Lancaster mill deal ‘worse than Blobbygate’

Stephen Loxam with sister Christine outside the mill in St George's Quay.
Stephen Loxam with sister Christine outside the mill in St George's Quay.

A businessman alleges Lancaster City Council owes him £5m in compensation as part of a land deal that turned sour in St George’s Quay.

Stephen Loxam claims the council has breached contracts, concealed information and misled councillors over a deal going back to 2005 to buy Lord Ashton’s famous linoleum mill on St George’s Quay and redevelop the site for housing.

Noel Edmonds gives his creation 'Mr Blobby' a hug during the opening of Crinkley Bottom at Happy Mount Park in Morecambe in 1994.

Noel Edmonds gives his creation 'Mr Blobby' a hug during the opening of Crinkley Bottom at Happy Mount Park in Morecambe in 1994.

He says the situation is “worse than Blobbygate” – when Lancaster City Council faced a District Auditor inquiry over their handling of a Morecambe theme park deal with TV star Noel Edmonds in 1994.

But Lancaster City Council says that the claims of breach of contract, which are currently being considered, are “wholly without merit”.

Over the last decade, there have been Lands Tribunal and Court of Appeal hearings over the issue, and Mr Loxam says the council has forced him out of business due to the court costs involved.

Mr Loxam’s family had owned the now derelict St George’s Works mill at Luneside East since 1948. The mill, once at the centre of 19th century industry in Lancaster, is now earmarked for demolition with planning permission to build student flats in its place.

The mill is due to be demolished

The mill is due to be demolished

Lancaster City Council said Mr Loxam “continues to claim compensation to which he is not entitled, attempting to force his case by making false allegations”.

In January 2016, the Court of Appeal dismissed Mr Loxam’s claims. But Mr Loxam says that a Lands Tribunal decision in December 2016 superceded this, and ruled that there was no reason why he should “not have a cause of action for damages for breach of the development agreement and an entitlement to compensation for the taking of land by the exercise of powers of compulsory purchase”.

The Lancaster Guardian has seen reams of documentary evidence and Freedom of Information requests relating to the case. In one email, from 2006, a council officer writes: “...pay £2m to TNL (Mr Loxam’s company Thomas Newall Ltd) and they give us mill early”...”effectively get Loxam and co out of the way as no-one really thinks they’ll be able to satisfy the conditionality in the TNL agreement”.

In 2003,Thomas Newall Ltd - which is now in administration, had plans to develop the site into flats and business units. Mr Loxam said developers were onboard, but council officers told him they wanted to take control of the development and would put a Compulsory Purchase Order (CPO) on the site.

Mr Loxan claims the city council owes him millions of pounds in compensation

Mr Loxan claims the city council owes him millions of pounds in compensation

Mr Loxam’s original plans included flats -a mixture of “affordable” and luxury, and business use on the ground floor. In 2006, there was a public inquiry, and the council offered Mr Loxam a development agreement, which he accepted. Mr Loxam received £2m from the council for the site, with a contract stating his company could partake in the development.

But issues over the contract, which Mr Loxam says the council breached, resulted in a stalemate. Documents from 2007 seen by the Lancaster Guardian show that the council was advised that compensation for Mr Loxam could be as high as £7m, including the £2m already paid.But Mr Loxam says that the council has refused to negotiate with him following the tribunals. Meanwhile, work continued on the sites surrounding St George’s Mill to regenerate the area. The Luneside East development had received £12m in joint funding from the European Development Agency, the now defunct North West Development Agency, and the Homes and Communities Agency. Part of this was to remove contamination from the site. A company was set up by Lancashire County and Council and developers - called Luneside East Ltd - to take forward the plans.

Mr Loxam said: “I want to out the truth as there are so many people complicit in this.

“The council has refused to negotiate with us. They took the roof off the building, supposedly for bat mitigation works, and went to the tribunal and said their Luneside East scheme was viable, but then the credit crunch was blamed for the delay.

“Luneside East Ltd contracted to pay £1.7m but only paid £170,000 for the site. Why was it reduced to £170,000?

“They’ve taken our company, they’ve taken our property, and they’ve put the family out of work.”

Lancaster City Council said that the £170,000 sum was accepted following a revaluation of the site carried out when the scheme was reconfigured in 2011/12 to “aid viability”.

Susan Parsonage, chief executive of Lancaster City Council said: “Mr Loxam continues to make allegations against the council, its officers and its advisers. Mr Loxam’s complaint concerning the council has recently been referred to the Local Government Ombudsmen. The LGO is able to investigate procedural irregularity and maladministration.”

The Local Government Ombudsman decided that the case was outside their jurisdiction and it is a matter for the courts.

Lancaster City Council reiterated that the case has already been considered by the court of appeal and dismissed.

The site has a long history of industrial use, including the city’s former gasworks between 1845 and 1970.

St George’s Works was part of the Williamson empire, and used for the manufacture of oil cloth (1860s - 1970s).

The site has been used since then as a paint works, car breakers yard and for the recycling of car batteries.

In 2012 an extensive fire ripped through the building.

Since then, many people have objected to the demolition of the building, arguing that the exterior is sound and reflects the history of the quay.

Last year, Lancaster and District Heritage Group applied to Historic England to get the building Listed, but were unsuccessful.