Culture clash threatens Liverpool's capital year

In the long and turbulent history of Liverpool, 4 June 2003 was an extraordinary day. It beat five other contenders to the title of Capital of Culture 2008, so opening the door to an estimated 14,000 jobs, 1.7 million extra visitors and around £1bn in investment. Life could not get much sweeter for the two beaming figures credited with securing the title, the Liberal Democrat city council leader Mike Storey and David Henshaw, the chief executive he had hired four years earlier.

But two years on, Sir David (knighted last year for services to local government) and Mr Storey have fallen out so spectacularly that one of the most distinguished figures in local government -Sir Roger Lyons - is mediating between them at the town hall.

It is Liverpool's biggest municipal crisis since the Militant years and could end with the enforced departure of either, or both. Amid the political gridlock, high-profile projects seen integral to the Capital of Culture year are going belly-up, the latest a £170m tram plan.

Mr Storey wanted the trams but neither Sir David, nor Alistair Darling, the Secretary of State for Transport, shared his enthusiasm and the Government effectively kicked the project into touch this week.

After the plan for Will Alsop's futuristic Cloud building on the banks of the Mersey was abandoned and plans for a prime space at the King's Dock were delayed, Liverpool is yet to deliver a large-scale cultural project for 2008.

The woman appointed as artistic director of Capital of Culture year, Robyn Archer, has not yet moved from Melbourne, Australia. Medium-scale plans appear thin on the ground, although possibilities abound: a blockbuster show from the theatre impresario Bill Kenwright (who would love to be asked but has not been, city sources say), a permanent exhibition of the city's John James Audubon art collection or an attraction built around HMS Whimbrel, the city's last Battle of the Atlantic ship which languishes in the Egyptian port of Alexandria.

The roots of the council's predicament lie in the municipal wreckage the Liberal Democrats found in 1998 when they wrested control of the old "corpy" from Labour. Liverpool was the third-worst performing council in Britain, had the highest council tax and was massively inefficient.

Mr Storey turned to Sir David, a fellow Liverpudlian who was running the neighbouring borough of Knowsley and persuaded him Liverpool's new political class wanted to change things. Sir David cut 4,000 jobs, enabled Mr Storey to freeze the council tax for three years and delivered Liverpool a "good" Audit Commission rating. Capital of Culture status was suddenly a possibility.

But Sir David's abilities have cost more than his estimated £190,000 salary. He has brought a sometimes ruthless culture of the private sector to the municipality, dropping individuals who have served their time, and earning himself the nickname "Sir David Chainsaw" in the process.

The chief executive has also assumed as high a public profile as the elected council leader, no mean feat against a man known as "Fish and Chips Storey" (because he's always in the newspaper). It has been a recipe for disaster, Richard Vise, of the Local Government Chronicle said. "Chief executives come a cropper when they start to rival the public profile of the democratically elected council leader. It's not the way it's meant to work."

The row burst into the open after anti-Henshaw leaks to the local press and the suspension of the council's communications chief, who reports to Sir David but is close to Mr Storey. Despite their disagreement over the tram line, which was supposed to regenerate north Liverpool by linking it to the more prosperous city centre, its removal has more to do with Mr Darling's apparent concern about costs.

Cloud was also axed because of the escalating cost projections of developers. Discussions about the King's Dock have dragged on because no one has been able to persuade the city's two football clubs to share a stadium there.

Sir David told The Independent that he and Mr Storey remained "committed to making things work". With a £65m waterfront museum project dependent on a major grant next month, the city is hoping he means it.

Development hell

WILL ALSOP'S 'CLOUD'

Dropped as the Mersey riverfront 'Fourth Grace' last year, to be replaced by a Danish-designed £65m 'One World' museum if grant funding is secured next month.

TRAM SYSTEM

Linked to new retail development. The Government has refused to provide more than the initial £170m funding, but Merseytravel, which runs the city's transport system, is still trying to revive the project.

*KING'S DOCK REDEVELOPMENT

After years of delay, the first sod will be cut next week on a £135m project, designed by Wilkinson Eyre's Chris Wilkinson. It includes a 9,400-seat concert and sports arena and a 1,350 seat conference centre.