Some of the Lambeth officers antics over the Cressingham Gardens issue have been unbelievable but given the sort of nonsense that seems to be endemic within the borough, one really shouldn’t be surprised.
Some of what follows will appal any reasonable-minded person. Unfortunately, with Lambeth, we are not dealing with reasonable people.
What follows are many – but not all – of the questions which Cllr Ainslie has posed. THEY MUST BE ANSWERED. AND IN DETAIL.
Lambeth council’s overview and scrutiny committee – to whom this report has been sent – are obliged to have a close look at both the report and the questions being asked. But they will need to take a very, very close look at themselves first….
“LAMBETH HAVE A RESPONSIBILITY TO LOOK AT THE PEOPLE’S PLAN THOROUGHLY, AND IN DETAIL, BEFORE DISMISSING THE OPTIONS OUT OF HAND”
The full demolition of Cressingham Gardens estate being recommended by Lambeth officers fails to meet any of four specific criteria, says Cllr Ainslie in his report. (See main story above)
In the report to Lambeth council’s cabinet, officers state that options under consideration must achieve the following four criteria:
Viability: option achieves a positive Net Present Value (NPV);
Deliverable: that delivery risk is manageable and that phasing and construction programmes are feasible;
Meets Key Guarantees: delivers the re-provision of existing homes in line with the Key Guarantees to residents;
Meets Planning Policy and Tenancy Strategy: option meets as a minimum Council planning policy and Council tenancy strategy on affordable housing for the net additional new homes;
“The full demolition of Cressingham Gardens estate being recommended by Lambeth officers fails to meet any of these criteria” says Cllr Ainslie.
“INCORRECT”
Cllr Ainslie’s report says:
Lambeth officers were INCORRECT when they said that TPP (The People’s Plan) assumes “…80 per cent of the combined rental income and service charge could be used to fund refurbishment” says Cllr Ainslie.
“This is incorrect. “TPP clearly shows 45 per cent (20pc management costs plus repairs & maintenance based on historical data provided by Lambeth).
“Debt payments have not been included in TPP operating cash flow model, as these are finance costs.”
They were again INCORRECT when they said the average cost of refurbishment is only £16k, which is calculated by dividing the full cost of the Lambeth Housing Standard (LHS) programme (£499m), by 31,000 properties.
“This is an incorrect calculation, as it fails to consider the estates that were already refurbished prior to the LHS programme and hence were not included in the LHS programme” says Cllr Ainslie.
Officers were FUNDAMENTALLY INCORRECT when they included figures for weathertight repairs in their option five total demolition) calculations but EXCLUDED them from options one to four.
VERY POINTED QUESTIONS
Cllr Ainslie has submitted a set of very pointed questions in his report – and his reasons for asking them. They include:
Lack of consideration for the People’s Plan (TPP):
Question: Will Lambeth officers provide their analysis on the People’s Plan and allow the respective experts to discuss it?
Missing HRA (Housing Revenue Account) assessment:
Lambeth officers make the blanket claim that there is now a funding shortfall of circa £85 million due to cost-overruns to deliver the gold-standard Lambeth Housing Standard (LHS) (ie Decent Homes standard plus extras).
“Nowhere in the cabinet report is any actual assessment or analysis provided as to the condition of the HRA (Housing Revenue Account) business plan” says Cllr Ainslie, who adds:
“As all are aware, the amount of HRA debt peaks and then gets paid off over time and hence any funding ‘gap’ is time-specific and time-dependent.
“Officers have provided no timeline as to the HRA debt headroom over time. “This does not allow any serious assessment of what refurbishment could be afforded, and when.”
Question: Where is the 30 year HRA business model? And where is the 30-year HRA debt headroom forecast?
Question: Where is the clear analysis of the proposed refurbishment costs of Cressingham Gardens (now being shown in Lambeth’s detail data sheets as occurring over 10 years) against the HRA 30-year business plan?
Question: In November 2014, Lambeth was awarded an additional £23m in Backlog funding. To which estates was this applied and how was it spent? Why did this not reduce the overall funding gap down to £32m? (ie original funding gap of £55m minus extra Backlog funding of £23m)
Question: Why is Lambeth – a Labour council – supporting a redevelopment proposal that drives up housing costs across all tenures (council tenant, private tenant & homeowner), thereby worsening the housing crisis in Lambeth?
Question: Have the council officers considered other forms of increasing housing? Including: redevelopment of garages, infill, conversion of attics into maisonettes (as is done in Berlin), building above retail carparks? If yes, can the officers provide that analysis for review.?
