Judicial Review 2, part one

A high court judge has described as ‘troubling’ the basic accounting errors which Lambeth council allegedly made before opting to demolish – rather than refurbish – Cressingham Gardens Estate.

Lawyers for residents claim the officers’ failure meant that cabinet members behind the decision, were wrongly led to believe the £110m redevelopment would be profitable (have a positive £0.8m Net Present Value (NPV)) – a strict requirement of its own ‘must achieve criteria’.

The residents’ analysis of the redevelopment suggests it would not be financially viable and would in fact require tens of millions of pounds of public subsidy.

Meanwhile, the court heard how the community’s own alternative ‘People’s Plan’, which residents claim would both make a profit and offer dozens of extra homes at council rent levels, at the same time as averting the bulldozer, was wrongly discredited in the cabinet report. 

The judicial review claim, brought on four grounds by resident Andy Plant, is the community’s second challenge to Lambeth council’s decision-making in little over a year.

If the decision is found to be unfair and unlawful, it could be quashed.

In November last year, another Cressingham Gardens resident, Eva Bokrosova, won her case, resulting in the first decision to demolish being quashed. 

The judge in that case found Lambeth had unlawfully removed refurbishment options from the consultation after failing to produce evidence that they were ‘unaffordable’.

The most recent decision to demolish was made at a cabinet meeting on March 21.

Residents have been questioning the justification for and viability of the council’s preferred scheme throughout the consultation, which was first launched in September 2012.

Viability calculations in the current case, show £7.5m ‘income’ from the council being paid to ‘Homes for Lambeth’, the private company (special purpose vehicle (SPV)) Lambeth is setting up to build the new development, but not being accounted for as an expense in the financial model.

The March 2016 cabinet report stated that the money was to be spent on masterplanning and buying out leaseholders, and would be ‘recouped through the projects through Homes for Lambeth in due course’.

In a witness statement made in July, Lambeth’s regeneration programme manager Julian Hart, claimed that in the ‘detailed cash flow model, this expense is paid back to the council over the course of the construction period,’ when closer analysis revealed it was not, the court heard.

In the absence of evidence to back up Mr Hart’s claim, in October lawyers for the claimant wrote to Lambeth, ‘seeking documents that would show the recoupment’.

Later that month, a letter from the council’s legal services department confirmed the local authority had been ‘unable to locate any [such] documents’.

Just weeks before the hearing, Lambeth finally admitted it had not included the multi-million pound expense in the financial model, which was calculated by development consultants Airey Miller. The revelation was buried in paragraph 21 of a witness statement from finance director Christina Thompson. 

The judge, Mr Justice David Holgate, described the paragraph, which was supposed to clarify the situation, as ‘incomprehensible’, and part of a ‘delphic [deliberately obscure or ambiguous] witness statement’.

In the statement, dated September 29 this year, the finance boss accepted that criticism of the council’s approach to account for the money in the NPV ‘may have been justified’, but only if the sum were a loan or a grant.

She argued that the income was neither, adding, ‘the money is best described as a sum to be recouped’, partly because ‘Lambeth will be the sole shareholder in Homes for Lambeth’.

She claimed that it was therefore ‘appropriate to include the sum in the NPV calculation without showing its recoupment’. 

Another reason she cited was that the ‘scheme is expected to generate a surplus’.

David Wolfe QC, for the claimant, told the court, ‘I’m not sure her paragraph makes sense, and I’m not going to try and make it make sense.’

In a legal ‘skeleton argument’ contained in court papers, Mr Wolfe stated, ‘The option which the cabinet ultimately adopted, was said in the [cabinet] report to have a positive NPV – thus meeting a must-achieve criterion.

‘But the NPV figure included a £7.5 million cash income figure, which tipped it from negative to positive.’

Mr Wolfe argued that it was not appropriate to include finance as income in such a calculation, but even if it were allowed, it should have been properly accounted for.

He said that the point should be considered in the ‘context of the consultation process’ and a ‘dialogue with members of the public’ in which they were supposed to have a ‘chance to assess the viability’.

‘We then get to an element which emerges as a tipping point, and we get them changing and varying the consistency,’ added the barrister. ‘Variations not only about what it is, but also about how it will be treated and has been treated.’

Seeking to understand Lambeth’s decision to compare the viability of its regeneration options using NPV calculations, judge Holgate referred to the ‘difficult’ decisions’ the council supposedly faces in weighing up which estates to refurbish and which to redevelop.

He said that in this context there was a ‘tendency’ for Lambeth to see NPVs as merely ‘theoretical’, partly because they do not take into account claimed problems with sourcing funding for certain options.

Turning to James Goudie QC, defending Lambeth, the judge probed, ‘If your clients produced a positive NPV [a profitable model] for refurbishment, that might be a factor that could influence the choice as to whether that scheme should go ahead for refurbishment?’

Mr Goudie replied, ‘One could argue that the project could be done without doing any NPV exercise at all.’

‘Why do an NPV exercise if they’re not going to use it?’ pressed the judge.

Mr Goudie said he would ‘come back to that’.

The barrister later returned to the topic of the claimed surplus, and how that might excuse the missing £7.5 million.

The judge agreed the surplus was ‘pertinent’, but repeated, ‘I need to know how to handle’ the failure to include expenditure.

He added, ‘I draw the inference unless you tell me otherwise, if it had been modelled, it would reduce the cashflow.

