Agenda item

RECOMMENDATION:

It is recommended that Scrutiny Committee comment on the proposals within the attached cabinet report, ref CAB3570 which is to be considered by Cabinet at its meeting on 25 August 2026.

NOTE. This report contains an exempt appendix (Appendix B), if members wish to discuss any part of this exempt appendix, then the procedure under agenda item 7a (below) applies.

The Chairperson invited the members of the public and visiting councillors to address the committee, a summary of their comments were as follows.

1. Ian Tait addressed the committee. He raised concerns regarding the lack of affordable housing on the site and the deteriorating commercial viability of the scheme. He questioned the definition of "Winchesterness" and expressed doubts about meeting the planning longstop dates and suggested that the council should consider aborting the development agreement and selling the site outright.

2. Councillor Stephen Godfrey addressed the committee. He challenged the assertion that there were no other options worth considering and highlighted that the business case ignored £25 million in sunk costs and a £650,000 annual loss in rental income. He raised concerns about the scheme's marginal viability, its vulnerability to construction cost increases, and the lack of affordable housing, use of CIL, a hotel, and community space, passages that lead nowhere, no new jobs.  He urged the committee to ensure the whole district benefited from the investment.

3. Councillor Danny Lee addressed the committee. He asked what sensitivity tests had been undertaken to recover some affordable housing and questioned the council's total financial exposure, including St Clements Surgery and proposed car park acquisitions. He also sought clarification on the benefit to cost ratio, including the assumption of a 5% footfall increase despite the loss of the hotel, and asked when energy and climate resilience commitments would become measurable specifications.  He raised implications around the very recent National Planning Policy Framework (17.08.26).

Councillor Martin Tod, Leader and Cabinet Member for Asset Management, introduced the report, ref CAB3570, which included the following points:

1.    Cabinet would be asked to approve the submission of the planning application as outlined in Appendix D. A separate decision, outside of the business case, concerned the lease and access of the Marks & Spencer car park to enable necessary bus infrastructure.

2.    The project had experienced a lengthy progression dating back to the 1990s, including a previous scheme between 2005 and 2016 that had focused on financial returns and was discontinued due to lack of public and member support.

3.    The Supplementary Planning Document (SPD) made deliberate policy choices prioritising community and resident needs over profit maximization; and that internal viability assessments in 2018 had established that recovering land assembly costs alongside delivering affordable housing was not feasible under those constraints.

4.    The council had set ambitious environmental standards exceeding national requirements and had made commitments, such as opening up waterways which carried financial implications.

5.    Unforeseen global and national economic pressures, including conflicts affecting fuel and energy prices, had caused construction inflation to outpace development values fivefold since 2021.

6.    Winchester faced greater difficulty accessing central government funding compared to past assumptions but whilst development projects across the country were being delayed or halted, Winchester was notable in continuing to progress its scheme.

7.    The financial position was not final, and the council continued to explore avenues to improve viability, including potential government grants for regeneration and social housing.

8.    The council remained committed to affordable housing and would continue working to deliver affordable homes where funding and viability permitted.

9.    The proposed scheme delivered on core civic ambitions, creating a well-connected, pedestrian-friendly space integrating homes, workplaces, cultural facilities, open public realm, restored waterways, and high environmental standards.

10.Inaction or halting the project was not viable, and it was appropriate to proceed to the next stage by submitting the planning application.

Matt Woolger (Jigsaw) provided a further introduction and presentation which included the following points:

1. That the core team at Jigsaw was supported by approximately 60 people across 25 consultancies working on the project weekly, with around 50 reports under preparation, approximately 100 drawings in draft development, and over 100 suppliers supporting the project.
2. The scheme proposed the delivery of 234 new homes featuring a varied mix of sizes and types, to provide accessible entry points for city centre living.
3. The development incorporated 3,631 square metres of commercial floor space to generate new employment, mixed-age children's play areas, and 6,600 square metres of new public realm, including a new space named Woolstaplers Square.
4. The river running through the bus station site would be de-culverted to establish "New Abbey Mill Lane" as an attractive pedestrian route, alongside the planting of 64 new trees, representing a 700% increase on site.
5. Key heritage assets, including Kings Walk, the former Antiques Market, and Coitbury House, would be retained.
6. The scheme was designed to be car-free, except for necessary blue badge parking, and would provide 587 cycle spaces alongside improved bus infrastructure.
7. The climate resilience and energy strategy proposed air-to-air heat pumps offering "temperature lopping" to assist with cooling.
8. Phase 1 covered the area bounded by Middle Brook Street, Friarsgate, Tanner Street, and Silver Hill, introducing new alleyways to make the block permeable and reopening access to all sides of the former Antiques Market, including the removal of an existing toilet block extension.
9. Phase 2 covered the bus station area, featuring pedestrianised spaces alongside an emergency and deliveries-only route along the de-culverted river, controlled via bollards and booking slots.

To guide the discussion, the Chairperson suggested questioning be directed toward helping the committee decide between three potential conclusions for Cabinet:

1.    Determining if the revised scheme still delivered sufficient public value to proceed as planned.

2.    Identifying the specific risks, trade-offs, and operational changes Cabinet had to be mindful of before taking a decision.

3.    Assessing whether the lost elements were so fundamental that Cabinet should reconsider the entire underlying proposition.

The Chairperson also emphasised that the committee’s role was not to make the final decision on the scheme, but to scrutinise the evidence and provide Cabinet with clear issues and considerations to inform their discussion of the report at its meeting on 25 August 2026.

The committee proceeded to ask questions and debate the report. In summary, the following matters were raised:

1.    A question was asked regarding the receipt of council tax and business rates income, and whether this was modelled within the business case.

2.    Further clarification was sought on the costs and time impacts associated with the compulsory purchase option.

3.    A question was asked whether there was tracking of both the capital and revenue financial impacts, including lost income throughout the development process.

4.    Clarification was requested on what element(s) of the original proposition would need to be removed before officers concluded that the scheme did not represent value for money.

5.    Further clarification was sought on the viability of the hotel and whether the issue was a lack of demand or the cost of the build.

6.    Additional clarification was requested on why affordable housing could not be provided on a council-owned project.

7.    A question was asked about what specific factors in Winchester were keeping this scheme viable and maintaining confidence when similar schemes elsewhere were not proceeding.

8.    Further clarification was sought on what was considered to be the single greatest risk to the successful delivery of the scheme.

9.    Further information was requested regarding the proposed bus stop on Tanner Street and the requirement to take car parking space from the Marks & Spencer area.

10.Clarification was requested on why the potential use of Compulsory Purchase Orders (CPOs) was being considered on this occasion.

11.A question was asked about the future likelihood of affordable housing being included in the scheme if the financial position improved.

These points were responded to by Councillor Martin Tod, Leader and Cabinet Member for Asset Management, Councillor Neil Cutler, Deputy Leader and Cabinet Member for Finance and Performance, Simon Hendey, Strategic Director, Liz Keys, Director (Finance), Nick Walford (31ten), Ken Baikie, Director of Regeneration and Matt Woolger (Jigsaw) accordingly.

RESOLVED:

The committee agreed the following comments and recommends:

1.    That Cabinet consider and record whether the regeneration benefits of the revised scheme continue to justify the level of public investment, acknowledging the significant changes to the business case including the loss of affordable housing, hotel accommodation, capital receipt, and replacement income.

2.    That Cabinet consider the financial implications of the project, including the loss of existing income streams, the additional CIL contributions, and the absence of a capital receipt.

3.    That Cabinet continues to look for opportunities to improve the business case and maximise public benefit, including the potential reintroduction of affordable housing.