A letter to the District Auditor of Haringey

 Posted by on 28th April 2017
Apr 282017
 

48 CROMWELL AVENUE

LONDON N6 5HL

22 April 2017

Leigh Lloyd-Thomas 
District Auditor for the London Borough of Haringey,

BDO LLP
BDO London
55 Baker Street
London W1U 7EU
020 7486 5888

By email only to leigh.lloyd-thomas @bdo.co.uk

Original letter (pdf)

Dear Mr Lloyd-Thomas,

  1. Haringey Development Vehicle

Thank you for your email of 10 April 2017. We are copying this letter to Cllr Claire Kober and hope that she will be able to provide reassurance to the undersigned on the following points which we draw to your attention. Please note that all sections in red text are to provide our own emphasis.

You may be aware that the origin of the HDV lies in this document:

IT TOOK ANOTHER RIOT Sir Stuart Lipton Report 11.12.2012 

Ten Critical Recommendations

1               Form an independent governance structure

                  _ Interconnected problems need a coordinated response. Led by an independent, authoritative Chairman and dynamic Chief Executive, a Tottenham-based governance organisation should oversee regeneration in the area, champion joined-up government, and secure powers and funds from Whitehall. It should include a board of local experts from fields such as health, education and business.

3          New housing featuring a mixture of public and private tenures

                  _ Thousands more housing units are required, and there should be extensive estate renewal. This should aim to increase housing supply, create a greater tenure mix, and replace existing social housing where it is unsuitable for habitation or features layouts that contribute to cultures of poverty and low aspiration. Many estates are in need of substantial regeneration, and streets and spaces with little public access need replacing with lively, welcoming and safe environments.

4               Measures to tackle population churn and overcrowding

                  _ Overcrowding is rife. Alongside new house building, existing housing standards should be enforced much more rigorously to reduce churn and overcrowding, otherwise Tottenham will continue to absorb London’s residents in need of temporary accommodation. At three times the London average, and nearly eighteen times the national average, the impact of such concentrated volumes of transient residents is hard to overstate. 

5               Focus on reducing unemployment with youth training, enterprise support and the construction of uplifting new workplaces available at subsidized rents

                  _ Unemployment in Tottenham is amongst London’s highest. Companies need attracting to the area, bringing jobs, training and business rates. Existing council land should be used to attract investment, and a business district created at Tottenham Hale with high-quality commercial buildings constructed at low cost, enabling appealing rents.

Narrative following above :

Many parties have a role to play if Tottenham is to succeed, and dynamic, caring leadership will be essential. Initial signs are encouraging. In the year since we were asked to champion Tottenham by Mayor of London Boris Johnson, the position of the London Borough of Haringey has changed, and its Leader, Councillor Claire Kober, has appointed a new Chief Executive with the clear intention of bringing regeneration to Tottenham. She has shown considerable political skill and judgement, but will need the support of the Greater London Authority and central government in securing the necessary finances and powers. We understand this would most likely take a form analogous to the ‘City Deals’ recently negotiated by urban centres around the UK.........

So the challenge is this: the Borough, the GLA and central government must work together to endow a local body with the appropriate powers, funds and authority to operate a holistic programme of regeneration, including the measures outlined above. In return, this should provide coordination of local investment, parties and interest groups, and the holding to account of public services. As local lives are improved, the state will in turn benefit from savings gained by bringing the average public spend per head in Tottenham closer to the London average – a gap that currently accounts for £850m annually........

With proper action, Tottenham will prosper once again. A programme of regeneration is essential. Yet with highly interconnected problems, both the social and physical aspects of regeneration need careful coordination. Extensive talks with Borough of Haringey Leader Claire Kober, and Cabinet Members Alan Strickland and Joe Goldberg have shown their willingness to take challenging decisions in pursuit of major change.......

If they succeed, Tottenham and its residents could enjoy a bright future. If they fail, business will continue as usual, and we can expect the existing problems to further worsen. It took another riot. It shouldn’t take a third.