‘Whether it makes it [NPV] negative, it’s not for me to say.

‘What is the legal analysis – why shouldn’t it have been taken into account?’

He continued, ‘For months, Lambeth is saying that the repayment is in the model [and] it’s being taken into account.’

‘But almost at the eleventh hour, this witness says, “It’s not in the model,” and we have this paragraph attempting to explain that.

‘This is troubling me.

‘This is a mandatory criterion. This is the council’s own decision-making framework, not something imposed on them by the court. It’s something they chose as a test.’

Mr Goudie then pointed out a passage in the cabinet report which said an option with a negative NPV should only ‘probably’ be rejected.

Mr Wolfe had explained that ‘probably’ was a reference to schemes in general, and did not grant the council freedom to deviate from the official basis for decision-making about Cressingham.

Mr Goudie said, ‘If all [options] were [NPV] negative, a choice still has to be made.

‘It can’t seriously be suggested that if you manage to contrive that all are negative, that nothing is going to happen.’

He added, ‘Whether it had a positive NPV ultimately or not… one has to see the NPV in perspective.’

The judge went on to say that if the cashflows had modelled the £7.5m, ‘That, to use the vernacular, would be a slam-dunk.’

‘Even if the approach to NPV could be regarded as erroneous,’ said Mr Goudie, ‘this doesn’t mean that amounted to unlawfulness, still less that it would warrant any relief, because we were finally unable to fund any refurbishment of the estate.’

The barrister claimed that the refurbishment options (1-4) were dependent on funding from the Housing Revenue Account (HRA) (an assertion disputed by the claimant), which could not be afforded (also in dispute), while the demolition option (5), could be privately funded.

He added, ‘Whilst we would wish to be much more positive about Option 5, we submit it was the least of the worst of evils.’

After discussing the contention with regeneration officers behind him, Mr Goudie finally offered an explanation about the surplus, claiming that it was in fact ‘£25 million’.

He said this huge sum came from the difference between the ‘discount rate’ (6.09 per cent – the percentage used to perform the NPV calculation), and what the council believed would be the real, much lower cost, of borrowing (around 4 per cent).

This was possible because the council could control the ‘state aid margin’ – an interest rate payable because the SPV has to compete as a private company with market lending rates.

‘So, what you’re saying, is that in this explanation, the £7 million can be taken out of the £25 million, without disturbing the £824 thousand NPV?’ asked the judge.

‘Yes,’ said Mr Goudie. ‘Christina Thompson’s witness statement states there’s a sufficient surplus to be able to recoup the £7.5 million if and when that might be desired.’

‘She doesn’t give your explanation,’ said the judge. ‘Maybe there’ll be another late witness statement. I’d much prefer if it’s in the documentation we have already.’

When the court convened again on the third and final day, Lambeth produced a document which sought to explain the matter further.

However, the judge spotted a flaw in the author’s explanation of the NPV calculation.

‘Where does it come from?,’ asked the judge. Mr Goudie replied that it was ‘done by Mr Holbrook’, his junior barrister who defended Lambeth in the previous judicial review.

The judge then corrected Mr Holbrook’s approach.

Mr Goudie continued to press the point about the money being ‘readily recoupable’.

‘I get your point,’ said the judge. 

The court also heard how cabinet members were misled about the contents of the People’s Plan (TPP), which was discredited in the cabinet report.

Mr Wolfe argued that in leaving out explanatory appendices from the cabinet report, ‘the council officers had a duty, when summarising and appraising TPP, to do so accurately, fairly, on a proper basis and in sufficient detail in order for the cabinet to be able to conscientiously take into account the consultation response which TPP embodied’.

He added, ‘The problem, however, was that their summary and appraisal contained material errors on key points which officers said (in the report) were fatal to TPP.’

Firstly, the report stated that TPP had been over-optimistic in assuming that 80 per cent of rental and service charge income would be available to reinvest, when the figure allowed in the plan is closer to half of this.

This inaccuracy was exacerbated by the fact that the council also wrongly claimed that it spends around 30 per cent of income from Cressingham Gardens on repairs and maintenance, when a freedom of information request revealed it was only 7.64 per cent.

The report also claimed that the cost of repurposing the undercroft car parks into housing (23 flats), would cost about four times more than calculated in TPP, which put it at only £52k per home.

TPP’s detailed costings were supported by an architect and a quantity surveyor. By contrast, the council’s estimate was two short sentences and ‘very much finger in the air’, said Mr Wolfe. He said this was a distinction which was not made clear to cabinet members.

In addition, officers also ruled out the conversion after claimed the ceiling heights would not comply with the London Housing Design Guide, which was not true.

The guide, which the judge observed was a guide and not building regulations, suggests new housing would need to have higher ceilings, but exceptions could be made for conversions in sensitive historic contexts or conservation areas.

The court heard how English Heritage (now Historic England) strongly suggested the council consider extending the Brockwell Park Conservation Area to include the estate, as a reflection of its ‘local significance’.

‘It’s put as a very clear no-go,’ said Mr Wolfe. ‘It’s put as a show-stopper’, he added, arguing that this was ‘bound to impact’ how the cabinet members viewed the proposal.

The judge pointed out that the report contained a ‘litany of criticisms’ of the proposed conversion, including about restricted daylight and the fact that the extra flats would be ‘single aspect’.

