Tesco Trickery

Tesco secretly bought a town centre through a front company and let it become essentially derelict as it tried to secure a landmark regeneration deal, The Times has learnt.

Britain’s biggest supermarket group won applause from councillors and local people three years ago when it bought the centre of Linwood, in Renfrewshire, and promised to redevelop its crumbling 1960s shopping precinct.

Its acquisition from the Edinburgh-based Balmore Properties came after a “Boot out Balmore” campaign by community leaders who complained that under its ownership, the precinct had deteriorated so badly that it was dubbed Scotland’s Basra.

But The Times has established through documentary evidence that Balmore, which bought the centre in 2001, was intertwined with Tesco from its inception. One property insider said the deal was designed to give Tesco a stronger case for securing approval for a lucrative regeneration, while ensuring a lower price.

The Linwood episode sheds fresh light on the surreptitious deals supermarkets hatch to find new sites in a fiercely competitive market. Tesco, in particular, is turning to redevelopment projects incorporating homes and offices as greenfield sites dry up.

It is common for supermarkets to buy land through agents to ensure confidentiality. But the Linwood case is different because the decline of the town centre under Balmore’s management was a key factor used by Tesco — and the council — to justify its redevelopment plan. Shop closures and the deterioration of the centre were “seriously detracting from the amenity of the town as a whole”, Renfrewshire’s chief planner wrote. A website set up by Tesco to promote the scheme states: “Vacant units have become a magnet for vandalism and antisocial behaviour.”

Balmore Properties was founded by Dallas Rhodes, a Glasgow businessman, in 2000, shortly before it bought the Linwood centre for about £1.7 million. It was incorporated by Semple Fraser, Tesco’s law firm in Scotland and was wound down shortly after the centre was sold. Of 17 property vehicles founded by Mr Rhodes, only one other appears to have been incorporated by Semple Fraser — and it, too, was later sold to Tesco.

Semple Fraser acted for Balmore when it bought the property and later for Tesco. Eric Young & Co, Tesco’s property agent in Scotland, also acted for both Balmore and Tesco. Development Property Planning, Tesco’s planning consultant, made representations to the authorities for both companies.

It is unclear how much Tesco paid for the precinct, though it was reported at the time that it was a similar sum to that paid by Balmore six years earlier.

One big loser was the Church of Scotland, which swapped a former church hall with Balmore for another property. Solicitors valued the site at £200,000 at the time, but when the property was transferred from Balmore to Tesco three years later, its value had rocketed to £2.3 million. The hall is on land that Tesco wants to develop, but the Church was unaware that Balmore was connected to Tesco.

Wendy Alexander, the local MSP, said: “Balmore’s stewardship was simply a disgrace. They refused to meet the community or elected representatives. Tesco gave no indication to the community of any long-standing relationship.”

 Campaigners for small shops yesterday seized on the secret Linwood deal to argue against handing supermarket groups the power to redevelop town centres. John Drummond, chief executive of the Scottish Grocers’ Federation, said: “It is quite wrong for one business, with obvious vested interests, to control the redevelopment of this or any other site.”

Former tenants in the shopping centre said that Balmore was unresponsive and unwilling to invest in the centre. Joe Lappin, owner of Linwood Carpets, which has since moved to a nearby street, said: “They were very non-committal. I had six months left on the lease and asked ‘Can I extend, can I do this place up?’ In the end they let me walk away from the lease.”

Tesco’s defenders say that it is alone in taking on complex regeneration projects and that such projects require confidentiality.

A Tesco spokesman said: “Our plans will regenerate Linwood, bringing not only a Tesco store but many jobs for the long-term unempolyed and a new health centre and library. Linwood town centre has been in decline for years, before our involvement, or the involvement of Balmore, and it is our plans that will reverse this and bring investment back to the area. Our carefully considered plans have been granted planning permission on their obvious merits and will create modern retail facilities for local people.”