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Just what is happening to the Parker Knoll site

As soon as soon as something that really matters comes up, consultation stops. Consultation is about theory - not action! Commercial sensitivity becomes an excuse for stifling discussion. Nobody who knows anything about the Parker Knoll situation is talking. One District Councillor says its all in the hands of the Planning Officers and the councillors will know nothing until a proposal is presented to the Planning Committee. The Mayor and Cllr Grantham who are the Town Council's representatives in discussions aren't allowed to talk. Gossip is taking over....and this is about the most important single issue facing the town today - the outcome of which could change the face of Chippy forever. We are suspicious that some recommendations will be sprung on us in the dog days of August with little time for consultation. Everybody should be talking and thinking about things in an informed way now. But if nobody will tell us what's going on then we will just have to glean what facts we can and join in the speculation.

Silentnight - the owners of Parker Knoll are in financial problems. In their annual report (for the year ending February 2003) issued only in the last couple of weeks the Chairman says: "The year witnessed a further 22% fall in the turnover of the Furniture Division..... This resulted in precipitously increased losses.... Overall, operating profit before exceptional operating costs fell to 5.6 million, more than 50% down on 2001/02. To deal with this situation, new management under Chief Executive Nino Allenza has carried out a full strategic review of the business and has concluded a fundamental restructure and re-basing of the Furniture Division is essential if current losses are to be stemmed. The actions necessary include ..... the closure and subsequent local relocation of Cornwell Parkers upholstery factory in Chipping Norton "

Silentnight considered closing their Furniture Division down completely. Tired old brands in a sticky market with cheap foreign competition is not a good situation. Instead they have opted to introduce new management, relaunch their brands, source from overseas and cut costs drastically. Silentnight's situation is complicated by its ownership. The Clarke family (the founders of the original beds company) own about 51% or 23m shares in Silentnight PLC through their investment vehicle Famco. Its an open secret that the family believe that Silentnight made a mistake in diversifying from beds into other furniture with the acquisition of Ducal and Cornwell Parker. In August last year the family opened discussions with the company about buying the remaining shares, but the deal fell through. Instead Famco forced a management change on the company and a new CEO was installed.

The City has not been impressed. The Silentnight share price has plummeted from 200p in August/September 2002 at the time of the Famco discussions to 117p now. The share price based on asset values should be around 200p. There is no debt. The company has recently sold assets including a factory in Keighley for 3.15m.

Motley Fool (a well-known financial web portal) commented ...."The loss-making Silentnight still plans to pay a dividend this year, which it justifies on the grounds that shareholders (ie Famco) "wish" for a dividend. It is unclear whether the board's intentions are entirely altruistic or simply that the company is being run into the ground".  Put simply the company is selling factories to continue paying a dividend to the Clarke family. This is the only way at the moment that the majority shareholders can get any of their money out since they clearly won't be selling shares just yet awhile.

Selling the Chipping Norton property as an industrial site might fetch (at a guess) up to 3 or 4m if the building is useable.  But with unrestricted Planning permission for residential use the price for the whole site would be well above 10m (1m an acre is the going rate). Silentnight need cash and its perfectly obvious that they would love to sell their site with Planning permission for residential development.

The town's overriding interest however is quite different. Chippy certainly needs to satisfy local housing requirements but it also needs to preserve local employment. Of the 400 workers at Parker Knoll a half are thought to live in the town itself and constitute a very important part of the local economy.  Which is where the Local Planning authority - West Oxfordshire District Council -  and their LOCAL PLAN (not yet agreed but now out for a second round of consultations) comes in to the picture.  The Plan says....

The change of use of existing premises and sites with an established employment use to non-employment uses will NOT be allowed unless:-
a. It can be demonstrated that the site or premises are not reasonably capable of being used or redeveloped for employment purposes.
b. The site or premises is considered unsuitable on amenity, environmental or highway safety grounds for employment uses or
c. Substantial planning benefits would be achieved by allowing alternative forms of development.

and later.....In cases where proposals are put forward to redevelop an employment site for housing, the suitability of the site for housing and the need for housing, including affordable homes locally, as well as the contribution the site will make towards overall housing provision, will always be balanced against the number of jobs lost (directly or indirectly), the loss in terms of reduction in local economic activity and the ability to replace lost sites without further greenfield employment development.

So it looks as if Silentnight's best chance of getting Planning permission would be to show that the use of the site for housing would contribute to a real local housing need (Point c) - since points (a) and (b) don't seem to apply. They would probably also need to show that they will continue to offer significant employment in the town - perhaps on another site.

