Councillors approve £3.7bn City Building ownership restructure

City-Building-016Glasgow City Council has agreed to share ownership of its construction business City Building Glasgow with Wheatley Group in a 50/50 joint venture worth £3.7 billion.

The partnership between Scotland’s largest council and the country’s biggest social landlord will secure thousands of local jobs over the next 30 years.

Under the deal, City Building will undertake all repair work for Wheatley’s social landlords in the west of Scotland including Glasgow Housing Association (GHA).

As well as securing 2,000 jobs and more than 2,000 apprenticeships over the next three decades, the joint venture will also sustain employment for disabled workers at City Building, which has returned over £50 million to the council since it was established 10 years ago.

Councillor Frank McAveety, leader of Glasgow City Council, said: “This is the biggest deal of its kind in the UK. When the joint venture was originally proposed, it was valued at £2.7bn over the next 30 years, however significant additional value has been identified as the detailed business planning has been undertaken and refined, with an additional £1bn of value created.

“A range of other significant opportunities have been identified in the expanded business plan - for example, RSBi, City Building’s specialist manufacturing division, which employs more than 260 local people, around half with disabilities, will undertake a range of additional work for Wheatley Group subsidiaries. Importantly, the JV will also invest £180m in training its people and improving skills over the 30-year period.

“The positive impact on our communities and on the wider Glasgow economy will be enormous. Securing 2,000 jobs and 2,000 apprentices is a fantastic legacy for the people of Glasgow, not to mention the thousands of tenants of Glasgow Housing Association who will enjoy an industry-leading range of services for many years to come.”

A shadow board will now be created and work will start on formally establishing the new 50/50 JV from 1st January 2017.

GHA chair Bernadette Hewitt said: “Our priority is, and has always been, to ensure a first-class repairs and maintenance service for our tenants and factored homeowners and the new JV is the best way of doing this. We are pleased that plans are progressing well and approval for the joint venture by both Glasgow City councillors and Wheatley Board is an important milestone.”

The announcement follows a report last month by economic researchers the Fraser of Allander Institute which revealed that City Building supports a turnover of nearly £325m across companies in the city.

The 50/50 joint venture goes before Wheatley Board on December 14 for approval.

The joint venture’s business plan is calculated to be £93-£99m per annum over 30 years.

A further £23 million per annum of work will be carried out by RSBi, including current works from Glasgow City Council and additional opportunities within Wheatley Group’s new build programme, e.g. kitchens, timber kits, windows and door sets.

In addition, a further £6m per annum will be invested across the organisation in training.

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