This was the starting point of the journey which has led to the Haringey Development Vehicle. But there is an essential paradox. The third Critical Recommendation which envisaged public funding calls for:

  • Increase housing supply
  • 'Regeneration/renewal'
  • create a greater tenure mix
  • replace existing social housing

Several things have happened since 2012 which must be taken into account now when considering how the third Critical Recommendation can be achieved through the HDV:

  • Following the most recent census in 2011 which showed London's population had increased by far more than was projected, the GLA's London Plan required local authorities to build large amounts of homes
  • The RICS methodology for Viability Statements post the 2008 banking crash allowed developer's to make 20% - 25% profit as an incentive to their continuing development. The combination of increasing land values and the allowable profit level has led to few developments meeting the London Plan target for affordable housing (up to 80% of market rent). No affordable housing was achieved at Tottenham Hotspurs development as, at the last minute, the developer submitted a revised Viability Statement.
  • A 'greater tenure mix' is now embedded in the emerging Local Plan and is reflected in the Business Plan for the HDV. The new CEO in 2012 was appointed to deliver this aim which would lead to an increased supply of housing with an improved rate base.
  • The Business Case (October 2015) for the HDV is predicated on profit arising from rising property values. It is notoriously the case that developer's assessment of sales' income in Viability Statements has been nowhere near close to actual sales prices. Lendlease's Heygate development in Southwark is a case in point.
  • There is no certainty therefore that much if any affordable housing will be achieved but a greater rate base might be, depending on the 'deal' negotiated by government on Brexit Referendum which, of course, was not envisaged and has happened since Sir Stuart Lipton's report was written.
  • Council-owned housing for rent developed by the Council has dropped off the agenda.

We consider it to be the case that a combination of unforeseen circumstances have arisen since Sir Stuart Lipton's Report was published and the best of intentions and a balanced approach have been lost in the process.

Our concerns fall under the following headings :

  1. Risk

The Council’s Business Case of 2015 was prepared before the EU referendum and before the numerous changes in housing and planning law which were enacted in the Housing and Planning Act 2016 and trailed in the White Paper recently released. As a result of these changes in the economic and political environment the Council’s decisions have to be tested against a much wider range of possible circumstances than must have seemed likely in 2015.

The economy of the UK is very weak, with low investment; what little growth we have being driven by migration and expanding household debt and no clear prospect that we’ll be able to take advantage of a devalued pound to increase our exports. Many of our export sectors in finance, insurance and related professional services are directly threatened by brexit while others – like the university sector, a huge earner of foreign exchange — and tourism are threatened by visa restrictions. We share with Greece the decline in real incomes in the last decade.

We thus need to consider the possibility that the UK economy will fail to grow and may contract in the coming decade. Furthermore the effect of inflation of import prices leading to higher interest rates would both impoverish an indebted population and change balance of power within the HDV.

The other contextual factor is related to housing policy: it keeps changing in ways which make it ever harder for councils to resume house-building. That’s one of the reasons why Haringey has proposed the HDV. But it seems quite possible that government will find ways of extending the Right to Buy to Council-owned companies or in other ways inhibit the efforts of London Boroughs to circumvent government policy. Although the Minister has backed off the RtB threat recently we cannot be very confident.

So what are the risks which the Council should be looking at:

  • The risks ofdebt exposure of the HDV. We are told that the Investment Partner (IP) will match the value of the Council’s successive transfers of property with injections of equal amounts of its own equity finance. Then on top of that the HDV will borrow the money to do its developments. Can the HDV borrow through the Public Works Loan Board (at about 2% currently) or by bond issuance (which might be cheaper still) or would it have to pay open market interest rates of perhaps (7-8%)?

In any event (whatever the interest rate) if interest rates then rise, it could indefinitely postpone the moment when Haringey begins to receive 50% of the profits from the venture. (We are told that the Council would receive profits only after all debts are repaid.)

