Council bought dilapidated pub above market value and without condition survey due to 'macho style of leadership'

A council report from June 2020 setting out to address “eyesore sites and buildings” in the town identified 11 sites to prioritise action on. However, this list did not include The Crown - which had been unoccupied and in an increasing state of disrepair since 2015.

The Council was given an unconditional offer to buy the building’s freehold for £750,000 on November 29 2022. Then-chief executive Tony Parkinson replied via email indicating the council’s intention to go ahead with the purchase, having consulted with the then-Mayor Andy Preston, only eight minutes later.

In his response, Mr Parkinson also indicated the purchase would need to be completed by January 31 2023. The auditors’ report states no assessment of the property’s condition had been undertaken by the Council prior to Mr Parkinson’s affirmative response.

Mr Parkinson told the auditors he did not believe it was his role to negotiate on price with the vendors.

The auditors’ report shows the Council’s executive was recommended to approve the purchase of The Crown only six days after missing out on Levelling Up funding from the Government to regenerate both the pub and former House of Fraser building. It also states the Council approved the purchase of the pub for £750,000 despite an internal report valuing the building at only £460,000. The valuation report also indicated potential renovation costs of £5.5m to bring the building back into use.

Additional costs for the purchase included £27,000 on stamp duty, £10,000 on professional fees, and up to £100,000 on essential works including security on site.

Mr Preston told The Yorkshire Post buying the pub last year was important because failing to do so “jeopardised a massive regeneration plan. In the scheme of major urban renewal and fighting decades of decline,” he adds, “£750,000 for a prime central site is a reasonable price.”

While they acknowledge The Crown became a priority for the Council from late 2021, the auditors say they “have not seen any documentary evidence to show how or why this came about”. Outlining their concerns, the report states: “We have not been able to fully establish the rationale for the acquisition nor its links to the Council Strategy.”

An unnamed council officer questioned by the auditors as they investigated the pub’s purchase is quoted saying: “The way the purchase was done was entirely consistent with the macho style of leadership in place at the time.”

Current mayor of Middlesbrough, Labour’s Chris Cooke said: “No plan, overpriced and unsafe. These words are enough to describe everything that was wrong with purchasing The Crown.

“Despite this, Andy Preston boasted about being the man who bought The Crown on social media. The Council should be respected and risks to public money need to be carefully considered, this is just an example of the chaos that went on during his tenure as Mayor.”

The business case for purchase of the pub was not prepared until after the process to purchase had begun, and presented to the Council’s executive on January 24 2023. The auditors say this business case was “very brief and does not include a full analysis of the costs and benefits for the purchase or any clear rationale.”

Mr Parkinson told auditors the urgency to complete the purchase was driven by former mayor Andy Preston, who he said was aware of the upcoming pre-election period when restrictions are in place on the sorts of announcements local authorities can make.

Clive Heaphy added: “The report makes for difficult reading and sets out several clear recommendations which we accept and are implementing.

“The report does recognise that the Council has already made considerable progress in improving organisational culture, including ensuring elected members and officers understand and respect the boundaries between their respective roles.”

Speaking of his time as mayor, Mr Preston says “staff did whatever they wanted and did it very slowly. Thankfully that was stopped and together we did great things like build social housing, provide universal free emergency food and attract record investment. If that’s macho then I’m proud to be a macho man.”