A hotel and conference centre project undertaken by the Unite union in Birmingham between 2016 and 2020 has come under scrutiny amid significant cost overruns and questions about governance and contractor selection. The project, originally budgeted at £57 million, ultimately cost £112 million to complete but is currently valued at just £37.5 million, leading Unite to record a £66 million impairment on its accounts.
The construction contract was awarded without competitive tender to the Flanagan Group, a Merseyside-based company connected personally to former Unite general secretary Len McCluskey. McCluskey acknowledged that the decision to appoint the Flanagan Group was made by Ed Sabisky, Unite’s then finance director, who managed the project day-to-day. Sabisky died in March 2020, shortly before the financial difficulties became public. McCluskey asserted that Sabisky kept senior leadership, including the union’s executive council, unaware of escalating costs until late 2019, and that the council was not fully informed until 14 months later, after media reports surfaced.
The selection of the Flanagan Group raised concerns because the firm had no previous experience with projects of this magnitude and a mixed record on past contracts. McCluskey suggested that time pressures, possibly including an unconfirmed threat from Birmingham city council to reclaim the land if construction did not begin promptly, influenced the decision to bypass a competitive tender process. The city council has stated it found no evidence of such a threat.
Following Sabisky’s death, Howard Beckett, Unite’s legal director with limited formal financial qualifications, assumed responsibility for financial oversight related to the project. Beckett has since been subject to a police investigation into separate allegations involving fraud and money-laundering; he denies any wrongdoing and has not been charged.
A report commissioned by Unite’s current leader, Sharon Graham, known as Project Clean-Up, identified extensive overcharging by the Flanagan Group. The report details at least £30 million in excess costs, including unexplained increases in charges for preliminary items like scaffolding, which rose from £10.5 million to £22.4 million, as well as a notable surge in costs for drilling holes in blockwork from £91,000 to £1.3 million without clear justification. Attempts to obtain detailed explanations from the Flanagan Group were unsuccessful; the company declined to comment citing ongoing investigations but noted that independent professionals were regularly updated on projected costs throughout the project.
Relations between McCluskey and Graham have deteriorated amid the controversy, with McCluskey defending his actions and denying allegations of favoritism or improper benefits. Questions were raised about a private jet flight McCluskey took with Paul Flanagan and others in 2019 to watch a Liverpool Champions League match. McCluskey acknowledged making the trip and covering its costs personally but declined to disclose financial details.
Regulatory scrutiny has criticized delays in informing the union’s executive council of the project's financial difficulties. The overall financial outcome has left Unite with a significant loss, even excluding the identified overcharging.
The unfolding investigation and internal disputes underscore ongoing challenges in financial management and accountability within Unite, raising broader questions about governance practices in large trade unions.