  • All the work of managing the HDV and the property portfolio handed over to it on day 1 would be undertaken by the IP (Lend Lease). This would presumably mean that the IP is expected to charge the HDV with its costs, and these costs would undoubtedly include some level of profit to themselves on each task performed. The IP would thus be enjoying steady profits from these operations while the Council would gain no profit share from the HDV until much later, if at all.
  • If the government goes ahead with measures which would impose the Right to Buy on sub-market dwellings produced by Council subsidiaries, the HDV could be losing units which it had made such sacrifices to produce.
  • The Council’s cash flow under the HDV regime would, at least initially, fall because the rental income from its commercial property portfolio would instead flow to the HDV. The leader of the council in her recent article implicitly accepts this prospect, but expects it to be made good by growing income from Business Rates and Council Tax. That may be so, but the figures should be available.
  • A final risk which should be explored is what happens if and when the IP  decides to sell its share. We are assured by the Council Leader that Haringey would have to consent to any such sale. But if economic conditions become very adverse and there are few willing buyers the Council might not have much choice. This could be important because we have seen examples, especially in Germany, of large portfolios of rented housing falling into the hands of hedge or private-equity funds of the very aggressive kind which then exert intense pressure to raise rents and evict those who cannot pay. Rather less likely, though possible, is that the Council sells its share, or part of it with similar attendant risks.

If an up-to-date evaluation of risks were to be made, it would most likely indicate the need to think again about the Cabinet’s preferred option and give serious consideration to the merits of an incremental (parcel-by-parcel) approach to development, minimising the Council’s up-front commitment of assets in the hope that the economic or policy conext might improve. At least an explicit risk-mitigation strategy could be developed.

The Cabinet decision of February 14 was, in fact, called in by members of both the Labour and Liberal Democrat Groups, and following an almost 5 hour meeting on March 2, was referred back to the Cabinet. We have attached the link to the call-in and the minutes for your reference.The Cabinet rejected that overarching recommendation, and is pressing ahead with the HDV negotiations with a published date for Cabinet sign off on July 3

Despite several concerns and risks being raised, this was rejected by the Cabinet on March 7 in 19 minutes. These three meetings were webcast. The issue of risk is central, and we believe is heightened, for example by the increased costs of imported building materials, availability of skilled labour, and wider trends in the economy including risks of general inflation and rising interest rates. That the Governor of the Bank of England recently asked the largest businesses to provide Brexit plans, and that the housing market appears to have peaked, adds to insecurity. Even when the economy was in better shape, the history of these long–term joint ventures was patchy at best, with at least two documented voluntary liquidations which cost these authorities significant amounts of taxpayers’ money. In addition, we draw your attention to the fact that this venture includes an exclusivity clause regarding building contracts (we know no more detail) which raises the alarm regarding this whole scheme, and who makes profits at various stages. We understand this was a central feature of a case in New York involving Lendlease and its subsidiary Bovis. Some $56m was paid in fines in order to avoid prosecution.

The plain fact is that the November 2015 business case, is now firmly out of date. Surely this should be revised in the light of changed economic circumstances, before any decision is taken on this venture. We understand the Housing and Regeneration Scrutiny Panel is currently doing more work on this, especially focusing on risk, and should be producing further recommendations shortly. A delay to produce an up to date business plan must surely be prudent and would be a minimal requirement, enabling the range of options to be re-visited in a rational way.

https://www.minutes.haringey.gov.uk/ieListDocuments.aspx?CId=128&MId=8162&Ver=4

  1. Governance

The kind of “independent governance structure” proposed by Sir Stuart Lipton was clearly intended to bring together different parts of (local, London and perhaps national) government to counter disjointed practices, adding in local expertise etc. It’s not clear what “independent” meant for him: clearly he wasn’t envisaging a private company. (It sounds awfully like a Development Corporation.)  The HDV as currently conceived is clearly not something which could meet Lipton’s objectives, indeed its existence would render such an agency powerless or redundant by virtue of taking away control of land and built assets.

The decision process on the HDV up to now has been deficient in governance terms at two levels.  For elected councillors outside the Cabinet it has been - and remains - impossible for them to satisfy themselves of the wisdom of the Cabinet’s emerging proposals and report back to their constituents because confidentiality rules have been applied even long before any commercially confidential data on actual Investment Partners was involved.  Secondly the Council/Cabinet has failed to act transparently and to consult with its residents, taxpayers, tenants and other interested parties in a way that would satisfy the “Gunning” principles, or at all. The Gunning principles were recently reaffirmed and strengthened by the Supreme Court in a Haringey case so this omission is especially surprising.