Dramatic rises in tenants rents:
Returning council tenants will be expected to pay 10-25pc more in council rent over a five year period. A majority – 70pc of residents – will be expected to pay 23pc more in council rent.
In addition, council tax is also predicted to go up through band changes. This will push many of the residents into further reliance on housing benefit or onto housing benefit for the first time. In a time of austerity how can this fair to existing tenants?
No Budget:
Question: What is the budget for the proposed next phase, including the development management team? Please also provide a breakdown of costs
Question: From where will the funds be sourced to pay for the next phase? How much will be funded from the HRA? Will this HRA money be diverted from repairs & refurbishment?
Question: On which other estates has the refurbishment cost per unit been above £16k per property?
Question: Why are there estates costing more £16k per property to refurbish (often 2x or 3x that cost), that are not being earmarked for regeneration?
Question: Where is the analysis showing that Cressingham Gardens would cost more to refurbish than all other estates, given the council has already admitted via an FOI that it doesn’t actually know how much it has cost to carry out refurbishment on individual estates?
Question: Why have officers failed to include the cost of weathertight repairs in Option 5 (total demolition of the estate), whilst including it in Options 1-4, and if weathertight repairs were to be included in Option 5, what would be the NPV under the council’s calculations?
Loss of Secure Tenancies:
Under the proposed full demolition, council tenants will need to give up their secure tenancies and accept assured tenancies. Hence the right to return is conditional on tenants giving up rights and security.
Question: Why is Lambeth not offering tenants a ballot as would be the case if it were a stock transfer, giving tenants a real choice as to whether they want to keep their secure tenancy or give it up for an assured tenancy?
Question: Why is Lambeth not offering existing tenants an assured tenancy with protected rights as would be required in the case of a stock transfer?
Factual & calculation errors:
Question: On which other estates has the refurbishment cost per unit been above £16k per property?
Question: Why are there estates costing more £16k per property to refurbish (often 2x or 3x that cost), that are not being earmarked for regeneration?
Question: Where is the analysis showing that Cressingham Gardens would cost more to refurbish than all other estates, given the council have already admitted via an FOI that it doesn’t actually know how much it has cost to carry out refurbishment on individual estates?
£7.5m loan recognised as income:
Lambeth proposes to invest £7.5m of capital funds into the full demolition (Option 5). It is stated that this £7.5m is to be repaid to the council by the SPV (Special Purpose Vehicle – Homes for Lambeth). In the financial data sheets the £7.5m is classified as ‘grant income’. It is not. This sum should be recognised as debt or equity.
This means that the NPV (Net Present Value) of Option 5 has been overstated, as the £7.5m was included as income in the NPV calculation. Removal of the sum would mean that NPV would drop to a negative minus £6.7m NPV.
Question: Why have Lambeth officers included the £7.5m loan to the SPV as income in the financial model, and how is the NPV of Option 5 affected if the £7.5m ‘grant income’ is removed?
No maintenance:
No local authority or housing association has just 20pc of gross rents being spent on management, lettings and repairs. The HCA’s ( Homes and Communities Agency) report “Global Accounts 2014 of Housing Providers” shows that for Social Housing Lettings, the following are the industry averages as a percentage of total rental income:
Management costs: 20.5pc
Service costs: 10.7pc
Routine & planned maintenance: 21.0pc
Combined total: 52.2pc
Question: If officers state that they can achieve 20 per cent compared to the industry average of 52 pc, how will this be achieved? Please provide full details.
Demolition:
A lot of significant costs are missing in the demolition financial models. For example, the following ‘known’ costs have not been incorporated:
Building a new community hall to replace the Rotunda
Car parking provision
Waste management
External and drainage works
Dealing with the 40″ water main that passes through Cressingham Garden that is older than the estate itself
Dealing with the invasive weed present across the entire estate (For the same invasive weed to be removed from the Olympic Park Stadium development site, approx the same size as Cressingham Gardens, it cost reportedly £70m)
Compensation payable to non-returning homeowners to cover the stamp duty and legal costs for replacement homes
Question: Why have officers not incorporated the above costs into the demolition financial models, and if officers are contending that the above costs are incorporated, what percentage has been included as a premium over and above the build cost to cover them?
Question: What financial provision has been made for the removal of the invasive weed, and what is the proposed removal approach – if provision has not been made, what are the estimates, and what are their impact(s) on the NPV calculation?
In datasheets Cllr Ainslie says Lambeth assumes that the full demolition option will generate £517k in income for Lambeth every time a returning leaseholder “staircases.” (Note: Staircasing is the term used when, as a shared owner leaseholder, you want to purchase further shares in the home when you can afford to – Ed.)