The WODC have published detailed forecasts of housing needs for Chippy in the LOCAL PLAN including precise targets for "affordable housing". The plan also clearly shows two zones which have been allocated for future housing development - both of which are separate from but virtually adjacent to Parker Knoll. The WODC have also just issued new draft guidelines on Affordable Housing in a strategy document which sets out to show what policies they will use to achieve their targets.

There are only two proposals for Housing Development in the newly revised Local Plan to 2011.
Proposal 1 (Cromwell Park) consists of an old Highway depot and agricultural land. The proposal includes an area (B1) for employment (Business not industrial). There is also provision for a new ambulance depot. The remainder is allocated for Housing (0.9 ha) and landscaping (0.6ha). The agricultural land is part of a farm which is believed to be owned by the County Council and leased by them. The proposal is for 120 dwellings "which shall include 50% Affordable Housing".
Proposal 2 (Rock Hill) is a former Council yard and is owned by the District Council The proposal is for 25 Affordable dwellings.

Taking these figures at face value they make provision for 85 affordable houses. The recent Draft Policy document on Affordable Housing calls for 100 affordable dwellings in West Oxfordshire each year - of which 10% will be in Chipping Norton. That means a total of 80 in Chippy up to 2011. At first sight we seem to be home and dry. There does not, therefore appear to be a need for any provision for further Affordable Housing beyond these two proposed sites at Rock Hill and Cromwell Park. No need is apparent for further housing development on the Parker Knoll site.

BUT...Firstly, this Local Plan is not yet agreed. Not until mid-2004 at the earliest. The Parker Knoll site- on the other hand - is an immediate opportunity. Secondly, a Plan is one thing. Delivering on it is another. Its all very well for the District to say it will "seek" 50% Affordable Housing on a Cromwell Park development but for this to happen an agreement has to be reached between the County Council, the leaseholder, a developer, a Housing association and the District Planning Department. (Phew!) The negotiation will be about who takes less than open market value, where any public subsidy goes and in what proportions. (Even bigger Phew!)

From reading the detailed guidelines, virtually everything seems to be negotiable. If a developer - in order to get any sort of Planning Permission - is going to end up having to give away a percentage of his land to a Housing Association for Affordable Housing or the equivalent in cash to the District, then he is going to negotiate hard with the landowner for the lowest land price and with the council for the lowest percentage of Affordable Housing...quoting viability, cost of build, inappropriateness, existing availability of Affordable Housing and so on. At the end of the day his own profitability is completely constrained by the market price at which he can sell his own development. In the past few years in a booming housing market a developer may have been prepared to reckon on rising prices to produce an extra margin. But those days are probably over. Remembering that this is all new policy and the council's track record is not yet proven, most observers think that a developer or the District Council will have an extremely difficult time putting together a deal on a 50% Affordable basis.

Provision of Affordable Housing is already on AMBER alert in the District. The Performance Indicator target set for Number of new affordable housing units let or sold in West Oxfordshire (either shared ownership or discounted market) for the 3 years April 2002 to March 2005 is 300. In the first of these years only 70 have been completed. The officials in Witney are (hopefully) already under considerable pressure to start hitting their targets. Certainly the Planning Department are out on the stump explaining and "selling" their "Affordable Housing" policy. Two Planning Officers from the WODC speaking at a meeting in Chippy on July 15th made it perfectly clear that 50% was an opening negotiating position in discussing site quotas with developers.

Against this background lets get into some pure speculation about what sort of Poker game may be going on.

Perhaps the District Council's opening bid is to insist on the continued use of the Parker Knoll site for employment purposes.  Clearly nobody can tell Parker Knoll that it must keep its factory open.  But judging from the boom in small IT industries, specialised engineering companies and custom furniture building that is going on in nearby Oxfordshire towns (and on our own Industrial Estates), who can suggest that there is not a viable role for several medium-sized industrial units on the Parker Knoll site whose occupants might find Parker Knoll's workforce ideal for re-training. Has the site been advertised yet as an employment site Has the District Council fully explored the potential for a small Industrial Estate Just because Parker Knoll want to make a quick killing, that is no reason to roll over and let them do so!

But perhaps Parker Knoll can demonstrate that permission to develop their site for residential housing is more than justified by an undoubted local housing need - strongly evidenced in the Local Plan. They could probably provide up to 150 homes - with an Affordable component. They might also argue that this is a far more certain and faster option than the Cromwell Park site allocated in the Plan.