The governance aspects of the proposed HDV are deficient. The assets would be owned, and decisions made, by a Limited Liability Partnership. It would be outside the scope of FOI which is a deficiency. It’s governing Board meetings would presumably not be open to the public or to councillors who were not directors. Its minutes and agendas would presumably not be public documents. Directors nominated by Haringey would presumably be required by company law to act only in the interests of the LLP and it is hard to see how this legal requirement could square with the need for them to report back, represent the interests of the Council, citizens and the public generally.  While this must be a problem in every joint public-private company, the 50:50 balance envisaged for the HDV makes the problem more acute.

It is surprising that the Business Case makes no reference to international experience which could provide useful models. In particular the French system of Mixed Economy Companies (Sociètés d’Économie Mixte) has been operating for many decades, delivering housing, infrastructure and mixed development in hundreds of sites under a law which ensures that public bodies must control between 51% and 85% of each company. There are Netherlands, German and Scaninavian models which also should have been considered as possible approaches to good governance.

It is stated that the HDV would establish subsidiaries for each individual project/development. The problems of council and public scrutiny of a proliferating set of organisations would be very severe and does not seem to have been addressed.

Has the Cabinet prepared for the challenge of maintaining an in-house shadowing (understanding, monitoring) of what is going on within the HDV? To play its role as 50% owner in an informed way it would need to assemble a staff of development finance & related professionals to be the officer-level interface between the Council and HDV.  Since the Cabinet considers that Haringey lacks the skills to do direct development, how can we be assured that it will assemble the skills to keep effective control of HDV?

Where estate regeneration is concerned, there is widespread agreement that tenants and residents can and should play a strong role from the outset (DCLG 2016, London Assembly 2015, Mayor of London’s draft Estate Regen 2016) and it is hard to envisage this being achieved if the process is under the control of a private LLP.

  1. Balance Sheet
  • The IP will be required to input funding to match the Council’s equity interest and additional funding on a debt basis;

(Page 6 of the Business Case dated October 2015)

There is mention that the Council's IP will input Capital but where is it coming from?

            There is little clarity about what a balance sheet for the HDV would look like on Day-One. In particular, the terms cash, equity and loan-note seem to be used almost interchangeably, for reasons that are not obvious.

Liabilities side: we know that the intention is for ownership to be divided 50:50. The two partners' shares would be the only items on the liability side, unless there were other liabilities from day one (i.e. short-term debt or long term loans).

Any such ordinary borrowings are unknown, but it is intended that the HDV could borrow (without limit) and that such borrowing would be secured against assets to be transferred into the HDV.

            Asset side: we know that on day one, the Council's Commercial portfolio (shops, offices, industrial estates) would be transferred and that this is valued (or undervalued?) at about £48 million. Apparently, LendLease would match this, via cash/equity/loan note. However, what is currently unclear – if not actually unknown – is how the Loan Note (£48 million?) would operate.

            It is important to get this clear, because tens of millions of pounds worth of real Council assets are to be exchanged but we need to know precisely for what.

We are told that we would own 50% of this vehicle, but it is unclear of what the vehicle comprises. 

            We are also told that we would have a claim on 50% of the profits, but any profits may be insignificant or not exist at all, or not for a long time and in any event, would drop out of a complicated financial structure, dominated by the manager.       

  1. Business Case October 2015 : Is it out of date?        

http://api.ning.com/files/BVt5Yxup6TdnE-TUY3CZdJxy*tpCtzGu2eRUBNx6MYHj4tGnNYhnuMhjZYQ2wuMzGgtCh1An4DP4DyujZc4PMh7xBJs0UPSo/BOOKMARKED1HDVBusinessCaseOctober2015.pdf

  • The business plans of the HDV will provide the opportunity for the Council to enshrine its objectives into the sites and vehicle. (Page 6 of the Business Plan October 2015)

4.1           Are the following premises still true?

The Borough has huge potential for growth and opportunity. Haringey, and in particular Tottenham, is today seen as London’s next big growth opportunity. The Council’s Corporate Plan states that by harnessing the Borough’s potential correctly it can become a more balanced and prosperous area and an important part of the future of London. It is believed Tottenham alone is capable of delivering 10,000 new homes and 5,000 new jobs by 2025. (Page 3 under 'Context')

