35% Campaign update – Former Council leader glides through revolving doors

   

Aug 11, 2021 01:00 am

Former Southwark Council leader Peter John OBE has joined the long list of councillors and ex-council staff now working for property developers. Cllr John led Southwark from 2010 to 2020, and was chair of London Councils from 2018 to 2020.

Cllr John was recently appointed Chairman of the Terrapin Group, a lobbying firm, whose client list is dominated by property developers and real-estate investors. Cllr John joins three other serving councillors, from different boroughs, as a Terrapin ‘practitioner’, but in the more senior chairman’s role.

Terrapin was founded by former Tory politician Peter Bingle in 2012 and has acquired a reputation for lobbying local government politicians to help developers get planning consents.

The Public Affairs Board Register shows Elephant & Castle developer Delancey is one of Terrapin’s oldest clients, having benefited from their consultancy services since 2013. The Elephant Park (formerly Heygate estate) developer Lendlease was also on Terrapin’s books for 4 years, from 2013 to 2017.

Other Terrapin clients with schemes in Southwark include Barratt Homes (from 2013 to 2017; Blackfriars Circus, Maple Quays, the Galleria, Redwood Park); Telford Homes (from 2019; Bermondsey Works), Hollybrook Homes Ltd (2018 – 2020; Eagle Wharf) and Bellway Homes (from 2013; Elmington estate regeneration, Phase 3).

The biggest developer in the Old Kent Rd Opportunity Area, Avanton Ltd, was also a Terrapin client from 2017 to 2019. Avanton is behind the approved Ruby Triangle development and the upcoming Gasworks and Carpetright schemes, which together will have over 2,100 homes. Ruby Triangle Properties Ltd was also on Terrapin’s books, from 2017 to 2019, as was its affordable housing partner A2 Dominion, for different periods.

Other developers with smaller schemes in Southwark, who are or have been registered with Terrapin include Higgins Homes plc (Cherry Garden School); Southern Grove, who are looking to develop two sites (the ‘Brooklyn’, near Rotherhithe tunnel, and the St James, Bermondsey) and Pocket Living (Varcoe Rd and Credon House).

Peter John’s relationship with Terrapin’s Peter Bingle spans most of the years of his leadership at Southwark. The Council’s Register of Interests shows a number of dinners paid for by Terrapin, Bingle himself or his previous company – the disgraced Bell Pottinger.

The announcement of Cllr John’s appointment as Terrapin chair gives us an opportunity to look back at some of the controversial schemes signed off during his 10 years as Council leader.

Heygate estate redevelopment

In July 2010, just months after taking the reins at Southwark, Peter John signed a development agreement with Lendlease for the demolition of the 1,200 homes of the Heygate estate and its replacement by a private development with only 25% affordable housing – 10% less than Southwark’s policy requirement – and with a minimum of social rented housing. In the event, Lendlease has built nearly 3,000 homes on the site, with just 100 at social rent.

It emerged that the deal involved a payment to the Council of just £50m for the 25 acre site – barely enough to cover the cost incurred by the Council in emptying the estate.

Later, in 2012 and 2014 Cllr John came under fire for accepting tickets to the London Olympics, paid for by Lendlease and for making a trip to Cannes, to attend the MIPIM developer jamboree.

Aylesbury estate redevelopment

In 2014, Peter John signed-off the sale of the 2,759 council homes and 60 acres of land of the Aylesbury estate for demolition and redevelopment to housing association Notting Hill Genesis. Whilst the deal required Notting Hill to provide 50% ‘affordable housing’ it failed to secure any of the 3,500 proposed new homes as council homes and would have entailed a net loss of social rented housing.

Delays and political pressure forced Southwark into a U-turn last year, when it agreed to pay Notting Hill £193m to convert 581 new homes in phase 1 of the scheme into council homes. Southwark has also now committed to no net loss of social rented housing.

Canada Water redevelopment

In 2018, Peter John signed off the sale of 15 hectares of council-owned land at Canada Water to developer British Land.

The deal secured 35% affordable housing, but this is below the 50% requirement for publicly-owned land, set by the Mayor in his London Plan 2021 (Policy H4A).

It is unknown what land receipts (if any) the Council will receive in return for its 15 hectares, because the development agreement with British Land has been heavily redacted.

Elephant & Castle shopping centre

Also in 2018, Cllr John took the unusual step of announcing his support for Delancey’s proposed redevelopment of the shopping centre despite it having been knocked-back by the planning committee earlier in the year. Amongst other things, the scheme, while exceeding density limits, didn’t meet minimum social rented housing requirements, or offer any relocation support to existing traders.

It was only after a concerted local campaign (leading to legal action) that Delancey improved its offer from 33 to 116 social rented homes and agreed to provide relocation units and financial support for some of the traders.