A third error in the summary of TPP to members, was the report’s assertion that the proposal was reliant on funding from the Housing Revenue Account (HRA). The judge acknowledged that TPP in fact details a number of alternative funding streams.

Finally, the council’s analysis included £1.4 million of ‘weathertight repairs’ costs in its analysis of the plan, when the scope of the works has now decreased to £430k, meaning their decision was based on incomplete data.

Mr Goudie insisted the report ‘addressed TPP very fully’ and had been treated with an ‘abundance of fairness’.

Of the estate’s critics of the council, he said, ‘They always want yet more. They are simply insatiable.’

However he admitted, ‘I do appreciate that on some points I may not be able to submit more strongly than, “It [the analysis] passes muster”.’

He added, ‘In our submission it did, and certainly did not constitute unfairness.’

Regarding the repurposing of the car parking space, Mr Goudie conceded that TPP offered a similar number of extra homes for council rent levels as does Option 5 [in TPP a further 14 new build homes are proposed at the north end of the estate, totaling 37, while the council’s best effort is 27].

However, he suggested that putting the current points aside, they remained ‘unsatisfactory’, due to the ‘undesirability of homes in a car parking area’.

Lambeth denies four grounds that: The council erroneously included the £7.5m income which would have otherwise for each of the options resulted in its own preferred demolition option failing the ‘must achieve criteria’; Misled its own Cabinet members as to ‘The People’s Plan’ and/or the members failed conscientiously to take into account key aspects of this consultation response; Failed to provide up-to-date data relating to the HRA finances to either the consultees or the Cabinet members, such that they were (respectively) not properly able to comment on or take into account the data; and Breached Mr Plant’s right to property under Article 1, Protocol 1 of the European Convention on Human Rights, combined with his right to respect for a home, by removing his existing ‘Right to Buy’ contrary to current government policy.

The case was heard between November 15 and 17 and the judge has reserved judgement, which is expected to be handed down within weeks.

Advertisements

Demolition-threat residents ready for judicial review 2

Cressingham Gardens residents are getting ready for their second High Court battle over what they claim is Lambeth council’s unlawful decision to demolish their homes.

Andy Plant, a resident of the estate near Brixton in south London, is bringing the second challenge on four grounds (listed below), in a case listed for three days and beginning tomorrow (November 15).

Just 12 months ago, another resident of the estate Eva Bokrosova (pictured bottom of page), won her case against the local authority which had unlawfully resolved to flatten the estate’s 306 homes. Mrs Justice Elisabeth Laing quashed the decision after finding Lambeth had unfairly dropped refurbishment options from the consultation.

Residents claim that rather than carry out a sound review of resident feedback, the council briefly re-consulted early this year, before making the same decision at a heated cabinet meeting on March 21, this year, rejecting the residents’ alternative scheme. The Labour-run council hopes to completely redevelop the estate at an estimated cost of £110m.

As part of the resumed consultation, the council had agreed to consider an alternative option called ‘The People’s Plan’ – a lengthy consultation response compiled by residents, including Mr Plant (pictured centre, main image).

The plan not only aims to save most of the homes with a refurbishment programme, but would also increase the number of council-rented homes by 34, beating Lambeth’s proposals for 27 extra homes at council rent levels (of a total extra 158). The council claims it can only achieve this through full demolition, and privatisation of the redeveloped estate.

The cost of the council’s controversial plan is projected to exceed £100 million, compared to the residents’ proposal, which would need a fraction of that.

Lambeth proposes to achieve its aim by setting up a specially created private company known as a special purpose vehicle (SPV), which would be used to raise funds. Following demolition, the land would be transferred to the SPV and private investors would be signed up to finance the redevelopment.  The new estate would therefore be privately-owned, rather than council-owned, so placing the homes at risk of being sold off.

Residents choosing to remain would lose their secure ‘council tenant’ status, including the ‘right to buy’ and associated statutory rights. Lambeth has also admitted that living costs will rise for those living on the redeveloped estate.

Lambeth’s swift re-consultation – which started at the end of January, and ended on March 4 – concluded again that any options entailing a degree of refurbishment, including ‘The People’s Plan’, were all unaffordable, blaming Housing Revenue Account (HRA) constraints and central government cuts.

At the High Court on Friday, August 19, this year, Mrs Justice May granted permission to allow Mr Plant to challenge the council’s consultation and subsequent decision.

This was followed on September 26, with the granting of an order prohibiting Lambeth from forging ahead with the regeneration of Cressingham Gardens, which includes a ban on possession proceedings and CPOs.

Mr Justice David Holgate will hear the judicial review at the Royal Courts of Justice over three days beginning on November 15. Judge Holgate is expected to reserve judgement to a later date.

In four grounds of claim, Mr Plant argues that Lambeth council’s decision to demolish the estate is unfair, and unlawful because the council:

  1. Erroneously included a £7.5m loan to the SPV in its calculation of the Net Present Value (NPV), which would have otherwise for each of the options resulted in its own preferred demolition option failing the ‘must achieve criteria’;
  2. Misled its own Cabinet members as to ‘The People’s Plan’ and/or the members failed conscientiously to take into account key aspects of key aspects of this consultation response;
  3. Failed to provide up-to-date data relating to the HRA finances  to either the consultees or the Cabinet members, such that they were (respectively) not properly able to comment on or take into account the data; and
  4. Breached his right to property under Article 1, Protocol 1 of the European Convention on Human Rights, combined with his right to respect for a home, by removing his existing ‘Right to Buy’ contrary to current government policy.