3.3 Economic Context

At a national level, there is continuing growth in the economy with consumer confidence at its highest level since the pre-crash levels of 2006. Projections from the Bank of England predict a continuation of this solid demand for growth with an anticipated growth to household spending and business investment combined with low costs of finance. Whilst inflation is at a record low, the MPC expects it to bounce back to 2% in the short to medium term with unemployment rates continuing to fall. London, in particular, will benefit most from this projected growth and therefore this continues to be an area for investment. This sets the Council in a strong position when seeking to draw in private sector investment and equity to facilitate housing and economic regeneration and growth proposals through new delivery approaches in the Borough. As a result of this economic growth, housing values (particularly within London) have also experienced enormous change. The average cost of a home in London is set to breach the £1 million level by 2030 as house building struggles to keep pace with a rapidly rising population. With London’s population set to increase by 14% (more than 1 million people) over the next decade, the level of housing required is unlikely to be reached. This demand / supply imbalance means that the rise in the London housing market is set to continue in the medium term.

The opportunities within the Borough to undertake estate renewal, rebalance housing tenures, improve stock quality and increase housing density are therefore well placed to capitalise on this period of demand / supply imbalance and rise in values. (Page 16)

Although there will be a commitment by the Council to contribute these assets in their entirety to any new delivery approach over time, it is likely that the land would be contributed on a phased basis subject to meeting pre-agreed conditions (as set by the Council).

These assets have been identified as priority sites on which large scale estate renewal and town centre regeneration can be undertaken and comprise:

  • Wood Green;
  • Northumberland Park regeneration area;
  • Medium Potential Development Sites: Park Grove Estate , Leabank View estate, Cranwood House;
  • and Commercial Portfolio

                  The Council would expect to determine a finalised list of sites as part of the procurement dialogue with its prospective partner(s). (Page 19)

            What is proposed now is that all these assets are placed in the HDV on Day One and with a single partner.

4.2       CrossRail 2 was not included in the Chancellor of the Exchequer's Budget       

            Please see pdf of article in the Evening Standard of 5 April 2017 which reported that several volume house builders and the G15 group of the largest Housing Associations had written to Philip Hammond urging him to announce the go-ahead for CrossRail 2. Without it, they said, they could not commit to building the number of homes required by the London Plan. Why are their Business Plans so different to Haringey's?

            Please also see 8.2 below

The existing good transport links are continuing to be strengthened, with the real possibility of Crossrail2 making a further significantly positive impact on the Borough. (Page 18)

                  The Council owns an extensive portfolio of assets within Wood Green’s town centre, in three clusters at the Library, River Park House / Station Road and the Civic Centre......with the potential for two nearby Crossrail stations, present a unique opportunity to unlock a significant regeneration opportunity in Wood Green. (Page 20) 

5.2.2 Crossrail 2

Crossrail 2 will add much needed capacity to London’s rail network and support economic regeneration. With up to five stations planned for Haringey, it is expected to bring improvements to the Borough such as a reduced journey time from Tottenham Hale to Clapham Junction from 45 minutes to 22 minutes. It is also projected that the potential development of Crossrail 2 could mean that the number of jobs within 45 minutes of Tottenham Hale will grow from 2.6 million today to 2.8 million in 2030. The associated transport accessibility improvements will make development of new sites, such as those that might be contained within the proposed delivery structure, viable. Crossrail 2 will be a brand new high capacity railway line with 250m long trains with capacity for over 45,000 persons per hour, per direction, operating up to 30 trains per hour. Current plans are that it will serve south west to north-east London through central London. It is hoped that it will be open in 2030 and is estimated to cost £25 billion. The identified route will significantly improve the already strong existing transport connections in the Borough. (Page 26)

            Crossrail 2 is by no means certain to go ahead at the time of writing (April 2017) and does appear essential to provide capacity both for the intensification of the whole Upper Lea Valley Opportunity Area and for the commercial expansion of Wood Green as a centre.