Southwark also boosted Delancey by adopting Compulsory Purchase Order (CPO) powers to help clear the site of traders. This little-publicised power gives local authorities a great deal of legitimate leverage in its negotiations with developers; if a site is not empty, it cannot be developed. But rather than use the power to get a better deal for traders, it stood behind Delancey, whose own hand was strengthened at the traders’ expense.

Letting developers off the hook

Aside from the shopping centre, Delancey has also been involved in other schemes in the borough, including Elephant Central (formerly Elephant One), with 272 student rooms and 374 private residences and 185 Park Street (next to Tate Modern) with 69 new homes – neither development has any social rented housing.

These schemes are not exceptions. Our research shows that only 456 new homes, out of 11,863 units in 25 major developments, approved in Southwark from 2006 to 2016 were social rented tenure – 3.8%. Had these schemes to complied with minimum policy requirements then around 2,500 social rented homes would have been delivered in total.

What we say

Confidence in the planning system has been badly dented by high profile schemes not delivering the affordable housing we need. That confidence is not improved when the former leader of the council becomes the chair of a lobbying firm whose business is ‘influencing government’, including ‘public authorities’, such as councils.

The Terrapin Group boasts that it is a ‘market leader’ and has ‘a superb track record of helping our clients achieve successful planning consents right across Greater London’ and invites inquiries for ‘potential assignments’.

We cannot know for whether any of the developments featured above are examples of such successful ‘assignments’. More recent developments, such as along the Old Kent Rd, have at least 35% affordable housing, most social rented and so it looks as if the current administration may not be cut from quite the same cloth as the previous one. But more needs to be done; the bar has been stuck at 35% affordable housing for too long and should be raised to 50%. To help achieve this behind-the-scenes lobbying by developers must be ended. Southwark can take a lead on this by taking two immediate measures;

  1. No sitting councillor should also work for a public affairs company whose clients are property developers and investors. It is not enough that councillors do not engage in such work within their own borough, as required by the Public Affairs Code. They should not be trying to persuade fellow councillors in other boroughs to approve schemes either. Planning decisions must be seen to made solely on the merits of the application, with all discussions open to public view.
  2. A local register of public affairs companies for the borough should be established. Every applicant for at least major schemes should be required to list their agents, including public affairs companies.

These measures would not only help maintain the integrity of the planning system, but might also avoid this kind of damaging headline:

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Legal battle for the Elephant and Castle shopping centre ends

Jun 12, 2021 09:54 am

Final decision goes Delancey’s way

The Appeal Court has upheld the High Court decision allowing developers Delancey to proceed with the demolition and redevelopment of the Elephant and Castle Shopping Centre, after it found that there were no grounds for reversing the High Court’s decision.

The legal challenge was mounted as part of a hard-fought 4-year campaign by Up the Elephant. This brought together housing campaigners (including the 35% Campaign), students, tenants’ groups, local councillors and trade unionists, in the fight for more social rented housing and a better deal for traders displaced by the proposed development.

The decision will now allow the mixed-use development of new shops and homes to proceed, with 116 social rented units, out of 979 ‘Build to Rent’ homes.

Despite the legal outcome the Up the Elephant Campaign secured many improvements to the original proposals, compared to the baseline of the original application, made in October 2016.

  • Increase of social rented housing from 33 units of ‘social rent equivalent’, owned and managed by the developer, to 116 proper social rented units, owned and managed by the Council or housing association
  • Provision of affordable retail space
  • An established traders’ panel
  • Temporary traders’ premises on Castle Square
  • Trader relocation to Elephant Arcade (Perronet House)
  • Trader relocation and assistance funds of £634,000 and £200,000
  • 15-year affordable retail lease

What we have lost

Despite these improvements Delancey’s scheme still remained a bad one, hence the legal challenge. The shopping centre may have been shabby, but it housed one of the largest bingo halls in Britain, much used by older people from black and ethnic minority backgrounds, with a bowling alley next door, equally popular with younger people.

It had over decades become one of two social hubs for Latin Americans living in London (along with Wards Corner, in Seven Sisters). Most of the other independent traders come from other parts of the world and had built businesses for themselves and their families. All this would be lost. And while the affordable housing ‘offer’ was improved it still did not meet Southwark’s minimum policy requirements, falling short by over fifty homes for social rent.

The GLA grant mystery

The status of a purported £11.24m grant from the Mayor, that allowed Delancey to improve the social rented housing offer from 74 to 116 units and how this was reported to the planning committee was a key question before the court. The planning committee was told variously that the grant was ‘an agreement in principle for grant funding’ (Officer’s report Adden. para 11), or ‘recently confirmed’ (OR 371), when in fact it was neither. There was no grant and no application had been made. Delancey had only been advised by the Greater London Authority (GLA) that an application would be welcome (Appeal Judgement para 87) and of the steps that they needed to take to make an application.