If the judge agrees the decision was unlawful, it could be quashed for the second time and have far-reaching implications for other local authorities across the UK.

The decision follows communities secretary Sajid Javid’s refusal in September to grant a compulsory purchase order (CPO) to Southwark council, which had been gearing up to begin phase one of the Aylesbury estate redevelopment.

And it joins a growing list of recent “citizens’ challenges” to the decisions of both local and central government – mounted by people who refuse to allow those in power to abuse the law without fear of public scrutiny.

Mr Plant commented: “Once again, residents of Cressingham Gardens were dealt an unfair blow.

“It’s very sad that we’ve had to take this step, but it is in response to what we see as cavalier behaviour on the part of Lambeth councillors and officers, where they seemingly treat public property as if it’s part of a game of Monopoly.

“I can see for myself that their privatisation plans have the potential to devastate the lives of real people (tenants and homeowners), and are likely to jeopardise the future of true council housing in the borough for generations to come whilst doing almost nothing to help those on the housing waiting list.

“On the contrary, many of our residents might well find themselves unable to find secure housing locally as a result.”

Cressingham Gardens residents first learned their homes were under threat in the summer of 2012, when Lambeth launched its regeneration programme, which now includes six of the borough’s estates: Cressingham Gardens, Central Hill, Westbury, Fenwick, Knights Hill and South Lambeth.

In February 2014 the council suggested five options for discussion by Cressingham Gardens residents, that were the subject of the first consultation.

The options were:

  • Option 1 – Refurbishing the estate and bringing all council tenant homes up to decent homes standard, including the six void flats that have stood empty for over 15 years;
  • Options 2 and 3 – Refurbishing as in Option 1, plus infilling to create new homes.
  • Option 4 – Partial demolition of the estate, with the net extra in new build homes sold at top market price
  • Option 5 – Full demolition and rebuilding of the estate at higher density

The local authority has consistently promoted Option 5, despite a clear majority of residents favouring a refurbishment-led option.

The legal firm in both the Plant and Bokrosova cases is Leigh Day.

Donate to the Cressingham residents’ fighting fund here.

DSC_0369
Eva Bokrosova successfully challenged the decision by Lambeth in 2015

——————————————————————

FOR FURTHER DETAILS PLEASE CONTACT: cressinghamlife@gmail.com

PRESS RELEASE: RESIDENTS GRANTED PERMISSION FOR SECOND JUDICIAL REVIEW AGAINST COUNCIL

Residents of a popular council estate are embarking on their second High Court battle in 12 months, after a judge granted permission for a judicial review of a decision to demolish their homes.

Mrs Justice Juliet May ruled on Friday that Andy Plant, a resident of Cressingham Gardens estate, near Brixton in south London, can bring the second challenge against the London Borough of Lambeth on all the grounds listed below.

In November last year, another resident of the estate Eva Bokrosova, won her case against the local authority which had unlawfully resolved to flatten the estate’s 306 homes. Mrs Justice Elisabeth Laing quashed the decision after finding Lambeth had unfairly dropped refurbishment options from the consultation.

Lambeth council’s cabinet rubber-stamped the proposed £110m full redevelopment option at a meeting on March 21, following a brief consultation early this year.  As part of the resumed consultation, the council had agreed to consider ‘The People’s Plan’ – a lengthy consultation response compiled by residents, including Mr Plant.

The resident-devised alternative not only saves most of the homes with a refurbishment programme, but also increases the number of council-rented homes by 34, beating Lambeth’s proposals for 27 extra homes at council rent levels. The council can only achieve this through full demolition, and privatisation of the redeveloped estate.

The cost of the council’s controversial plan is projected to exceed £100 million, compared to the residents’ proposal, which would cost a fraction.

The council proposes to achieve its aim through setting up a specially created private company known as a special purpose vehicle (SPV), which would be used to raise funds. Following demolition, the land would be transferred to the SPV and private investors would be signed up to finance the redevelopment.  The new estate would therefore be privately-owned, rather than council-owned, so placing the homes at risk of being sold off.

Residents choosing to remain would lose their secure ‘council tenant’ status including the ‘right to buy’ and associated statutory rights. Lambeth has also admitted that living costs will rise for those living on the redeveloped estate.

Lambeth’s swift re-consultation – which started at the end of January, and ended on March 4 – concluded again that any options entailing a degree of refurbishment, including ‘The People’s Plan’, were all unaffordable, blaming Housing Revenue Account (HRA) constraints and central government cuts.

At the High Court on Friday, August 19, this year, Mrs Justice May granted permission to allow Mr Plant to challenge the council’s consultation and subsequent decision.

In four grounds of claim, Mr Plant argues that Lambeth council’s decision to demolish the estate is unfair, and unlawful because the council:

  1. Erroneously included a £7.5m loan to the SPV in its calculation of the Net Present Value (NPV), which would have otherwise for each of the options resulted in its own preferred demolition option failing the ‘must achieve criteria’;
  2. Misled its own Cabinet members as to ‘The People’s Plan’ and/or the members failed conscientiously to take into account key aspects of key aspects of this consultation response;
  3. Failed to provide up-to-date data relating to the HRA finances  to either the consultees or the Cabinet members, such that they were (respectively) not properly able to comment on or take into account the data; and
  4. Breached his right to property under Article 1, Protocol 1 of the European Convention on Human Rights, combined with his right to respect for a home, by removing his existing ‘Right to Buy’ contrary to current government policy.