4.3       The Council's Risks were identified in the Business Case in 2015. Have they been satisfactorily addressed?

                  4.4 Commercial Portfolio

The Council owns a large commercial portfolio. The significant proportion of the commercial assets within the portfolio (excluding telephone masts, wayleaves etc.) comprises 146 assets (offices, industrial and retail) with a portfolio value of £48 million generating a net annual income of £2.1 million. (Page 22)

6.2.6 Option

6: Overarching Vehicle (OV) Under this option the OV is established between the Council and a strategic partner e.g. a development partner, in order to create an overarching strategic partnership. This partnership can then take assets forward by way of different delivery mechanisms beneath the overarching level e.g. development agreements, joint ventures etc.

Pros:

  • The Council retains control over the assets as a partner of the OV i.e. on-going control over assets, development
  • The Council participates in profits from the OV
  • Flexibility to cross fund projects through the OV e.g. income from the commercial
  • portfolio and site disposals could be used to fund other projects e.g. estate renewal site
  • etc

Cons:

  • No large capital upfront receipts until values crystallised
  • Use of income from the commercial portfolio to cross fund development projects will reduce the revenue budget available to the Council and the Council will need to manage this accordingly (Page 39)

Appendix 4 sets out recent examples of joint venture delivery vehicles that have been established to facilitate regeneration or development of a portfolio of sites, including an investment portfolio. For note, whilst examples of ventures established elsewhere within London Boroughs are included for reference, these are for much smaller schemes than that proposed for Haringey (Page 41) Note: there is no cautionary opinion expressed here.

  • The capital strategy is likely to highlight a funding gap for achieving the Council’s long term ambition and the Council will need to determine its appetite and capacity to afford additional prudential borrowing. (Page 49)

The services provider will receive fees for providing these services with remuneration based on incentivised targets; (Page 6)

Have these fees been quantified, for example, by reference to similar schemes such as Heygate or One The Elephant in Southwark?)

  1. Security of tenure and homelessness           

The Haringey Development Vehicle is intended to facilitate the demolition of estates and the building of new housing on the demolished sites. As the likelihood is that the new estates built on these sites will have less socially rented housing available, this meant that it will be harder for Haringey Council to house the homeless in Haringey, thus forcing them to house people outside the borough away from their families, schools and support networks.

The sites where estate regeneration is to take place are identified in the Haringey Development Vehicle Business Case. This indicates that the council is considering incorporating Northumberland Park Estate and Broadwater Farm into the Haringey Development Vehicle, as well as some smaller sites. (Document available at https://www.minutes.haringey.gov.uk/mgAi.aspx?ID=46926 , see Appendix A1 Business Case (public version) page 20-22.)

Other relevant documents from Haringey Council or commissioned by them show that Haringey Council’s plans are to build less social rented housing on these sites.

There is the Northumberland Park Strategic Masterplan Framework. (Available at https://tottenham.london/explore/northumberland-park/explore-northumberland-park-strategic-masterplan-framework , see page 104-110.)

Even with the ‘minimal intervention’ scenario only 183 out of 1092 council tenanted properties in the relevant area will be retained. (See page 104, total retained council tenanted properties sum to 189 added to figure of 909 council tenanted homes to be ‘affected’, i.e. not to be retained.)

This is one indication of how much may be demolished. How much social rented housing will be re-provided? This is indicated in the Haringey Council Cabinet Reports Pack for 13/09/2016, Housing Zone Phase 2.

(Available: https://www.minutes.haringey.gov.uk/ieListDocuments.aspx?CId=118&MId=7845&Ver=4 see page 221.)

This report indicates that in Northumberland Park regeneration will provide 2300-2800 net new homes, a ‘minimum’ 25% of which will be affordable.

But even these will not mainly be affordable rented properties. This is shown in the Tottenham Area Action Plan, (available at: http://www.haringey.gov.uk/planning-and-building-control/planning/planning-policy/local-plan/tottenham-area-action-plan , see page 39.) In new developments in Tottenham the ‘affordable housing’ provided will be 60% Intermediate housing/40% affordable rented. Intermediate housing is housing at above so-called affordable rents, i.e. above 805 of market rent, or home ownership products like shared ownership. People from the housing waiting list are not housed in intermediate housing properties by the council. Therefore, of the new housing provided in Northumberland Park only 40% of 25% may be affordable rented housing, if the above policies are adhered to, i.e. 10%.

