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 CEO Jo Negrini: her cunning plan has come a cropper
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.
A blighted future: housing minister Gavin Barwell
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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Brick by Brick was touted by Croydon Council as a means to develop property and retain profits in the borough as part of a “hugely ambitious agenda for increasing the supply of new homes and affordable homes in Croydon”. As I read it the changes proposed in the White Paper don’t prevent them doing that.
However, dodging right-to-buy rules might well have been the primary motive (You might think that, I couldn’t possibly comment) but let us say it wasn’t put front and centre in the justification.
You Barwell fans are really too disingenuous for your own good.
Of course Brick by Brick was created to avoid Right to Buy, a devious Tory device to buy votes with billions of pounds of public property which has placed a stiletto’d boot on the throat of social housing for the past 37 years.
And you wonder why there’s a housing crisis? You shouldn’t be trusted with a Lego set.
You may well have a far better knowledge of the motives of Croydon’s Labour Council. I would merely point out that they failed to mention this as a primary motive when setting up Brick by Brick.
It was so obvious, it was probably reckoned that even slow-thinking Tories would understand that for every action, there is a reaction.
Your Party has just announced that the housing market is “Broken”, but you are unable to see a dysfunctional causation between the diversion in resources from social rental housing into the “Right to Buy”. Until you can clearly diagnose causation in the problems of providing housing in the UK there is little chance that such an ineffective piece of legislation is going to make any impact on the severe problems that so many people face. Especially when the job is being undertaken by a politician who has only ever succeeded in failed developments.
Do even you have any idea what you are talking about?
It is noted that you are unable to defend your Housing Minister with any evidence of any involvement in one piece of successful development. What has happened to your great debating skills?
Please can someone advise me where into his second decade in local and central government has Gavin Barwell successfully instigated a development which has led to an increase in “Affordable” Housing?
Reblogged this on sed30's Blog and commented:
As a door opens its slammed in your face
We need a Government ( whether blue, red, orange, green or purple) that allows local authorities to build new properties again. Maybe restrict the right to buy to families who have rented a council property for 15 years without problem. For new buyers, give a choice of renting or rent to buy over 30 years. Current “right to buy” proceeds don’t go to the council, for reinvesting in new build, but to central government, which seems wrong.
Margaret Thatcher so hated local councils that she stopped them building new homes, and brought in the right to buy, thus depriving councils of their housing stock, and also taking away the income stream from the sold properties. A quadruple whammie.
Ironically, failure to build enough homes across the sectors since she brought in these changes has actually deprived the children of the baby boomers from their right to buy their own home — as the cost of houses and flats has gone sky-high due to high demand but inadequate supply, so they can’t afford to buy. Doh!