Report questions Manchester’s partnership with Abu Dhabi but council defends it as a good deal for the city

Academics have raised major questions about a flagship development deal that has transformed parts of Manchester in a new report placing the council’s deal with a company from Abu Dhabi under the microscope.

Manchester Off-Shored, by three researchers from The Urban Institute at The University of Sheffield, analyses in depth the Manchester Life partnership which brings together Manchester City Council and the Abu Dhabi United Group.

While the academics say that the property development in Ancoats that has resulted from this is better than what was there previously, there nevertheless remain concerning issues around the accountability and transparency of the deal as well as whether or not the council has got a good deal for the city out of the arrangement and the ethics of dealing with Abu Dhabi, which has been heavily criticised on human rights grounds.

Ultimately, the academics accuse the council of having “sold the family silver too cheap”.

The local authority, though, has robustly defended Manchester Life and its effect on the Ancoats area, saying the arrangements are bringing in millions of pounds for the council and have acted as a catalyst for redevelopment across the city.

What is Manchester Life?

Manchester Life is a joint venture bringing together the city council and the Abu Dhabi United Group, a private equity company which has invididuals benefitting from it who are also linked to the emirate’s ruling family and which also bought Manchester City.

The partnership was established to develop homes for rent or sale across the Ancoats and New Islington areas of Manchester, with 1,468 properties having been built at the time of the report and more planned for east Manchester.

The academics say this came about at a time when Manchester City Council had been freed up by devolution for Greater Manchester to actively seek external investors to redevelop parts of the city centre which were still relatively deprived, and when Abu Dhabi investors were eagerly looking for ways to diversify their business interests out of oil.

What issues did the report consider?

The report identifies a number of issues with Manchester Life which it seeks to scrutinise in order to ask what impact the deal with Abu Dhabi investors has had.

The council claims the land for building the properties on was sold to its partners for the biggest amount they could get because no-one wanted to build in Ancoats at the time.

However, the researchers dispute this, saying that analysis of land sale prices around other comparable parts of the city at that time suggest the partners were able to acquire sites comparatively cheaply.

In addition, the developments were built without affordable housing and with the section 106 payments which force developers to make contributions to the communities around where they are building waived.

The researchers also say that the council negotiated away all the property assets so it had no stake in what was built, and although the town hall says it negotiated an “overage agreement” the academics could find no evidence that this has put any cash into the council’s coffers.

They are concerned that commercial confidentiality arrangements around revenue sharing, which they emphasise are within the council’s rights and do make a certain logical sense, throw up issues about holding local councils to account and ensuring taxpayers’ money is being spent wisely.

The council, for its part, said that the first payment has not yet come through but will be a sum in the millions and the properties have already boosted its accounts through the extra council tax and business rates payments.

The academics are also concerned that the arrangements mean money generated by the building work flows to the various subsidiaries and companies based in the tax haven of Jersey which are owned ultimately by those at the top of the Abu Dhabi group.

And this all means substantial amounts of cash leaving the city which could be spent in Manchester if the council had a stake, the academics say. The report says rental income from the Ancoats and New Islington developments in 2021 alone was £10.1m after tax, while to date homes have been sold for an estimated £112.9m.

The researchers identified what they called an inability to “shift gears” at the council, which meant it remained in the same way of working even once it was clear that the momentum for redevelopment of the Ancoats area was unstoppable and the area had increased dramatically in desirability.

Furthermore, the researchers cite complaints made by organisations such as Amnesty International about the human rights record of Abu Dhabi and the United Arab Emirates (UAE) as a whole, suggesting in the report that this clashes somewhat with Manchester’s reputation as an open city celebrating its progressive tendencies.

What do the researchers say about the report and their findings?

The researchers say that given all the negatives associated the deal the council had a far stronger hand than it thought in negotiating the agreements behind the partnership.

Professor Adam Leaver, one of the report’s three authors along with Dr Jonathan Silver and Dr Richard Goulding, said: “In our view, the council has not used its bargaining power very well.

“It doesn’t look like the kind of outcomes we would expect if the council had used its bargaining power effectively.

“What you’re left with is asking how we explain this. One explanation is that there was this incredible focus on bringing money into Manchester and the council became a little bit insensitive to the sort of rights they were giving away to the other partner. There was an urge to get Manchester built super-quick.

“Another is that they made a bad call on how well Manchester was going to flourish, which we find perplexing. There had already been quite a bit of material work done in Ancoats and there were developers operating in the area.

“We think that if they had been able to identify these opportunities they would have extracted a better deal from the partner. We say this is an inability to shift gears with the opportunities that were on the horizon.”

Professor Leaver said while there was no question that the buildings in Ancoats and New Islington are an improvement on what was there previously, people’s views of what had happened to the area would differ markedly.

He said: “With these kind of developments people have been displaced and people have moved in. This is why we call our project Centripetal Cities, because cities move people and resources around.

“If you talk to people who’ve moved in they would think it was brilliant. I dare say I would if I was in my early 20s and was wanting to move to an exciting city.

“But there are people who may have been residents for a long time who have a different view, who may have seen the break-up of communities and support networks that kept things afloat.

“There are divisions in Manchester we can’t ignore. It has inequalities like any other British city.

“The report isn’t going to shy away from the fact that clearly what is there is better than what was there before, but there is a question about the deal and whether it could have been done in a way that kept more of the ownership and income within the city so it circulated locally and built up positive flows of finance and investment, rather than being sucked out into a tax haven like Jersey and ultimately into Abu Dhabi.”

Professor Leaver says the next stage of the project will involve looking at whether or not Manchester’s investor-friendly approach has made it harder for towns around Greater Manchester such as Bolton or Wigan to thrive if people were being offered the chance to splash the cash in the city centre.

What has Manchester City Council said?

A Manchester City Council spokesman said: “We reject any suggestion that the sale of the sites involved in the Manchester Life joint venture was not a good deal for the council and the city.

“Land was valued by independent experts, using the nationally accepted ‘red book’ valuation benchmark, and we got the best overall deal we could for each site at a time when there was very little market interest in the area.

“The value of that deal includes not just the initial receipt for the land but also site-specific overage arrangements, and profit sharing payments. These were always envisaged as longer-term arrangements – the council is due to receive several million pounds in this financial year through the first such payments.

“On top of this, the 1,500 new homes and the new businesses which the Manchester Life developments have made possible are generating significantly more for the city in extra council tax and business rates income.

“This report does not reflect what Manchester Life has achieved. Through concentrating £250m of private investment, at speed and scale into Ancoats and New Islington it has acted as a catalyst creating confidence and attracting further investment into the area. The area has gone from somewhere few people wanted to be to an internationally-recognised success story.

“Manchester Life’s significance should not be understated but nor should it be overstated – it is only part of a much wider picture of growth and investment in Manchester.”