£6bn Meridian Water project delivery under review

Enfield Council has announced a review of its £6bn Meridian Water regeneration project, as it addresses the impact of inflation and rising interest rates.

The council is the master developer for Meridian Water, which was intended to deliver 10,000 homes over 20 years.

In a report to cabinet, officers say that the council has reduced spending on building work in the current financial year, having had to make “strategic and fiscally responsible decisions” to “ensure continued value for money”.

The council has removed £14.9m from Meridian Water’s budget for 2022-23. This includes the pausing of preparation work for a section of the development called Meridian Four, which was set to deliver 800 build-to-rent and affordable homes. The project has been hit by “unprecedented cost inflation”, the report says, prompting the local authority to consider alternative plans.

In 2020, the council secured a £170m grant from the government’s Housing Infrastructure Fund (HIF) for Meridian Water, to fund road and rail works, among other projects.

But the report says that “due to significant budget pressure”, the construction start date for some HIF-related work “has been delayed to early 2023, whilst additional funding is confirmed with [the Department for Levelling Up, Housing and Communities]”. A decision is expected in March.

Overall, Meridian Water is currently allocated a £326.3m capital budget over the next 10 years. But the report explains that “all projects that rely on borrowing either have been or are in the process of being reviewed to ensure they remain affordable and deliverable”.

The Meridian Water budget will be “updated” in future months, it says, with a review of its business model due to be reported to the council’s cabinet in April 2023 “to reflect the current economic climate”.

To finance the scheme, it has borrowed about £400m from the Public Works Loan Board, which is to be paid back through land receipts.

The report says: “Meridian Water is highly sensitive to wider market forces which impact sales values, developer confidence and interest rates, which have suffered a downturn in 2022.

“The Meridian Water team is further mitigating the capital expenditure risk through a review of the delivery strategy for the project, coupled with accelerating delivery where possible to generate land receipts. Tighter controls on project spending have also been implemented to manage the council’s exposure.”

Construction has begun at one Meridian Water site and is expected to take place at multiple sites in 2023-24.

Galliford Try Partnerships, now part of Vistry, won the contract to deliver the first homes on the development in 2019.

In 2021, Vinci Taylor Woodrow, Bam Nuttall and VolkerFitzpatrick were appointed to support the delivery of £90m of infrastructure works for the project.