Now as the following FOI answer makes clear Haringey does discharge homeless duty by housing people in the private sector in some cases and does put some homeless families in temporary accommodation outside of the borough:

https://www.whatdotheyknow.com/request/localism_act_private_sector_disc_3

Quite clearly if social housing is reduced in Haringey, private sector and out of borough placements must surely increase. The Northumberland Park development plans show that there is a serious risk that the HDV will lead to a big reduction in the amount of social rented housing available to house those most in need in Haringey. Instead homeless families will become more likely than at present to get properties with non-secure tenancies in the private sector and be housed out of borough.

It is also worth noting that a 2013 plan by Arup commissioned by Haringey Council for the future of Broadwater Farm has been obtained by an FOI. We have been informed this shows a similar loss of social housing in the new development

  1. Planning policy risks

6.1       References to 'refurbishment', 'regeneration', 'renewal' and 'new build' are used loosely and interchangeably in the various documents including consultation documents. In future these terms should be carefully explained and what is proposed made clear in the interest of transparency.

6.2       The introduction by Cllr Joe Goldberg to the Wood Green AAP could lay the Council open to JR.

6.3       The Council seeks to emphasise in its public statements about the HDV that affordable housing is an essential reason for the HDV and delivers one of the key aims of the Council. However these statements are heavily qualified by phrases such as 'we will do our utmost to provide affordable housing.' These qualifications reflect the clear knowledge on the part of the HDV protagonists that it is one thing to have a policy framed in this way: "The Council will expect x% of affordable housing" but quite another to be certain in the light of Viability Statements that x% will be achieved. This gargantuan Vehicle is publicised and defended on the basis that it is the only way Haringey can provide homes for affordable rents but this could very well not be achieved.

6.4       The GLA is working on revisions to the London Plan.

6.5       The GLA is also working on a new Supplementary Planning Guidance (SPG) on subsidising affordable homes on a pro-rata basis depending on the percentage of affordable homes between a minimum of 30% up to 50%. The consultation period ended on 28 February 2017. All London LPAs will need to bring their Local Plans into line with the GLA policy once adopted. If the Haringey requirement stands at 40% affordable homes, it would have to change it to 30%. How this policy would be funded is not known to us. Does Haringey include this subsidy in its current financial projections for the HDV?         

  1. Timing of decision

7.1       Expected date for Decision in relation to External Audit

            We understand that Cabinet intends to make a Decision about the HDV on 3 July 2017.

            We presume this will be a two-part decision:

  • on whether to proceed with the HDV
  • whether to enter into an LLP with Lendlease under terms clearly set out

We note that Haringey have a team working in detail on the proposed HDV. If that team has completed its work by the date of that meeting and has found everything satisfactory, then it is agreed that Cabinet could legitimately make those decisions. However If your work is incomplete or raises concerns which need to be addressed before completion of your Audit which must be signed off by 30 November 2017, we cannot see that Cabinet could reasonably consider the HDV questions on 3 July and make decisions.

            If manifestoes are to be relied upon, the situation regarding Brexit may be clearer after the General Election on 8 June. It should be clear whether a 'cliff-edge' scenario needs to be factored into your risk assessment.

            The Local Plan was due to be adopted in March 2017 after two years of consultation, re-drafting, Examination-in-Public and the Examiner's comments having been received. We understand that adoption of the Local Plan has been delayed to July 2017. We are not aware of the reasons for this delay. The Government is pressing all LPAs to put their Local Plans in place. Without a Local Plan, developers may be able to argue that the Local Plan is not 'emerging' and so a planning policy limbo exists and developers across the country are taking advantage of this situation. We would like to refer you to the Appeal regarding HGY/2015/3288 & APP/Y5420/W/16/3162812: 86 Victoria Road, N4 3SW which will be heard at an Informal Hearing at Wood Green Civic Centre on 3 May. The developer contended that the Local Plan could not be considered as emerging given the delay in its adoption. The Statement of Common Ground (between the LPA and the developer) leaves the situation of the Local Plan unclear.