On this point, the appeal court ruled that while there had been an ‘overstatement’ (AJ 87) of the position, all-in-all the committee had not been misled, particularly as Delancey had committed to building the social rented housing, with or without grant (AJ 85,86).

This commitment naturally led the legal challenge to argue that if Delancey could provide 116 social rented units without grant, they should be able to provide more with a grant. Again, the appeal court did not agree, citing the viability assessment, which stated that 116 units was ‘the maximum reasonable amount’ of social rented housing, and accepting that Delancey was committed to building the social rented housing at their own risk, even if grant were not available (AJ 91).

‘The land and sum of money’

The appeal court also found that the officer’s report and two addenda were only guidance and allowed council officers discretion in how the committee’s decision was practically put into effect (AJ 49, 50). This ruling had important consequences. One of the main grounds of the legal challenge was that a stipulation that would allow Southwark, not Delancey, to build the social rented housing, but without cost to itself, had not properly found its way into the legal agreement that sealed the planning permission.

To this end, the officer’s report had said that ‘The s106 agreement would therefore stipulate that if the development on the west site has not substantially commenced within 10 years of the east site commencing, the land and sum of money sufficient for construction and completion of the social rented units would be transferred to the council, to deliver the social rented units’. (OR 364)

What actually appeared in the s106 agreement was a more complicated arrangement of three options, two of which require Southwark to find up-front costs of construction. Delancey argued that the land value and non-residential elements of the social rented housing block had to be taken into account in this transaction and that this arrangement was therefore perfectly correct. Surprisingly, given that it was putting itself in a position of finding money to build something that Delancey would otherwise have to pay for, Southwark agreed with Delancey. The judge agreed with both, against the campaign’s arguments, ruling that this was a fair rendering of the committee’s decision (AJ 57-60).

Social rent and social rent equivalent – different, but the same

The legal challenge also took issue with Southwark and Delancey effectively treating ‘social rent equivalent’ and ‘social rent’ as being the same tenure.

This distinction becomes relevant if part of the development were to be switched from ‘Build to Rent’ to ‘Build to Sell’, with a higher affordable housing requirement and higher profit leading to an uplift to the social rented housing numbers. Delancey argued that any such uplift would have to be housed in towers that were managed by the affordable housing provider, who could not cope with real social rented housing, for stock-management reasons, and so the uplift would have to be social rent equivalent.

Despite the campaign offering three sets of differences between the tenures – including differences of security of tenure (3 years assured short-hold for social rent equivalent against lifetime tenancies for social rent) and differences in regulatory oversight – the appeal court judges these differences to be ‘nuanced’ rather than ‘material’ (AJ 77-79).

The implications of the judgement

While the Court of Appeal’s decision is disappointing, and the end of the legal challenge against the redevelopment of the shopping centre, we are not disheartened. The Up the Elephant campaign took up the fight in defence of council policy for a minimum amount of social housing, about 170 units, when Southwark Council refused to do so. The campaign did not succeed in getting 170 units, but it did raise the number from 33 social rent equivalent, to 74, then 116 social rent. Other gains have been made along the way, as noted at the beginning of this blogpost.

But though the local community and the Up the Elephant campaign won 116 social rented units, Southwark’s track record of repeatedly conceding ground to Delancey shows that it is more than capable of losing them.

It was not enough for Southwark to allow Delancey almost 10 years to build the social rented housing; Southwark then allowed Delancey the option of passing the task back to them, without adequately securing the resources to do the job. Southwark then went to court, not to make sure that they got the social rented housing, but to defend this lopsided arrangement, and back Delancey up, when it argued that this was all fair and proper.

The appeal court’s endorsement of Delancey and Southwark’s interpretation of ‘land and a sum of money’ (AJ 58, 59) now opens the door, under one option, to Southwark getting nothing more than the land and £1 (one pound). A second option will get Southwark money to build the social rent, but not the full construction costs. Both options would leave Southwark having to find upfront the construction costs. And, despite the appeal court’s judgement, we don’t believe that this is what the planning committee had in mind when it approved Delancey’s scheme.

Southwark should also demand to know when Delancey are going to make the application for the £11.24m that back in 2016 was claimed to be both agreed in principal and confirmed, but in reality, in 2021, does not seem to exist. As at June 2021, Delancey had not completed the registration of its affordable housing provider T3 Residential Limited with the Regulator of Social Housing, that the GLA advised was a condition of a successful grant application. As a recent Sunday Times exposé has shown, Delancey are well versed in how to use the public purse to its own advantage, when it comes to affordable housing. It is not difficult to envisage a scenario where it does so again, at Southwark’s expense.

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