Why is the Labour Party falling out over Haringey?

Haringey council leader Claire Kober announced she would stand down last week, following an intervention by Labour’s National Executive Committee (NEC) into the dispute within the Haringey Labour party over a controversial regeneration plan with Lendlease, a private developer with a dubious history. Kober was determined to press ahead with a plan that had been rejected twice by the Haringey scrutiny committee, was deeply unpopular with local residents and Labour Party members, and was opposed by 22 Labour Councillors and both the local Labour MP’s.

After the NEC motion asking Haringey to pause the plan, and offering to mediate in the dispute between local Labour councillors, the leaders of many Labour run councils, including Manchester, signed a letter published in the Sunday Times , criticising the NEC’s involvement in the dispute, claiming that their actions were “an affront to the basic principles of democracy”.

Known as the Haringey Development Vehicle (HDV), the proposal would hive off publicly owned land, buildings, council homes and their rents to a joint public/private venture. Funding construction of thousands of homes, in an area of acute housing need, the HDV had a ‘Gross Development Value’ estimated at £2 billion to the company over twenty years.

Kober asked Haringey council to approve the scheme, despite two separate recommendations from the scrutiny committee not to proceed; due to the financial risk, lack of commitments on social housing, and secrecy on contract details cloaked by commercial confidentiality.

HDV plans promised up to 40 percent ‘affordable’ housing, not guaranteeing to replace any of the ‘social rent’ council housing which would be bulldozed to make way for the scheme. According to council figures, average weekly social rent is £103.89, while average weekly affordable rent is £248.14, nearly 150 percent higher, unaffordable on a low income, as many are in Haringey, the nineteenth most deprived borough in England.

Crucial to understanding the bitterness of this row is the role of London authorities, struggling after years of grinding Tory austerity, in driving through the demolition of council housing, replaced by homes for sale or shared ownership, or supposedly affordable properties. Councils and Developers launch propaganda campaigns promising new homes, facilities, investment and jobs.

“Forced gentrification and social cleansing”

Jeremy Corbyn acknowledged the issue at the Labour Conference in September, saying regeneration had too often meant “forced gentrification and social cleansing” such as the Heygate Estate redevelopment completed in 2014 by Lendlease for Southwark Council. This resulted in 1,194 social rented homes being replaced with 198 homes at affordable rent, 316 shared ownership homes and 82 social rented homes according to Inside Housing.

For the Labour Party, to be accused of bulldozing council estates, and socially cleansing the poor from London to make way for luxury flats built by property developers is political poison. The campaign group Architects for Social Housing believes of the 237 London estates which have been regenerated, have plans underway, or are threatened by such proposals, 195 are in Labour boroughs. Twenty one of these were proposed in Haringey, pitting housing activists, an increasingly sceptical public and grassroots Labour members in a totemic struggle against the HDV. Closer to home a regeneration plan for College Bank and Lower Falinge in Rochdale proposes demolishing 720 primarily social rent homes, with no guarantee of any social rent properties in the proposed 680 new build properties to replace them.

As the HDV details became public, the worst fears of residents were confirmed. Plans for the Northumberland Park and Wood Green estates included 6283 homes, in the first stage of the project. A Freedom of Information (FoI) request revealed that despite assurances from the council leader, the HDV included 2435 homes for sale, 1858 for the private rented sector, and 1990 units of so called affordable housing, or thirty two percent, and no guarantee of any social housing to replace the 1200 council homes to be knocked down, which is not mentioned in glossy consultation leaflets given to locals, who were guaranteed a right to return.

Aditya Chakrabortty of The Guardian revealed the undemocratic and secretive methods used to try to manufacture consent for the HDV including creation of a ‘Shadow Board’ on which three council representatives met with Lendlease months before the scheme had been approved, when Haringey formally approved the proposal in cabinet in July 2017, 1500 pages of documents were released to the public only a week before the decision.

The new mood on social housing prompted by the Grenfell fire failed to encourage reflection or reconsideration by Claire Kober, Alan Strickland (Executive member for housing), or cabinet colleagues. A noisy protest was held outside the council buildings on the day of the meeting. They pressed on regardless, ignoring the warnings of the planning scrutiny committee, of both the local Constituency Labour Party’s, and their two centre left Labour MP’s, David Lammy and Catherine West.