Lambeth council now have 35 days from the judge’s decision to file and serve their detailed grounds of defence. The date for the judicial review hearing has yet to be fixed, but is likely to take place at the Royal Courts of Justice in London towards the end of the year.

If the judge agrees the decision was unlawful, it could be quashed for the second time and have far-reaching implications for other local authorities across the UK.

Lawyers are now also preparing an interim injunction application to prevent Lambeth council from taking further steps and committing more taxpayers’ money in furtherance of their plans to demolish this much-loved estate.  The case is expected to be heard by the end of September.

Acting for Mr Plant, Rowan Smith, a human rights solicitor at Leigh Day, said: “We are encouraged by Mrs Justice May’s decision to allow full scrutiny of Lambeth council’s decision-making on the future of the Cressingham Gardens Estate, albeit that we would have preferred for Lambeth council to have made a lawful decision at the outset.

“Despite resistance from Lambeth council, the fact that permission was granted on all four grounds demonstrates the arguability of the arguments put forward by Mr Plant in this and confirms that there is indeed a case to be answered.”

Mr Plant commented: “Once again, residents of Cressingham Gardens were dealt an unfair blow.

“It’s very sad that we’ve had to take this step, but it is in response to what we see as cavalier behaviour on the part of Lambeth councillors and officers, where they seemingly treat public property as if it’s part of a game of Monopoly.

“I can see for myself that their privatisation plans have the potential to devastate the lives of real people (tenants and homeowners), and are likely to jeopardise the future of true council housing in the borough for generations to come whilst doing almost nothing to help those on the housing waiting list.

“On the contrary, many of our residents might well find themselves unable to find secure housing locally as a result”.

Cressingham Gardens residents first learned their homes were under threat in the summer of 2012, when Lambeth launched its regeneration programme, which now includes six of the borough’s estates: Cressingham Gardens, Central Hill, Westbury, Fenwick, Knights Hill and South Lambeth.

In February 2014 the council suggested five options for discussion by Cressingham Gardens residents, that were the subject of the first consultation.

The options were:

  • Option 1 – Refurbishing the estate and bringing all council tenant homes up to decent homes standard, including the six void flats that have stood empty for over 15 years;
  • Options 2 and 3 – Refurbishing as in Option 1, plus infilling to create new homes.
  • Option 4 – Partial demolition of the estate, with the net extra in new build homes sold at top market price
  • Option 5 – Full demolition and rebuilding of the estate at higher density

The local authority has consistently promoted Option 5, despite a clear majority of residents favouring a refurbishment-led option.

——————————————————————

FOR FURTHER DETAILS PLEASE CONTACT: cressinghamlife@gmail.com

Lambeth Labour home-snatchers bulldoze ahead

The amazing level of support for Cressingham residents fighting against Lambeth’s underhand practices was clear at Monday night’s cabinet meeting with a passionate and noisy protest. This saw the shamed home-snatchers, our cabinet members, retreat to vote on our demolition fate in private.

IMG_0154_lowRes.jpg

Through the People’s Plan, residents had offered the council a financially viable and cost-effective alternative to demolition that also would provide 33 extra council rent homes, more than the council’s own proposals, but sadly this was overruled by the council on highly spurious grounds. Nonetheless, we will continue to develop the plan and challenge the council.

We also heard about the betrayal by Melissa Madjitey, the Lambeth resident chair of Brixton Area Leaseholder Forum, a consultant for estate agent Savills, who has stood down to become project manager for the council’s scheme – Savills having now been contracted to help set up subsidiaries of Homes for Lambeth. It’s also of note that cabinet member and Herne Hill councillor Jim Dickson is a director of Four Communications, a regeneration consultancy which counts Savills among its clients.

The final straw, triggering loud chants of “shame on you” during the meeting, was the false and highly misleading claims of the supposed financial expert on the cabinet, Cllr Paul McGlone, ward councillor for Ferndale. He said redevelopment was the “only affordable option”. How can a supposed expert fail to address the profitability of the People’s Plan, compared to the flawed unviable redevelopment plan? He should be ashamed. Our professional analysis submitted to the council shows redevelopment would require up to £40m public subsidy on top of the £112m needed from a private investor. How can this folly be justified during crippling austerity and while libraries are being closed across the borough?

And no-one should consider themselves safe from the land grab – we heard the emotional pleas of a homeowner living next to Cressingham, whose block Park View Court is under serious threat from compulsory purchase because of the scheme. This is a sign of desperation from Lambeth which needs to build and sell more overpriced private flats to make its plan look viable. It’s worth noting that Lambeth’s property company plans to sell one-bed flats at £436k; two-bed flats at £610k; three-bed flats for £750k; and four- bed flats at £863k; with market rents ranging from £345/wk for a one-bed flat, to £757 per week for a four-bed flat. Even the rents designed for those on housing benefit are high at at £204/wk for a one-bed, and £265/wk for two-beds, all in an area where the median household income is around £29,000 pa.

