Brick by Brick’s profitable Blairite response to Right to Buy

The tragedy of the Grenfell Tower fire has, rightly, focused attention on safety around the nation’s low-cost housing. But underlining the lack of attention given to the conditions of such homes and the ongoing under-investment in council housing has been another scandal of neglect in housing for nearly half a century.

An even greater scandal is how a handful of people have, as a result, managed to become very, very rich at the expense of society’s poorest and most vulnerable.

Affordable rent, London living rent, Affordable sale, Shared ownership, Shared equity…

There’s an often baffling array of terms used by those in power to describe some of the housing that is being provided to meet the demand for homes in Croydon, London and across the country.

But one term you almost never hear these days is “council housing” – the kind provided as “homes fit for heroes” after the First World War and later, and in greater numbers in the 1940s and 1950s, by the Attlee-led Labour Government.

In Croydon today, the council is spending millions of pounds of public money to build 1,000 homes. Not a single council home will be built.

According to senior Labour councillors, at least 570 of the units to be built under the council’s auspices by 2020 are to go for private sale, at maximum possible profit. With the average price of even the most modest of flats in Croydon now touching £300,000, the total amounts involved are staggering.

Our Labour-run council has set up two private companies to manage all this.

Ostensibly, this is to put the other 400 or so homes the council wants to build out of the reach of any government measures which might insist that the properties become subject to the Tory shibboleth of Right to Buy.

The two private companies are not accountable to the Croydon tax-payer and they have no elected representatives on their boards. One senior councillor this week admitted that, apart from council employee, Colm Lacey, who has been made the managing director of  Brick by Brick, the housing development company, they had never heard of any of the other company directors overseeing this vast expenditure with public money.

The companies created by our council are entirely immune from any public transparency, despite being in receipt of millions of pounds of public cash, and potentially making millions in profits.

It appears that our Labour-controlled council has learned from a local Tory MP by using a company form called a LLP to help disguise its business activities.

We’re building homes. But for whose benefit?

Croydon South MP Chris Philp runs many of his building investment firms behind the opaque device of an LLP, or limited liability partnership. LLPs are obliged to publish only the most limited of company accounts and details.

It is this LLP form of company that our Labour-run council is establishing as another corporate tier to shield the “affordable” properties to be built by housing company Brick by Brick from any risk of Right to Buy.

Ahhh. Right to Buy.

A new documentary, Dispossession: The Great Housing Swindle describes the long-term effects of Margaret Thatcher’s Right to Buy policy – “probably the most popular ever introduced by a Conservative government”.

Right to Buy was wonderful for many who benefited from it, but destructive of local authorities’ ability to respond to housing need. Its selling off of publicly owned housing has contributed to the ever-growing bill for housing benefit.

Herein is one of the absurdities of Thatcherism. Local authorities are now paying sky-high rents to house people in homes which those very same councils once owned, but which have since been sold off with generous discounts on their true value under Right to Buy.

And so in Croydon today we have our local council establishing an elaborate and opaque corporate structure ostensibly to “protect” any house-building they do from such a rapacious policy. At the same time, perhaps conveniently, this also manages to disguise and hide the values and use of its finances from the public.

Of the 1,000 homes Croydon’s Labour council boasts it is building, all using public money or borrowed in the name of the tax-payer, not a single one is a “council house”.

Selling out: Margaret Thatcher, accompanied by Tory GLC leader Horace Cutler, hands over the keys to a council house in 1980

It is a matter with which Architects for Social Housing, ASH, took issue before the election, as they critiqued the manifesto proposals of Jeremy Corbyn’s Labour Party for, well… not being socially aware enough.

“Titled ‘Secure Homes for All’, its focus is on house building, rightly identifying the housing crisis as one of affordability, but wrongly identifying the building of new homes as the solution,” ASH wrote earlier this month.

“And what will a Labour government build? 100,000 council and housing association homes a year… And what will those homes be? For ‘genuinely affordable rent or sale’.

“Let’s just pause here. Housing associations are not government-run so half of these homes – in the absence of precise figures, let’s say 50,000 per year – will be built by them to fit their requirements as private companies…”

This will have a familiar ring to it for anyone who has been following Croydon’s Block by Block “solution”.

ASH continued: “The manifesto doesn’t say, and in the absence of any indication to the contrary we must assume housing associations will continue to receive subsidies for building homes for affordable rent, London living rent, affordable sale, shared ownership, shared equity, and anything else they can think of to supplant the council homes for social rent housing associations are either privatising or demolishing and building in their place.

“Indeed, ‘affordable’ is the only tenancy type and rental level the manifesto mentions.”

So, no council houses then.

ASH identified a phrase in the Labour manifesto that promised “to focus on tackling the crisis and to ensure housing is about homes for the many, not investment opportunities for the few”.

ASH responded, “We couldn’t have put it better ourselves. Except that council homes are not affordable housing, not even for ‘genuinely affordable rent or sale’.

“Council homes are, or were, exclusively built for rent at around 30 per cent of market rate, which is uniformly, although confusingly, referred to these days as ‘social rent’ – particularly in local authority planning documents identifying their demolition and replacement by, again, homes for affordable rent at up to 80 per cent of market rates, London living rent, affordable sale, shared ownership, shared equity and, of course, private sale – which, as in the Labour manifesto, make up by far the largest proportion of new-build homes.