Corporate hospitality or “schmoozing local councillors”

Financial arrangements were redacted from the documents worried councillors had to assess the scheme for reasons of commercial confidentiality. Despite the insistence of Strickland and Kober that residents were being fully consulted in the decision making process, campaigners felt this was also inadequate, so a crowd funded challenge in the high court for a judicial review of the decision was made in October.

A track record of cronyism between Lendlease, and councillors and officers in Southwark has fuelled mistrust. Anna Minton and Spinwatch showed three senior officers went on to work for Lendlease, and one in five of all councillors in Southwark, worked as lobbyists for developers.

News site Vice covered in detail the involvement in the HDV of lobbying firm Terrapin and its owner, Peter Bingle, who “spends his days schmoozing local councillors in the capital’s finest restaurants in a bid to get his clients picked for big deals.” Terrapin represented Lendlease while winning regeneration contracts for Southwark, Haringey, Kensington and Wandsworth worth £3 Billion.

Between July 2014 and January 2017, Kober accepted hospitality on six occasions from Terrapin worth £365, Alan Strickland on five occasions, totalling £275, including during their jolly to the 2015 MIPIM property development conference in Cannes. Other councillors in Haringey were similarly entertained or employed by Terrapin, one, Cllr Adam Jogee, has been employed by them as a consultant, and is the Labour group whip – responsible for party discipline and making sure the leadership maintains the support of members.

Haringey sent Cllr Strickland to the March 2017 MIPIM property conference in Cannes, along with another executive councillor, and three senior officers. An FoI request reveals meal expenses were £1026.82, and hotel accommodation cost £5,800 for the delegation to MIPIM, paid for by sponsorship of £16,300, raised from companies in the development industry. There are perfectly legitimate reasons to take part in such events, but the extent to which councillors and officers meet with and are entertained by people involved in the HDV adds to suspicion amongst local residents and Labour members.

Broken promises, bad deals and deselection

Promises were broken by Lendlease at Heygate. Originally the 1100 socially rented homes would be replaced on site, this was revised downwards in various stages of the development to just 82, and only 45 of the original Heygate tenants have returned. Of the original 1034 secure tenanted households only 216 have remained in the SE17 postcode. So the right to return was honoured for less than 5 percent of residents. Architects for Social Housing believe the reasons are clear: “London’s estate regeneration programme is designed to demolish the housing estates in Inner London for redevelopment as high value property for capital investment, property speculation and home ownership.”

It was the failure of the Haringey executive to acknowledge these fears or compromise with fellow Labour councillors about HDV, rather than any left wing strategy, that led to a string of deselections in November; and other councillors choosing to stand down. The movement against them was supported by members from all shades of Labour opinion, and though Claire Kober scraped through her own reselection, of 28 pro HDV councillors, 22 were deselected or chose to stand down.

The Financial Times, hardly a bastion of Marxist ideology, found the terms offered to Lendlease were overly generous. Besides granting them 50 percent ownership off all assets put into the HDV, including a £45 Million property portfolio with considerable commercial income, and £18 Million worth of Land in the first phase alone, the FT stated: “HDV will also pay fees to Lendlease for managing Haringey’s commercial portfolio and for project managing the developments. The fees, in both cases, amount to all costs plus 20 per cent of costs.”

Costs from third party suppliers can be artificially inflated in exchange for tax free rebates, a ruse used to boost profits in the facilities management and soft services industry. Lendlease has been subject to lawsuits for overcharging, and in 2012 settled out of court for $56 Million for fraud against New York City. With a history of health and safety breaches, environmental concerns, and trade union black listing, none of these would qualify as adding social value to the deal. Contracts parcelled out amongst small and medium UK firms would be easier to manage and keep the proceeds in the UK, but Lendlease profits would be exported using aggressive tax avoidance.

Challenges financing large scale public sector construction and outsourcing have been demonstrated recently, with Carillion collapsing, and Capita losing almost half its value on the stock market after a profits warning. Time and again in recent years public assets have been privatised, and services contracted out on the basis of reducing costs and improving performance through better management. But services often suffer, staff wages and conditions are forced down, and in many cases, such as the many PFI construction schemes, they are far more expensive in the long run than direct government borrowing and investment. The business model of HDV was based upon public sector assets and revenues, matched by IOU’s from Lendlease for work to be completed, with an expectation that Haringey council would borrow under public sector terms according to the FT’s investigation.

