Japanese win fight for County Hall

COUNTY HALL in London finally went to Shirayama, the Japanese property developer, yesterday for conversion to a luxury hotel - leaving the London School of Economics furious and Labour condemning the decision.

The London Residuary Body, which has owned the riverbank site since the dissolution of the Greater London Council in 1986, said that it was delighted at the decision by Michael Howard, Secretary of State for the Environment, to lift the bar he imposed in July which prevented the LRB proceeding with the sale to Shirayama in order to allow an LSE bid.

But charges made by Jack Straw, Labour's local government spokesman, that Mr Howard had failed to provide assurances that Shirayama has the money to convert, as well as buy, County Hall, were given some weight yesterday by the company. It confirmed that it would have to redraw its plans radically, given the recession and the property slump.

While Shirayama greeted the decision as 'a great relief', Makoto Toyota, its London representative, said that it would need to rebuild confidence in the financial community 'in order to start this large-scale financial project in a sound and practical way'.

The 'Ritz-on-the-Thames' concept was out, but the company still hoped to have County Hall open some time in 1996, he said. 'We obviously have a budget and a target and we are reasonably confident we can realise it.'

Shirayama was, however, 'fully aware of the many adverse economic factors' surrounding the project, and an 'extremely cautious and cost-conscious approach' would be needed.

The LRB said that while its contract with Shirayama was now unconditional, completion would not take place until October next year.

Mr Straw condemned the decision not to allow the London School of Economics to create a new European Centre for Social Scienceson the site. He said there was 'every possibility that County Hall will join Battersea Power Station as a constant, decaying reminder of the failure of this Government's policies'. He accused Mr Howard of 'doctrinaire spite' in preventing any public use of the old GLC building.

Shirayama is believed to have paid pounds 60m for the main riverside building, with the LSE offering pounds 65m for the whole site. That was rejected after the Universities Funding Council said it could not endorse the proposal. The LSE had argued there would be no net cost to its expansion, although a Touche Ross management consultants study concluded it might cost pounds 40m over five years.

But any chance the LSE had of acquiring the building fell victim to the vicious public spending round now under way. Mr Howard said that the Government had concluded that 'any bid by the LSE for County Hall would involve a significant and unacceptable call on public funds'.

The LSE said yesterday that with its centenary due in 1995, an appeal based around it having a new flagship home would have ensured there would have been no pounds 40m deficit. The school was now left with a 'critical' accommodation problem, and all the other solutions that had been examined were more expensive.

Professor John Ashworth, the LSE director, said: 'It is a greatly missed opportunity, which I think will come to be regretted by many people other than ourselves. County Hall was a unique site.

'But at least this has forced us to make plans. The LSE now has a strategic vision for its future and we will be looking at a number of alternatives.' Professor Ashworth has called a meeting of LSE's 400 staff on Monday.

Sir Godfrey Taylor, chairman of the London Residuary Body, said the decision allowing the sale to go ahead would 'revitalise this important part of London', allow bids for the rest of the site to proceed and for the 'considerable proceeds' of the sale to be distributed to the London boroughs.