“This imaginative and bold assumption regarding Lambeth’s equity share in returning homeowner’s homes, combined with an unrealistically high projected retention rate, means that even a slight decrease away from that projected retention rate will render the NPV negative.
“In fact, through the model for Option 5 recreated by Cressingham residents in The People’s Plan, it is shown that lower-than-projected retention rates could remove as much as £30m in NPV, ie cause the NPV to drop as low as a MINUS £30m Net Present Value compared to the current – meagre – positive £0.8m NPV.”
Question: Lambeth officers project achieving an 80pc homeowner retention. On what data is this figure based, and what are the effects on the NPV if retention is below the projected rate – at 60pc or 40pc? Please provide data sheets/models as evidence.
Criteria (see main story):
Question: Lambeth officers have ignored the “must achieve” criteria around whether the options are deliverable, ie whether delivery risk is manageable and that phasing and construction programmes are feasible. On what basis?
Key Guarantees have already been broken:
During the final viability workshop (18th February), Cressingham residents raised with Lambeth officers and Cllr Mary Atkins the issue that the 28 x 4-bed council tenant homes were only being replaced with 4 x 4-bed homes for council tenants.
Residents asked why and the explanation provided by one officer was that Lambeth had assessed current and future resident need, and based their decision on this.
He also stated that Lambeth was not willing to share this analysis.
Residents pointed out that there are more than four families requiring four bedroom homes and that it is inappropriate to be effectively telling residents that only four families will be allowed to return.
This is in contravention of the Key Guarantee number 1: “Any secure tenant who wishes to continue to live at their current estate will have the opportunity to do so.”
In the cabinet report Lambeth officers explain the reduction by arguing that the current four bedroom homes are only designed for five people and in such cases they only deserve a three bedroom in a new build.
But this is also in contravention of the Key Guarantees numbers 5 and 8:
5. The Council assures that tenants will not be worse off in terms of the size of their accommodation than their current circumstances.
8.Tenants who are under-occupying by one bedroom or more will be offered a new home with one bedroom above their need (for example, a couple living in a three-bed home would be offered a two-bed home when their actual need is a one-bed).”
Question: Are Lambeth officers allowed to break the Key Guarantees? What are the consequences if the Key Guarantees are broken?
Question: Where is the actual analysis undertaken by Lambeth officers to support their assumption of only needing 4 x 4-bedroom homes to replace the existing 28 x 4-bedroom homes?
Question: Why have five bedroom homes been excluded from their housing mix for the redevelopment if an analysis of current and future needs has actually been done?
Planning Policy and Tenancy Strategy “doesn’t meet planning policy & tenancy strategy”:
(i) Failure to meet target tenancy strategy for regeneration
Lambeth’s “target tenancy strategy” for the regeneration programme is that of the net gain houses, 60pc of homes should be “affordable” (all of which should be at council rent levels) and 40pc at market levels (either sale or rent).
Full demolition (Option 5) fails to meet this target strategy. Based on Lambeth’s latest figures in the report, only 17pc of the extra new homes will be at council rent levels whereas the target tenancy strategy requires 60pc. Even with the unaffordable “affordable” homes included, this only increases to 47pc and is nowhere near the 60pc required.
Question: Why is the council proceeding when their own target is going to be missed, with the likelihood that the low percentage of extra new council rent homes will deteriorate through the successive stages – as has happened on the majority of regeneration schemes elsewhere?
Question: At what lesser percentage of extra new homes at council rent would the regeneration become unacceptable to Lambeth, and warrant halting the scheme and a removal of Cressingham Gardens from the regeneration program?
(ii) Failure to meet Local Plan requirements in terms of mix of homes
According to Lambeth’s Local Plan (signed off September 2015) the “affordable” housing element of residential developments should reflect the preferred borough-wide housing mix for social/affordable rented and intermediate housing. .
In the proposed Full Demolition (Option 5), only 33pc of the net gain homes would be family-sized homes (3+ bedroom) and hence in breach of the Lambeth Local Plan.
Question: Why are officers proposing a breach in the Local Plan, and what is the “robust justification” for this variation?
AND FINALLY…….
In the council questionnaire which Cllr Ainslie filled in he is (eventually) asked:
What do you want the Overview and Scrutiny committee to do?
He replies: Refer the decision back to the Cabinet for full re-consideration as I believe there was no proper due diligence of the financial data, no proper consideration of the People’s Plan, and it will have unfair impacts on the residents – including the removal of key rights – for a very limited gain in council rent homes, which may disappear entirely as the process continues.