Lendlease know that they once they have captured the political leadership and entered into a contract they can shift the terms over time, reducing the benefit to the taxpayer, cutting back on affordable housing provision, and squeezing out more profit. Once demolitions and construction are under way Haringey would be locked into the contract, and the taxpayer compelled to meet any shortfall. The financial and political consequences of failure would be unthinkable.

Housing situation in Manchester

Providing decent housing is not currently a statutory duty for local government, but it is clearly now one of the most important challenges in Manchester, and across the country. Manchester is a great city, and with so many people keen to live here it will continue to grow. Current plans leave Manchester 10,000 homes short by 2021, and current building plans fall short by 2000 properties per year to meet demand. The growing problem of homelessness is mostly unseen, with the MEN reporting 1800 children in temporary accommodation in November; thousands of families are waiting for homes, or making do in sub-standard, overpriced, private rented accommodation.

Manchester’s measure of affordability, based upon a third of mean average household income of £27,000, is better than the governments [at 80% of market rates], but too high for those in the greatest need. More social housing is needed to tackle the crisis, building so called affordable homes which are out of reach of those in need will not tackle the problems. Meanwhile, allowing the city centre property boom to overheat will cause house price inflation to ripple outwards, pushing up the cost of homes for everyone. Changing our affordable housing policy to build more social and low cost private rented housing, and make it harder for developers to use viability assessments to avoid building affordable housing or paying for its construction elsewhere would help. Making viability assessments public would make the process transparent.

Whenever development is proposed in an area it is important to ensure current residents will benefit, and communities are strengthened and protected, not destroyed to allow developers, or local authorities, to cash in on the proceeds of social cleansing. In Rochdale, a wrong headed proposal to demolish four of the well maintained and extremely popular Seven Sisters blocks on College Bank, and much of the Lower Falinge estate, threatens to slash the numbers of social homes. This would inevitably result in the social cleansing of many poorer residents so that new properties can be built for so called affordable rent or sale, and the vague promise by Rochdale Boroughwide Housing that residents would be rehoused somewhere in Rochdale town centre will count little to people whose lives would be turned upside down by the destruction of settled communities who have known neighbouring families for decades.

Labour’s NEC response to Haringey

Despite the Haringey Labour Group having fundamentally changed, so that 45 of the candidates for this May’s election opposed the HDV, the leader and her allies were determined to try to get the decision through council before the May elections. Because of these divisions, far from issuing orders, Labour’s NEC responded, quite legitimately, to a request to mediate in a dispute within a party unit, and support the request to pause the HDV from 22 local councillors trying to protect Haringey from disaster. The motion was passed unanimously after it was amended by Newcastle leader and local government NEC representative Councillor Nick Forbes, who strangely then chose to organise the open letter to The Times attacking his own decision.

Labour council leaders rightly praise Claire Kober for “leading a council in crisis following the appalling public service failures that led to the death of Peter Connelly (‘Baby P’).” Local schools made remarkable improvements during her watch. The loss of a dedicated public servant and a woman leader in local government is to be regretted. Unfortunately, good leadership and success in some areas of policy, is no guarantee of infallibility in others. Fundamentally, democratic leaders must build consensus and accept compromise, they cannot overrule the wishes of colleagues and the public.

Far from “mitigating Tory austerity”, as claimed in the letter to The Sunday Times, by bulldozing their homes and breaking up their communities, with no guarantee of replacement social housing, the HDV would pile additional misery upon Haringey people. Giving up Haringey’s public assets to a developer with a track record of broken promises and sharp practice, accepting social cleansing of residents as a price worth paying for investment and gentrification, the executive of the Labour Group doggedly pursued this shoddy and short sighted deal despite an ongoing legal challenge, and in doing so lost the support of the public and party members.

In opposing the HDV, and choosing candidates from across the party prepared to stand up for the public interest and defend working class communities, Labour members have won a great victory for democracy, and saved the reputation of the Labour party in Haringey.

 

Ben Clay

Ben Clay is a Labour Party activist, trade unionist and an organiser for Tenants Union UK. He has been selected as a Labour candidate for Burnage, Manchester, in the May elections.

Feature Image: Twitter