Troubled Woolwich Works handed secret second Greenwich Council bailout

Greenwich Council has arranged a second, secret bailout of the troubled £45 million Woolwich Works creative hub – through one of its subsidiary companies striking a “sponsorship” deal with the venue.

GS Plus, which provides transport, cleaning and facilities management to the council, gave the Woolwich Creative District Trust the cash earlier this year. The Greenwich Wire understands that GS Plus paid £300,000.

“Woolwich Works is in serious trouble,” one town hall source told The Greenwich Wire, but the council insists that the two-year-old venue is showing signs of success.

Greenwich has refused to confirm or deny details of the deal, which came after the council made available £2 million in loans to keep the trust afloat last year. Most of that public money has now been drawn down although Greenwich would not confirm whether the whole sum had now been lent to the trust.

However, on Tuesday morning – hours after the council’s press office responded to The Greenwich Wire’s query about the deal – messages from Woolwich Works’ account on Twitter/X started carrying the message “supported by gsplus.org”. The account had been silent for the previous three weeks after the departure of its head of marketing.

It is not clear just what GS Plus, which is wholly owned by the council, gets out of the deal.  The company was set up to provide a source of income for the council, and used to provide services for other authorities including transport in Bromley and catering in Kent schools, but hit trouble after it followed Greenwich in paying London Living Wage to its staff. GS Plus was on the verge of insolvency four years ago but has returned to profit after concentrating in work in and for Greenwich.

The company’s last published accounts describe the council as its “principal client”. Its managing director, Mirsad Bakalovic, is the  director of communities, environment and central services for the council and also has ultimate oversight of the town hall’s relationship with Woolwich Works in that role.

“What’s it for? It’s not as if someone’s going to see a show at Woolwich Works, see the GS Plus logo and think ‘I’ll just hire some school buses’,” one town hall source said.

Another said the decision to advance more money to Woolwich Works had “caused a huge row” within the council’s ruling Labour group of councillors, who were told about the decision but had no say in it.

The Greenwich Wire understands that the decision for GS Plus to fund Woolwich Works was made by Bakalovic and Anthony Okereke, the council leader, after the company made a healthy profit in the most recent financial year. No accounts for 2022-23 have yet been published, but accounts for 2021-22 show that the council company made a profit of £1.2 million. 

Greenwich has insisted that the council’s financial dealings with Woolwich Works have been scrutinised by councillors. 

But when Rachel Taggart-Ryan, a Labour councillor for Middle Park & Horn Park, tried to ask about “the other funding request that had gone through our partner organisation GS Plus” at a scrutiny meeting in July, she was hastily closed down by Clare Burke-McDonald, the committee chair, because the matter was “potentially commercially sensitive”.

The Greenwich Wire has been told by multiple sources that Sarah Merrill, a former cabinet member who was on the board of GS Plus, quit because she objected to the deal. 

Merrill has not responded to a request for clarification, but Companies House records show that she stepped down from GS Plus in June after less than a year to be replaced by Issy Cooke, a Plumstead Common councillor.

Many Labour councillors are privately furious that the Woolwich Works project – which was touted as costing £31 million but came in at £45.6 million – is still costing the council money when it is meant to be run by an independent trust.  

Three of the 12 Woolwich Works trustees are Labour councillors – former Lewisham Council leader Dave Sullivan, ex-cabinet member Jackie Smith and Denise Hyland, who championed the project when she was council leader.

Woolwich Works was envisaged as kickstarting the regeneration of the troubled town centre, but its opening was delayed then disrupted by the pandemic, while building costs went far beyond the publicised £31 million budget to hit £45.6 million. 

That bill does not include the cost of acquiring the leases to the buildings from Berkeley Homes, which owns the Royal Arsenal, before the project began.

Woolwich Works was criticised for niche programming and poor promotion, and its original business plan was torn up last year when Greenwich offered it £2 million in loans to help it stay afloat. James Heaton, its first chief executive, left in February and is now managing director of the Sohoplace theatre in the West End.

Clare Williams, an arts consultant, was brought in as a troubleshooter this summer, and revealed in July that the building was in such a poor condition that it cost nearly £1 million a year to operate; while inadequate  soundproofing meant that it could not host loud music.

Williams also said that the summer holiday programming was only confirmed at the last minute after funding was secured from Berkeley Homes.

A previously sparse autumn line-up on the Woolwich Works website has begun to grow in recent days, suggesting that cash from GS Plus is allowing it to book acts again.

While Williams gave a frank assessment of the venue’s problems, Ben Howarth, the venue’s chair, appealed for patience in turning around Woolwich Works, admitting that it could take some years before the venue was a success.

Williams has now been replaced as the head of Woolwich Works by her namesake Nick Williams, the former executive director of the Perth Theatre and Concert Hall in Scotland. 

The council’s three Conservative members were not told about the GS Plus deal. Matt Hartley, their leader, sits on the panel which is meant to scrutinise Woolwich Works and last year joined Labour counterparts in calling for outsiders to monitor its finances.

Hartley, the leader of the opposition, said: “This episode shows that we need much, much more openness from the council when it comes to the true financial position that Woolwich Works is in. The taxpayer has already been exposed to significant financial risk through last year’s loan – which was predicated on a business plan that was later found wanting.

“The revelation that additional funding seems to have been arranged from this council-owned subsidiary company – in secret – raises even further questions about how the interests of the taxpayer are being safeguarded.

“The council should immediately publish full details of any and all additional financial arrangements that have been made to prop up Woolwich Works, and commit to ensuring full formal scrutiny of all of its dealings with the Woolwich Creative District Trust going forward.”

A Greenwich Council spokesperson said: “GS Plus is an independent arms-length company and is responsible for its own investments and sponsorship opportunities. As with any commercial relationship there is a reasonable amount of confidentiality involved between the two parties, in this case GS Plus and Woolwich Works.  

 “Despite opening during a pandemic and operating in a sector feeling the full brunt of the cost of living crisis, with Arts Council England funding being moved outside of London, Woolwich Works has won critical plaudits and commercial success is beginning to follow. 

“A number of local, national and internationally-acclaimed resident artistic companies now call the Woolwich Works cultural district home including Punchdrunk, the Acosta Dance Foundation and the National Youth Jazz Orchestra.

“The council agreed to provide a loan to the independent charitable trust operating the venue in order to help it establish itself and to help sustain it in the early stages of operation. The loan agreement has already been subject to rigorous and ongoing scrutiny, including at the council’s overview and scrutiny committee and regular meetings are held between the council and the trust to review progress made against its business plan.”

Woolwich Works did not respond to a request for comment.