BARRATT HOLMES finds that the government’s housing policies include a measure which goes against Treasury advice and may deter local authorities such as Croydon from building
The housing White Paper, introduced yesterday by Croydon Central Tory MP Gavin Barwell, could undermine Croydon Council’s £270million scheme to build 1,000 homes through a private company, as the government’s plans include an insistence that the properties be subjected to Right-to-Buy rules, just like council houses have been for the past four decades.
The government’s move could force Croydon Council to flog off any rented properties at vast discounts, at considerable cost to local Council Tax-payers and probably deterring the local authority from further attempts to increase borough’s housing stock for some time to come – exactly what Barwell was telling the world the White Paper was supposed to address.
The “brains trust” which runs Croydon Council, headed by “professional regeneration practitioner” Jo Negrini, the CEO, and council leader Tony Newman, came up with the cunning plan of outsourcing the council’s building programme to a private company, called Brick by Brick, as a way to get round the existing Right-to-Buy rules.
Croydon Council provides the land for the builds, it provides Brick by Brick with the financing, and it delivers the planning permissions, too. The council would then receive any development profits.
Half the properties are supposed to be “affordable” (when that means costing or rented for 80 per cent of market rates), and it had been intended that some would be made available for rent by the council or housing associations. That aspect of the scheme now appears to be in jeopardy.
Croydon is among nearly one-third of local authorities in England which have been forced to resort to the private company option, a measure which was recommended by a special report from the Treasury in January 2015.
Leading the way among those councils building through a private company was Newham, Negrini’s former employers, who set up Red Door Ventures to build 3,000 homes outside their Housing Revenue Accounts, partially to avoid losing the housing assets through Right-to-Buy.
But it is nearly two years since the then housing minister, Brandon Lewis, warned “imaginative” local authorities that the Tories would close this loophole on their flagship Thatcherite policy, which transfers public property into private hands at vast discounts.
Lewis, one of Barwell’s ministerial predecessors, warned, “The actions of a handful of councils mean the Right-to-Buy for some tenants is now under threat – I will not support any council setting up a housing company unless their tenants continue to have the chance of having a Right-to-Buy.”
So Negrini and Newman should have seen the measures in the White Paper coming, though it will now be the local MP, Barwell, who will have to explain how a set of policies intended to increase house-building can include a measure which so obviously works against that aim, putting under threat a council house-building scheme which in Croydon has been valued as worth £270million.
Barwell’s housing White Paper states: “We want to see tenants that local authorities place in new affordable properties offered equivalent terms to those in council housing, including a right to buy their home.”
A government spokesperson confirmed to Inside Housing that Right-to-Buy would only apply to the affordable and social rent homes developed by these companies – effectively admitting that is deliberately targeting council companies such as Brick by Brick.
As the detail of the long-delayed housing White Paper emerged yesterday, it was widely derided, “more a white flag than a White Paper”, the Tories’ political opponents said, while a former economic advisor to the Bank of England sumarised it as “too short-term and too political”. So exactly the sort of thing Barwell might have played a part in.
Barwell spent the day doing another tour of broadcast studios, utilising his “no silver bullet” and “rabbit out of a hat” soundbytes at every opportunity, desperate to manage expectations. “We can’t just flick a switch and make housing affordable overnight,” Barwell said, having just published a White Paper which flicked a switch to turn off councils from providing affordable homes.
If the Brick by Brick strategy unravels because of this, it would not be the first time that Croydon Council has gambled with millions of pounds of public assets, and lost. The previous Tory Town Hall administration entered into the disastrous £450million CCURV property speculation joint venture with John Laing at the depths of the global financial crash, lumbering the people of Croydon with debts which will take decades to pay-off.
Inside Croydon contacted Simon Hall, the council’s cabinet member for finance on the Labour-run council, to seek his reaction to the White Paper’s possible impact on Brick by Brick, but he has failed to return our calls.
Another senior Croydon Labour figure told Inside Croydon, “I think this shows – if any proof were needed – that the Tories are not interested in providing the large amount of rented social housing which is needed to tackle the housing crisis.”
It has been suggested that the council may now alter its plans and sell-off more of the Brick by Brick properties, rather than keep them for renting, to avoid them becoming subject to any Right-to-Buy legislation, as many Housing Association homes have done.
A Town Hall source said, “This measure will stop Brick by Brick borrowing from anyone but the council, though the council needs itself to think about whether Brick by Brick’s assets safe in the medium term to justify lending. It might also push the council to increase the number of homes that are sold immediately, so that Brick by Brick can build assets up more quickly to be then lent against for later social housing development.”
The Croydon Labour figure said: “Sales of these homes will deplete the affordable rented housing stock still more. It’s not enough to say that other dwellings can be built with the proceeds. We need those other dwellings (financed by borrowing) as well as the original ones.”
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