Trafalgar Place at the Elephant and Castle, designed by fashionable architects DRMM, and not a council home in sight

“Despite its vague promise to build ‘council homes for rent and sale’, the Labour manifesto says nothing about building council homes for social rent.”

A situation almost identical to the housing blueprint being rolled out here in Croydon.

And therein lies the rub, because as ASH is keenly aware, elsewhere in London, Labour-run councils – in Southwark, Lambeth and most recently in Haringey – have been doing the bidding of profit-hungry property speculators, at the expense of their own residents, who usually pay by having to give up their council homes.

It is nothing less than social cleansing.

“In Trafalgar Place at the Elephant and Castle, Southwark Labour council in partnership with property developer Lendlease have built 2-bedroom apartments that start at £725,000 on the ruins of the demolished Heygate estate,” ASH relates.

“Transparency International recently reported that every one of the properties on the first phase of the redevelopment has been bought by oversees investors. On Woodberry Down in Manor House Hackney Labour council in collaboration with property developer Berkeley Homes is building 2-bedroom apartments that start at £660,000. 55 per cent of the properties on the first completed phase have been bought by overseas investors.

“In Kidbrooke Village Greenwich Labour council, again in collaboration with Berkeley Homes, has built 2-bedroom apartments for £540,000 on the demolished Ferrier estate.

Alison Butler: backing £800,000 flats scheme

“And on the condemned Cressingham Gardens estate Lambeth Labour council – in a redevelopment vehicle directly backed by Jeremy Corbyn – is promising to build new properties for private sale that will start at £435,000 for a 1-bedroom apartment rising to £863,000 for a 4 bedroom property.

“We’ll leave it to you to judge whether this is building ‘homes for the many’ rather than ‘investment opportunities for the few’.”

Steve Reed OBE was the leader of Lambeth Council when the estate clearance of Cressingham Gardens was set in train. Reed is now MP for Croydon North. The candidate selected by Labour’s NEC to contest the Croydon South seat at the General Election was Jennifer Brathwaite, a councillor in Lambeth and the cabinet member responsible for implementing the estate clearances.

Reed is closely aligned with Croydon’s council leadership, Tony Newman and his deputy, Alison Butler, who is the borough’s cabinet member for housing.

Today, there are 1.9 million households on the housing waiting lists around the country, there are 280,000 households at risk of homelessness, and 71,500 households living in temporary accommodation.

None of these families are likely to be able to afford the £300,000, £400,000 or – in the case of the Labour council-backed proposals from HUB on the site of the former Taberner House in Croydon town centre – £800,000 “luxury apartments”.

This was the judgement of ASH on the Labour Party’s manifesto and, by extension, the housing policies currently being pursued by Croydon’s Labour council: “Housing policies that remain so bound to a programme of privatisation and home ownership show just how little it has changed from the party of Tony Blair, whose devotees in our town halls, councils and housing committees remain the real representatives of Labour in power.”

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3 Responses to Brick by Brick’s profitable Blairite response to Right to Buy

  1. derekthrower says:

    The Right-to-Buy which the Council has to offer unaffordable discounts to the purchaser makes Local Authority home building public sector financial suicide. However the system outlined above which uses housebuilding as a vehicle for asset speculation is also economic suicide. It has uncoupled home occupation from the incomes of those who live in the local economy and placed it in a global market. These global investors see UK property as a safe haven, with the ever growing population demographic on limited land seeing a never ending upward pressure on values.
    As with most things in life when you have a belief in the certainty of things you will be disillusioned with what the future provides you. The UK has seen great political uncertainty over the last decade and the results of this uncertainty is just starting to penetrate into housing markets and political opinion. The certain landslide of Theresa May is instead leading to her political demise. Rich property owners in London no longer use the open market to sell property preferring to mask the reduction in values and taxation requirements in private transactions. The political establishment in the UK now appears to be hoping something will turn up to save the inevitable housing crash which all this is inevitably leading to.

  2. An article in a Sunday paper raised the issue of saleability of high rise flats post Grenfell. Now there are many high rise flats proposed for Croydon at up to 40 storeys. Whilst they should all be built to exacting standards and be highly resistant to fire Grenfell may be a game changer. It is already difficult to get mortgages on high rise blocks and in the future that is now unlikely to be any easier. It is a similar situation to those properties in flood risk areas. This will have less impact on the weathy investors who may not need mortgages but it will certainly make what are described as “affordable” properties much less affordable or simply impossible.

  3. derekthrower says:

    It will eventually effect the wealthy cash buyer since the musical chairs being played now will have to come to a point where the asset is liquidated. The whole point of this ridiculous plan is not to build for the housing needs of the economy, but to provide investment outlets for speculators. That is why the Westfield Plan is not going ahead now. The uncertainty is too great, but with a state that serves the interest of the speculator than those in housing need it is safer to just sit still while no losses accrue due to minimal interest rates and a taxation system that subsidises by allowing them to offset losses against their current and future tax demands.

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