Of course there is a very real risk that the impact of this scheme will only become known once the community has been ejected from their homes, and the already small number of additional council rent level homes will shrink in favour of homes for the wealthy, echoing what was seen at West Hendon (BBC documentary The Estate We’re In).

The refurbishment of Cressingham was only going to cost £7m which it claimed it couldn’t afford, but the council is already preparing to gift £7.5m to the demolition scheme, part of a £25m public investment earmarked for the private company Homes for Lambeth, to distort the sums so they look better than they are.

Such waste and cruelty, from the Lambeth Labour party, over something residents and wider organisations fiercely oppose, really beggars belief. We urge the borough’s residents to join us in opposing this council and to call for an independent inquiry into its financial and shameful wrongdoing. Please give generously to the fighting fund.

https://www.gofundme.com/savecressingham

——

This article has been edited to make clear that Savills has been appointed to set up the HfL subsidiaries, not to manage them. LB has since the meeting clarified is not currently a management contract. Lambeth’s regeneration manager Neil Vokes said at the cabinet meeting: “We have appointed Savills. One of the parts of Homes for Lambeth would be a housing association. In order to set up a housing association you have to register with the Homes and Communities Agency. It’s very much a technical piece of work, whereby they have to develop a business plan for that organisation and show it’s fit to manage properties. So, the reason there was no wider resident involvement in that procurement, is because we saw it was a very technical piece of work.”
In addition, since this post was written, it has become apparent that the cabinet members quietly agreed the demolition just before leaving the room, rather than in private. This was not made clear to the members of the public gathered in front of them at the time.

LAMBETH “SWIFT DISMISSAL” OF PEOPLE’S PLAN

PRESS RELEASE MARCH 14

Yet again, Lambeth’s regeneration team, in tandem with Labour politicians, have shown their complete contempt for residents of Cressingham Gardens. Having spent just a few days in possession of the People’s Plan report, the council issued a swift dismissal by email to residents, which was strewn with errors, distortions and omissions, at 5.17pm on Friday evening. This was closely followed by a press release in similar terms, stating that cabinet is being asked next Monday to endorse full demolition of the estate. If the council does go ahead, this will cause chaos, misery and financial difficulty for many, and will destroy a community.

Residents  are disappointed and upset to say the least, but aren’t surprised – the council hasn’t exactly set a high bar for how it conducts itself since launching the Cressingham regeneration in 2012. Even in November’s high court judicial review hearing, following many months of delays, Lambeth’s officers finally, on the last day, produced into evidence a key finance memo, which was discredited, and even the judge said it had made her feel “uneasy”. She ruled the consultation unlawful and quashed the decision, forcing the consultation to be run again.

We produced our People’s Plan to challenge Lambeth’s lazy thinking and offer an alternative that was best for residents, and which would also meet the council’s aims. On this most recent occasion, despite the short period – barely five working days – since receiving our 326-page report (including appendices), the council has claimed to have assessed it “on both feasibility and finances” and “found that it could not be considered a practical option”. We are certain this can’t be the case both for reasons of time, and the evident inaccuracies. The numerous holes, and the council’s haste and closed-mindedness, are plain for all to see.

Were Lambeth to be honest, it would admit that the preferred option of demolition is the unworkable choice, yet it chooses to gloss over its own errors, while fabricating flaws in the residents’ proposal.

For example, residents purposely invited the council to meet a neutral third party to cover their commercially sensitive funding discussions, which the council has not taken up, and Lambeth has therefore concluded its “assessment” before considering the available evidence on that point.

Secondly, Lambeth claims the PP report “relies on funding from the Housing Revenue Account and does not, therefore, resolve the question of how to fund refurbishment of the estate”. This is also a complete misrepresentation. It is true we are suggesting there is an option for the HRA to be used to fund the refurbishment. The available evidence suggests there is enough money, but in Lambeth’s true spirit of non-transparency, it has refused to share an up-to-date HRA business plan with residents. This option, along with four other suggested funding structures, is clearly set out in the PP report. There is no evidence that the council has carried out the appropriate analysis of the structures suggested. In addition, it appears the council has a further £26.5m from the HRA Earmarked Reserves for investing and improving homes, some of which could be made available for the PP.

Thirdly, the People’s Plan proposal to provide 37 additional homes (of which 90 per cent – 33 homes could be let at council rent levels), has been summarily dismissed and on a false basis, with claims that the numbers achieved are lower than they are, and false claims about non-compliant dimensions of the new homes proposed for the carpark. We believe these misrepresentations are designed to mislead residents and councillors about the veracity of the People’s Plan.  

In terms of Lambeth’s analysis of its own preferred option, there are too many flaws to mention here. We highlight just ten of them:

The council has failed to address the fact that the People’s Plan report identifies a failure of Lambeth’s own recommended option to meet its “must” have number one key criteria of achieving a positive Net Present Value (NPV). A properly calculated NPV for Full Demolition (Option 5) reveals it falls spectacularly at the first hurdle, with a negative -£6.7m to -£30m NPV over 60 years, compared with the People’s Plan, which has a positive £6.6m to £13m NPV over only 30 years.

