MD2404: East Bank –Stamp Duty Land Tax (SDLT) on the BBC building

Type of decision: 
Mayoral decision
Code: 
MD2404
Date signed: 
21 December 2018
Decision by: 
Sadiq Khan, Mayor of London

Executive summary

Mayoral consent was given to LLDC on 11 December 2018 (under MD2399) to enter into an Agreement for Lease, Lease, Development Agreement, Deed of Covenant, and Loan Agreement with the BBC, and provide grant funding for a site on Stratford Waterfront, as part of the East Bank project. 

At their meeting on the 13 December 2018 the BBC Board of Trustees approved the East Bank transaction and gave delegated authority to the Director of BBC Radio to conclude the agreements with LLDC and sign by the end of December 2018. 

The legal documents are substantially agreed with the exception of the issue of Stamp Duty Land Tax (SDLT), which is likely to be payable by the BBC on the East Bank transaction. 

The Government has issued a letter approving the Full Business Case (FBC) for East Bank with the outstanding condition of signing an Agreement for Lease with the BBC by 31 December 2018. 

Following negotiation with the BBC and its legal advisers, the LLDC Board approved an underwrite of a maximum of 50% of the BBC’s Stamp Duty Land Tax (SDLT) liability on East Bank (should it become due), subject to Mayoral consent. 

Mayoral consent is required under Section 213 of the Localism Act 2011 to LLDC giving financial assistance by way of an underwrite of a maximum of 50% of the BBC’s SDLT liability (should it become due).

Decision

That the Mayor consents to: The LLDC underwriting a maximum of 50% of the BBC’s Stamp Duty Land Tax liability on East Bank (should it become due) in order to proceed to exchange with the BBC of the Agreement for Lease and Development Agreement, such exchange being a condition of government approval to the Full Business Case for East Bank.

Part 1: Non-confidential facts and advice

Introduction and background

LLDC has been working closely with the Mayor of London, the Government, University College London, V&A, UAL, Sadler's Wells and the BBC to develop the East Bank culture and education district project. The project will bring together world leading culture and university institutions on QEOP to create an inspirational centrepiece to drive aspiration and opportunity for the people of east London and beyond. 

An Outline Business Case (OBC) for the project was approved by the Government in November 2014. In December 2014, the then Chancellor of the Exchequer confirmed in his National Infrastructure Plan that Government would provide up to £141m to the GLA for the project. This was set out in a memorandum of understanding (MOU) between the GLA and the Department for Communities and Local Government approved under MD 1422. The Spending Review 2015 confirmed Government support for the project and increased the Government capital grant to £151.3m. The MOU has been revised to reflect an updated OBC for the project. In June 2018, the Government confirmed that the Full Business Case for £151.3m funding for the project had been confirmed (subject to conditions, including exchange by LLDC of the Agreement for Lease and Development Agreement with the BBC). 

Mayoral consent was given to LLDC in March 2015 (under MD1473) for it to enter into an Agreement for Lease with UCL (following LLDC Board approval in February 2015) for UCL East at Marshgate (academic facilities) and Pool Street (mixed-use student residential and academic) sites. Following discussions on revised delivery arrangements for the Marshgate facilities, the Agreement for Lease was revised, and a new Mayoral consent was given in February 2018 (under MD2234). 

Mayoral consent was given to LLDC in April 2016 (MD1643) to enter into Agreements for Lease with UAL, Sadler’s Wells and the V&A for sites on the Stratford Waterfront site adjacent to the London Aquatics Centre. This consent also covered the LLDC granting a loan to UAL alongside the UAL Agreement for Lease (under Section 213 of the Localism Act 2011). Following revised masterplanning on the site, the Agreements for Lease were revised, and a new consent was approved in February 2018 (under MD2234). 

On 11 December 2018 (under MD2399), Mayoral consent was given to the LLDC to enter into an Agreement for Lease (AfL), a 200-year lease, Development Agreement, Deed of Covenant, Loan, and provide grant funding for a new state of the art BBC music studios at Stratford Waterfront which will provide a hub from which to celebrate music of all genres. 

At its meeting on the 13 December 2018, the BBC Board of Trustees approved the East Bank transaction and gave delegated authority to the Director of BBC Radio to conclude the agreements with LLDC and sign by the end of December 2018. 

The Government has issued a letter approving the Full Business Case (FBC) for East Bank with the outstanding condition of signing an Agreement for Lease with the BBC by 31 December 2018. 

The legal documents are substantially agreed with the exception of the issue of Stamp Duty Land Tax (SDLT), likely to be payable by the BBC on the East Bank transaction. 

In order to resolve this matter, LLDC has agreed to underwrite a maximum of 50% of the SDLT (should it become due) when the BBC takes its lease. In return, the BBC will agree to work with LLDC and commit resources to further the delivery of the LLDC’s strategic objectives from now until the building opens. At that point the Deed of Covenant obligates them to undertake 20 years of strategic objectives work with LLDC. Further details of the agreement are provided in Part 2 of this form. 

Mayoral consent is required under Section 213 of the Localism Act 2011 to LLDC giving financial assistance to the BBC by way of an underwrite of a maximum of 50% of the BBC’s SDLT liability (should it become due).

