a year to complete, and Homes England would also need to be notified that the original business case has changed.

Cllr Richard Mills

The deputy leader of the council, Cllr Tom Hunt, said cutting the number of affordable homes is “absolutely not a lever [the council] wants to pull”, but for the sake of the complete review of the situation “it must be an option”.

Cllr Hunt said the “implications of not closing the deficit are material and unpleasant”. The increased potential deficit could have a “profound effect on the council’s financial position”, according to meeting documents.

Tom Hunt (Lib Dem, St Nicolas)

The council’s target is to get the deficit to zero, Cllr Hunt said, as anything else will increase the cost to the council and potentially would have to decrease services. If the council does not reduce the deficit to zero, there will be an annual impact on the council’s budget with interest and paying debt on the money spent on the WUV project.

“So steeped in blood, to go backwards would be worse than going forward,” said Cllr Mills, as he projected a rather grim picture on the council’s situation by paraphrasing a line from Shakespeare’s Macbeth. He argued the council seemed to be in a mess, but it would be worse going back on the plans than continuing them.

Acting as a developer, Guildford Borough Council is trying to recover the cost of upfront infrastructure investment from the sale of ten land plots to housing developers. The council has been successful in securing grant funding from Homes England and Local Enterprise Partnership (LEP) of around £60 million.

But officers told the committee that the council will have a “cash flow issue” over the next few years as it has not completed set “milestones” in housing delivery, related to the Homes England grant. When this happens, grant payments are stopped and the council will have to pay out of its pocket.

The original case to finance development was that land sales income was to cover the cost of delivering the infrastructure, but the deficit has altered this.

As the plots of land are next to an old sewage treatment works, Cllr Hunt explained: “There’s a fear from developers that no one really wants to live next to a fairly elderly sewage treatment works and with all that entails.” The delays to releasing developer land will worsen the deficit due to a delay in money for potentially two-three years, according to the report.

A “basket of measures” rather than only one solution was recommended by officers. Using cash from asset sales and reviewing the council’s major development strategy will likely be implemented going forward.

The deputy leader asked the committee to come up with alternative ideas to fund the scheme. Cllr Hunt gave a hard deadline of six months by which time the council will need to decide how it was going to cover the deficit.

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