  1. There are multiple unexplained omissions from the council’s NPV calculation, such as the absence of any maintenance costs under Full Demolition (Option 5); lack of sensitivity analyses for homeowner retention which is likely to be very low, thereby pushing up actual upfront buyout costs; a failure to include the full statutory home loss compensation and associated costs in the calculations; missing costs that ought to be in any development proposals as well as costs for known site-specific problems such as the major water main running under the estate. The totality of this means that what is being presented as a financially viable demolition programme, is in fact enormously loss making, not viable and would require massive taxpayer subsidies.
  2. The classification of a £7.5m “grant” as income, although it is simply Lambeth’s own capital cash that it is putting into their own private company “Homes for Lambeth”, massively distorts the viability and NPV assessments. Without this erroneous classification of the £7.5m, Lambeth’s proposed full demolition would be clearly loss-making even after 60 years. In addition, this grant, if it is supposedly to be repaid at some future point (no details provided) would also need to comply with state aid regulations, ie any loan would have to be provided at market rates, which is clearly not the case here.  Even if the £7.5m were permitted to be included in the NPV, which it should not be, for a fair comparison to be made with the People’s Plan, the £7.5m should be equally available to the Plan for the provision of the proposed new homes.
  3. The council may have to sell off all the new homes it builds on the open market, under legislation to fund the government’s RTB (Right to Buy) extension to housing associations, as these properties may be considered vacant “high value” properties.
  4. Under the above circumstances, it is clear that Homes for Lambeth would not be able to secure external funding, as no investor would put money into a proposal that has a grossly negative NPV, with the additional risk of having to sell off its assets.
  5. The government has said it will not allow councils to set up SPVs (Special Purpose Vehicles such as Homes for Lambeth, the private company being set up by Lambeth for property building) to be used in order to avoid current local authority accounting rules and debt caps, a fact which other councils have duly noted
  6. The government has said it will not allow SPVs to be used to deprive tenants of their rights, such as the right to buy. Lambeth’s proposal to replace secure tenancies with assured tenancies under the SPV, contravenes this policy. In fact, the financial “success” of Homes for Lambeth rests on the removal of tenants’ rights, by providing the flexibility for selling off shares and hiking rents to market levels in the future, along with the wide-ranging stripping of rights from residents – with secure tenancies being downgraded to inferior private, assured tenancies.
  7. While, as stated, we are in discussions with potential funders, regeneration manager Julian Hart is on record saying the council has not spoken to any banks, so on the available evidence regarding funding, the People’s Plan in the better position.
  8. The council’s additional homes are largely unaffordable and this contravenes its own target strategy of 60 per cent affordable (of which 100% of should be council rent levels) in regeneration schemes. (The market rents the council proposes to charge range from £345/wk for a one-bed flat, to £757 per week, for a four-bed flat. Market sales: 1 bed flat £436k; 2 bed flat £610k; 3 bed flat £750k; 4 bed flat £863k).
    At 90 per cent genuinely affordable (all council rent levels), the People’s Plan actually exceeds this target. In addition, the supposedly “affordable” additional homes in Option 5 involve large rental increases (for the majority of tenants forecasted is a 23%-25% rent increase).Furthermore, Lambeth will not be setting the rents of the new 1 and 2 bed homes at council rent levels, but at the much higher Local Area Housing Allowance levels, which we believe is designed to exploit Housing Benefit/Local Housing Allowance limits and has the effect of making Lambeth needlessly more reliant on benefits. The council is to charge LAHA levels for all extra one bedroom flats at £204/wk and two bedroom homes at £265/wk.
  9. In order to achieve its 27 homes at “council rent levels” Lambeth has massaged the numbers – by demolishing 28 four-bed homes, replacing them with only four homes of this size, and smaller three bed homes. There has been no evidence provided that actual need of residents was the driver for this configuration, and appears to be a way of boosting the paltry numbers from its previous “23”. The bald statement that all council tenants will be able to return, at the very least does not apply to those families living in many of the current four-bed homes.

Lambeth’s cabinet is about to endorse a catastrophically flawed decision made by Cllr Matthew Bennett and his regeneration team, that is very likely to be Labour Lambeth’s Iraq – aptly put by a resident of Central Hill, another estate threatened by the council. We urge officers, ward councillors and cabinet members to think again before taking the final leap.

To help save Cressingham Gardens and preserve these genuinely affordable homes for both its current residents and generations to come, we urge the public to join in the residents’ protest on March 21 and to back the People’s Plan: https://www.thunderclap.it/projects/38789-i-support-the-people-s-plan

https://www.facebook.com/events/255069118158125

Donate to the fighting fund:

https://www.gofundme.com/savecressingham

_______________________

Notes:

For further information contact cressinghamcommunity@gmail.com

 

 

High Court win hits BBC radio but housing chief Bennett is not taking responsibility

Lambeth’s regeneration cabinet member Councillor Matthew Bennett was given a real grilling by the presenter on BBC London radio yesterday evening, for setting an example of exactly “how not to do a consultation” and pouring tens of thousands of pounds of public money down the drain in the process. Listen here to the interview with him and also hear from Cressingham resident Tom Keene who outlines why the council’s decision was unlawful.

 

We perhaps don’t need reminding that Cllr Bennett is a politician and politicians are prone to trying to limit damage to their reputations after making mistakes. It may not have been intentional, but the councillor completely misrepresented the judge who quashed the decision and he even seemed to mock her. He said that the judge found it unlawful for the council to have stopped consulting on unaffordable options.

What Mrs Justice Laing actually said in her judgment was the opposite! She said she assumed the council would have been entitled to stop the consultation if it had truly found them to be unaffordable, but that this had not been shown to be the case.