They might argue that the present site is totally unsuitable for their slimmed-down production processes. It would be equally unsuitable for new high-tech units. So a complete clearance and re-build would be necessary. The economics of this would be frightening and unattractive (to anybody). Would any public subsidy be available (At this point the cash-strapped District Council representatives go pale).

As for jobs........Some of the Parker Knoll job losses will be in any case compensated for by the planned B1 office development at Cromwell Park.  Perhaps permission could now also be given for some additional units on the Elmsfield Industrial Estate to offset some of the other job losses. Parker Knoll might offer to maintain a limited presence in Chippy as long as a suitable site could be found. They might also argue that since a significant part of their workforce comes from the Banbury area, a relocation there would not affect the economy of Chipping Norton as far as those workers were concerned. Moreover a relocation would cut down substantially on commuting (which is one of the District Council's other priority objectives).

Perhaps at this point the District Council concedes that there may be case for housing development on the site but insists that 50% of the homes should be "Affordable" and the company continues to offer some level of local employment..

There is no way that Parker Knoll would happily accept a 50% Affordable Homes Deal. They would be negotiating hard for a much lower figure -probably advised by high-powered developers (perhaps quoting onerous materials specifications - given the location - leading to high build costs, proximity to and problems from an existing "prestige" development, cost of providing infrastructure, high compensation to the leaseholders etc). If they were maintaining a presence in the town, surely they qualified for some special consideration. And lastly they might point out that The Affordability Guidelines are still only a draft and the quotas being set in them are well above National Guidelines. Clearly the company would have to appeal against any decision which relied on these new policy guidelines.

Some local PR pressure might also help. This week (July 7th) the Chipping Norton News carries a fascinating  piece which is based on a "business plan update" apparently delivered to the paper anonymously. Assuming the document is genuine, it rather looks as if Parker Knoll are getting really fed up with delays but that there is a deal to be done.

Mr Cruise (of Parker Knoll) states that the existing Chipping Norton site has not been sold to a builder or a supermarket  in order to move site it is essential that we agree planning permission for a change of use for the existing business site to maximise its valueThis activityis proving to be very complex due to the number of parties involved. This includes the County Council, District Council and Town Council. Mayor Graves and Councillor Grantham from Chipping Norton Town Council have met with Nino Allenza (CEO of Silentnight) in mid-May to present a case for staying in Chipping Norton. Following that meeting management had anticipated receiving proposals from the Councils to back the case presented. It is now clear that no proposal will be forthcoming to meet our requirements.

Are our Planners up to this kind of poker game Lets hope so. If the scenario is anything like the speculative one suggested you would expect everyone to be sworn to secrecy (which they are), you would expect Parker Knoll to be being very canny about laying off workers (which they are), you might expect them to be getting some more high-tech equipment for higher tech processes (which they are rumoured to be doing) and you might expect them to be muttering publicly but locally about the delay and wanting a better deal (which is exactly what they are doing).

I would bet that negotiations currently are exactly at the stage where the principle of housing development has been conceded and local councils are considering whether a better deal should be offered on the "Affordability" component, and the company is being picky about alternative sites.

Suppose you lump together the previously "allocated" Cromwell Park site and the Parker Knoll site and apply a lower - (say) a 25% "Affordable Homes" requirement to both.  Hey presto your Plan target of 60 Affordable Homes (which was originally for the Cromwell Park site alone) now looks like a banker and you have got a much more achievable total deal. This must be a tempting scenario for the District Planners. But what an awful precedent for the first major negotiation under a new Policy. Maybe 40% then

The District Council can afford to play hardball. The company doesn't really have many options. Either it successfully sells the site or - if it retains it - goes on using it. It is inconceivable that their beleaguered shareholders would allow the company to simply sit on an unused, unproductive asset for very long!  Silentnight are not looking for a protracted, expensive Appeals process either - any more than the District Council are. Time is not on the company's side - particularly if they go on making losses at their present rate. 10m (give or take) in the bank now could be very opportune.

This Poker game may have another round to go!

Any of these permutations imply a total of getting on for 300 new homes up along the London Road. Which dramatically underlines the importance of not maintaining but substantially increasing the town's present employment. Otherwise Chippy will take another inexorable step to becoming a commuter suburb and that's not what anyone wants! It may be expensive in the short term but perhaps the best idea of all is for the WODC to acquire the Parker Knoll site and develop an Industrial Estate there. It has the potential to eventually be a money-spinner for local ratepayers. Or what about a syndicate of local business people getting together and helping to fund a commercial and industrial development. To pursue this idea we need some facts!

But remember this is only speculation. Perhaps sometime we will actually be told what's going on!


The WODC Affordable Housing document is well worth reading. DOWNLOAD