Objectives and expected outcomes

The BBC building is an integral part of the East Bank project, which supports LLDC's ability to deliver a meaningful and sustainable legacy from the London 2012 Olympic and Paralympic Games by creating a brand-new destination for London with world-class culture and education at its heart.  East Bank will be an exciting new district of London, providing a unique offer to residents and visitors. East Bank will support wider economic growth, greater access to education provision, as well as new skills and employment opportunities, generated by a strong visitor economy and an innovative learning and research location for inward investors.

East Bank supports a range of priorities including:

  • economic growth
  • enhanced education and skills levels
  • sustainable local jobs
  • raising local aspirations
  • supporting the delivery of a successful and accessible Park
  • helping to redefine Stratford's place in London's economy, as a new heart for east London

The economic impact assessment undertaken as part of the Full Business Case submitted to the Government estimates East Bank as a whole will create 1,500 jobs, £1.5 billion of economic benefit and 600 new homes. This will be enabled through 125,000 m2 of Higher Education space; up to 40,000m2 of cultural space; new residential units and public realm. Creating opportunities for the communities of east London and beyond is dependent on not only co-locating world class institutions, but also on proactively promoting collaborative relationships between the partners, local organisations, and local residents and with people visiting the Park.  

A core purpose of BBC Music is the performing, recording and broadcasting of music across a full range of genres to the widest possible audience.  The relocation of its music studios to East Bank is driven by this purpose and builds on the BBC’s role as Olympic Broadcaster. The new site will include:

  • a new home for BBC Symphony Orchestra, BBC Symphony Chorus, BBC Singers, and BBC Rock & Pop
  • host recording sessions and live performances across all genres from global stars to emerging talent
  • studios for experimentation and creativity, with opportunities for arts organisations and the wider community
  • performances some of which will be public, showcasing a broad range of music
  • connections with local music hubs and work with young people, making digital music resources available to schools everywhere

These facilities, alongside an extensive programme of learning and outreach projects and collaborations with other cultural and education partners at East Bank will contribute to establishing east London as a world destination for music. 

Equality comments

LLDC’s priority theme of championing equalities and inclusion was taken into account in the development of the proposition for the East Bank, in consultation with all the project partners. LLDC will ensure that equalities, access and sustainability considerations are applied to procurement, employment, participation and inclusive design as required throughout the project.

LLDC is a public body with a responsibility to promote equality, tackle discrimination and promote good relations between different groups of people with protected characteristics. LLDC undertook a strategic equality impact assessment on its renewed priorities, including its emerging five-year organisational strategy and the East Bank plans. As part of this process, LLDC consulted with equality groups and tested whether its approach is helping to promote its equality priorities. The outcomes of the strategic equality impact assessment in relation to the East Bank have been used to inform the planning process and public consultations. It is anticipated that there will be no adverse impact on equalities issues and any protected characteristic groups.

The BBC building contributes to promoting equalities by serving as an important centre for the BBC’s initiative to make music learning available to schools, children and the wider community, and provide a hub to celebrate music of all genres.

Other considerations

a) Key risks and issues

There are risks associated with the BBC’s SDLT liability that are covered in Part 2 of this form.

b) Links to Mayoral strategies and priorities

This proposal will support the Mayor’s priorities:

  • a cleaner, greener London – by providing a building which promotes positive environmental outcomes throughout the design, construction and operational lifecycle
  • making the most of arts, culture and creativity - by providing high quality and accessible public realm spaces for local people and visitors to enjoy, as well as providing world-class cultural programmes both inside and outside the buildings
  • a fairer and more equal city – through expanding access and participation, and through partnership programmes which deliver equality of opportunity, best practice in inclusive design and accessibility, and support for under-represented groups to work, to gain skills and to access opportunities
  • business, prosperity and opportunity – by developing skills and supporting businesses

c) Impact assessment and consultations

An economic impact assessment was undertaken as part of the Full Business Case submitted to the Government. It showed that the East Bank project overall will generate 1,500 jobs, £1.5 billion of economic benefit for the local economy and 1.5 million additional visitors. The BBC will contribute to the delivery of East Bank strategic objectives and the overall cultural, educational and economic benefits.

Public and pre-application consultations gave both statutory and non-statutory consultees, including the local community, an opportunity to express their opinions on the proposed development before the planning application is submitted, thus ensuring significant issues can be considered as part of the design and planning application process. Over 7,000 people have engaged with the project through more than 70 events including neighbourhood pop-ups, public exhibitions and workshops, with feedback from the public shaping future plans. The hybrid planning application for Stratford Waterfront has been submitted and the formal period of consultation is underway.

LLDC’s Board and Investment Committee, TfL Legal and external legal and tax advisors, the GLA’s Executive Director of Resources, and GLA Finance were consulted about this proposal.

Financial comments

LLDC’s liability to provide financial assistance to the BBC would only be triggered should the SDLT liability become payable. Further comments are included in Part 2 of this decision.

Activity table

Activity

Timeline

Full Business Case approval (subject to conditions)

June 2018

Legacy Corporation enters into Agreements for Lease and associated

documents with the BBC

31 December 2018

Legacy Corporation provides an underwrite for 50% of the BBC’s SDLT

liability (should it become due)

31 December 2018

Stratford Waterfront Planning application submitted

November 2018

Stratford Waterfront Planning application approved

Spring/Summer 2019

Stratford Waterfront start on site (enabling works)

November 2018

Shell and core work on the BBC Building completed

April 2022

The BBC building scheduled to open

May 2023