She said: “I do not need to decide whether, as a matter of law, the Council could have stopped the consultation if there had been a sufficiently important change of circumstances. I assume, without deciding, that it could have done so.

“I am not satisfied, on the evidence, however, that enough changed in February 2015 to entitle the Council to stop consulting on options 1,2 and 3, contrary to the terms of section 105 arrangements it had published.

“My conclusion is that by deciding to remove options 1, 2 and 3 from the consultation on 9 March 2015, the Council acted unlawfully.”

She went on to quash the decision and before doing so, said that she was required to decide whether “if the defendant’s unlawful conduct is taken out of the equation, that would make any difference to the outcome for the claimant”.

Judge Laing concluded: “If the section 105 arrangements had not been breached, the financial position would have been much more fully before the Council. In simple terms, it does not appear to me, if that had been the position, that it is highly likely that the decision would have been the same.”

Breaking news: Lambeth demolition decision quashed

Residents are celebrating a victory against their local authority landlord after a judge quashed its unlawful decision to demolish up to 300 homes at the High Court.

Lambeth Council was said to have “nobbled” its own Cabinet committee by calling off a consultation on refurbishment of Cressingham Gardens Estate in Tulse Hill, without carrying out the proper financial analysis.

In court, the council admitted deliberately downplaying the voice of opposition to the redevelopment of the “congenial, low crime” 1970’s estate, in a town hall report summarising residents’ views. The local authority left out resident feedback including on proposed alternative funding strategies, which it claimed were “not pertinent”.

The two-day hearing earlier this month also featured a mysterious memo, which the council claimed was the “show-stopping” document which proved the repairs were unaffordable – but was nothing of the sort.

David Wolfe, QC, for claimant Eva Bokrosova, a tenant on the estate, said: “Where’s the detailed analysis? Neither we, nor the court, have ever seen it.”

The barrister said that residents had been deprived of their right to a fair consultation. If done properly, the decision may not have been made to demolish peoples’ homes, the court heard.

The judge, Mrs Justice Elisabeth Laing, agreed Lambeth’s decision on March 9 this year was unlawful, after the council unfairly pulled the plug on three “refurbishment options”, leaving only two “demolition options” – partial or complete – on the table.

The judge added that she was “uneasy” about the memo, said to have been prepared by senior accountant Julie Curtis days before the decision.

She said: “I’ve considered the written submissions of the parties and decided that the decision on 9 March 2015 should be quashed.”

Lambeth Council has been granted leave to appeal the decision on a date to be confirmed.

Some 86 per cent of residents favour repairs over the bulldozer but the council says there is no cash to do up the homes, beside Brockwell Park, near fast-gentrifying Brixton.

The claim is hotly contested by residents who have been fighting the proposals for three years and many believe the council has deliberately starved the estate of repairs to make demolition seem inevitable. Residents expect the new development to drive up living costs, forcing them out of London and destroying a supportive community.

Council tenants wishing to remain on the new estate would lose their secure tenancies and a number of rights they now enjoy.

Homeowners, including parents with children in local schools, are facing a value gap of at least £100k on the new properties and many fear they will not be able secure mortgages.

Residents of privately-owned homes neighbouring the site are also facing compulsory purchase orders as a result of the council’s plans.

The campaign is backed by prominent heritage organisations including the 20th Century Society, Save Britain’s Heritage, and the Brixton Society, and a 2014 report by English Heritage even suggested it be included in the neighbouring park’s conservation area.

The popular estate has been described as “warm and informal…one of the nicest small schemes in England”, by Lord Esher, past president of the Royal Institute of British Architects.

In July, Lambeth agreed to flatten the entire estate and replace it with 464 new flats, including just 23 additional homes for council rent. The regeneration programme was originally launched to fill a funding gap in the borough’s Lambeth Housing Standard refurbishment programme, but more recently the local Labour administration has been pushing its densification agenda with “extra homes at council rent” being the mantra used to try and trump opposition.

Its own Equalities Impact Assessment admitted up to 60 per cent of the new homes for sale will go to buy-to-let landlords, affordable only to wealthy incomers.

This was followed in October by the decision to set up Homes for Lambeth, a private developer arm of the council which aims to build 1,000 extra homes, largely by redeveloping council estates.

Outside court, Ms Bokrosova, a mother of one, said: “The council has put me and my neighbours on Cressingham Gardens through absolute agony for three full years since the regeneration was first mentioned. It misled residents into thinking they were being consulted on a possible refurbishment of the estate but really this was just a sham. I believe they only ever had their eye on one goal – full demolition – and that they are motivated by a political agenda rather than what is best for residents. This case will hopefully make Lambeth Council think twice before mistreating people in this way and I hope that we can inspire others that with an organised effort residents can show up authorities who misuse their power for what they are – bullies.

“The quashing of the decision is a vindication of what we have been saying about the council’s appalling behaviour. All we ever wanted was a fair consultation on refurbishment and so I am thrilled that repairs are now back on the table.

“I would like to thank my solicitor Ugo Hayter of Leigh Day solicitors and my barristers David Wolfe QC and Leon Glenister, for their amazing work and support.  Also a massive thank you to everyone who has supported us over the last three years.”

DSC_0369.JPG
Eva Bokrosova, outside the Royal Courts of Justice following the quashing

Full details of the judgement available here