7.2       Wood Green AAP

            The Business Case (October 2015) for the HDV stated at page 9:

Through the Local Plan, Site Allocations, Tottenham Strategic Regeneration Framework and Area Action Plan (AAP) and emerging Wood Green Investment Framework and AAP, Haringey has laid much of the important groundwork for bringing forward its developable land. The acknowledged belief that Tottenham and Wood Green are areas of potential in London for growth and the development of an ‘affordable London’ illustrate that now is the right time to harness the potential of the Borough, including the Council’s land.

            The Wood Green Area Action Plan (AAP) is out for consultation until 28 April 2017, the period having been extended from the earlier closing date of 31 March. The fact that this document is crucial to the HDV will be evident as so much and the most valuable of Haringey's assets to be passed to the HDV LLP are located in Wood Green. The AAP, once finalised, will itself go to Examination-in-Public and eventually become part of the Local Plan suite of policies. We do not know when that is projected to be.

            Cllr Joe Goldberg (Cabinet member for Economic Development, Social Inclusion and Sustainability) in his introduction states:

            To this end the Council is working to deliver an ambitious plan, predicated on maximising the benefits associated with the introduction of a new Crossrail station to the centre of Wood Green. (CrossRail 2 is mentioned 87 times in this document. This statement must surely leave the Council open to Judicial Review as a planning policy cannot be predicated on a decision not yet made.) 

                  Spatial strategy

                  Projected AAP Development Outputs Methodology and assumptions

6.6            New development in this area is going to be spurred by a combination of public interventions and private investments in the AAP area. Key amongst these will be the introduction of Crossrail 2 to the area, including the development of a new station in the centre of Wood Green, and the redevelopment of Council land within the centre. Together with private investment on neighbouring sites, most prominently that of The Mall, Clarendon Square, and within the Wood Green Cultural Quarter, the area will be transformed to meet the Spatial Objectives set out in section 5.

6.7            In order to recognise the impact that the introduction of Crossrail will have on the property market in Wood Green, as well as the Council’s commitment to growth as a part of the regeneration of Wood Green, density assumptions have been increased from those set out in the current Site Allocations DPD for the sites within Wood Green. This, alongside the introduction of new sites (development capacity on the Mall, Vue Cinema Site, Hornsey Filter Beds) raises the capacity of the area.

Council as a landowner and developer

9.8           The Council has substantial landholdings across the AAP area, much of which has been allocated for redevelopment. The Council is committed to bring its sites forward in a timely manner and will, if appropriate, enter into joint ventures or other such arrangements, to facilitate this.

9.9           Any procurement exercise will be undertaken in an open and transparent manner

We do not know when the Wood Green AAP is likely to reach the stage of Examination-in-Public or be adopted as planning policy but until this process is finalised, it is surely not appropriate to take the risky step of passing all the most valuable Council-owned assets into the HDV. If it were to do so, the clear water between the HDV and LLP and the planning application process could be prejudiced as a result of substantial assets being put at risk.    

            All of these stages are relevant to timing of adoption of the HDV.

 

Yours sincerely,

Gail Waldman

Hilary Adams 

Martin Ball, for the Our Tottenham Coordination Group

Paul Burnham, Haringey Defend Council Housing

Cathrine Collingborne 

Joan Curtis, Secretary, Haringey Friends of Parks Forum

Dr Mark Ellerby

Dr Fiona English

Michael Hammerson

Simon Hunt, Director, The Friends of Finsbury Park

James Lazou

Ann Mctaggart

Dave Morris, Secretary, Haringey Federation of Residents Associations

Jan Morgan, Chair, The Highgate Society

Rev Paul Nicolson

Gordon Peters, Older Peoples Reference Group

Gordon Peters, Green Party

Susan Rose, Chair, Highgate Conservation Area Advisory Committee

Jacob Secker, Haringey Defend Council Housing

Jasmin Taylor, Chair, The Friends of Marcus Garvey Library

 

  1. Claire Kober