Haringey Labour is a facing a ferocious backlash from its own backbenches over plans to privatise £2billion of land and council houses in the largest sell-off of its kind ever undertaken by a UK council.
Labour’s rank and file councillors have demanded a halt to the deeply controversial Haringey Development Vehicle (HDV), which will see huge swathes of council land and property moved into a private company.
The trailblazing venture has already won a green light from Haringey’s cabinet as the best way to regenerate ailing council estates and build 5,000 new homes in the borough.
But Labour’s own backbenchers have called for a free vote on the HDV, with critics saying it is perilously risk-laden.
Cllr Stuart McNamara (Labour) told a scrutiny meeting last week: “If a venture like this failed the council would not have the financial reserves to bail itself out. It would also without doubt bankrupt the council and where will that leave tenants?”
Under the plans a new company would be set up owned 50/50 by the council and a private developer.
Public assets totalling £2bn would be transferred into the company on a long lease, in a deal spanning 20 years.
While other UK councils have used development vehicles there has been nothing of similar size or scale.
It has caused a bitter split in the Haringey Labour party, with a quarter to a third of backbenchers understood to actively oppose the HDV.
The Ham&High has been told council leader Cllr Claire Kober this week conceded to requests for a full review and free vote on the HDV deal under pressure from her party.
The cross party Housing and Regeneration Scrutiny Panel last Wednesday unanimously recommended the HDV should be halted due to the “sheer size and scale of the risk”.
Panel member Cllr McNamara said: “This proposed scheme is the biggest that any council in the UK has ever embarked upon and the cabinet needs to focus on the financial exposures and risks.”
Cllr Zena Brabazon (Labour) said: “Most of us don’t have a deep understanding, but we’ve got the point that public land will turn into private land.
“This is the hugest, riskiest undertaking this council has ever done and I just find it quite amusing that there is absolutely no mention of risk or uncertainty.”
But the plans were defended by housing and regeneration boss Cllr Alan Strickland.
He said it was “financially impossible” for the council to regenerate estates and build new homes without private investment, adding “we simply can’t afford it”.
He said: “The cost of doing estate regeneration is very significant indeed. The council can’t do that alone. We have to find another way.”
A demonstration was held outside Haringey Civic Centre before the meeting calling for Labour to think again.
Opponents say there will be no right of return for council tenants to estates which are demolished and regenerated through the HDV, and that it will drive up rents.
Speaking at the demo Paul Burnham, of Haringey Defend Council Housing, described it as an “absolutely terrible policy”.
“It’s not just about the loss of council housing, worrying as that is,” he said. “The whole plan is about increasing house prices. It’s morally wrong. They should stop doing the Tories’ dirty work.”
Philip Rose, chair of Haringey Momentum, the grassroots wing of the Labour party set up to support Jeremy Corbyn, said it was “an outrageous plan”.
“There is a lot going on in Haringey that is not being seen,” he said. “The council is selling-off £2bn of public assets to private developers without really any scrutiny of the decision - and this is supposed to be a Labour council.”
Opposition Liberal Democrats have also opposed the HDV.
Lib Dem leader Cllr Gail Engert said: “The Brexit vote means the economy is not strong and the amount of property going into this ‘development vehicle’ is excessive. It’s a very risky venture and could go horribly wrong.”
A council spokesman said the HDV reflected Haringey’s ambition to use “council-owned land to provide much-needed homes and jobs”.
He said: “This would not be a ‘sell-off’ of public land. Instead we have taken the deliberate decision to maintain control by taking a 50 per cent share of the proposed HDV.
“This will ensure potential returns from development would not flow exclusively to that private partner. Instead our share of the profits will be ploughed back into public services in Haringey.”
WHAT IS THE HARINGEY DEVELOPMENT VEHICLE?
* It is a private company owned 50/50 by the council and a developer in a public private partnership.
* The council will contribute land to the new company and a private investor matches the value in equity.
* The council assets would be transferred into the HDV on long leases with the council maintaining the freehold.
* A preferred bidder for the HDV is due to be selected in February and the deal signed off in April.
* The three shortlisted bidders are: Lendlease; Morgan Sindall with Affinity Sutton and Circle; Pinnacle with Starwood Capital and Catalyst.
* Sites that may be transferred to the HDV include Northumberland Park and Broadwater Farm estates in Tottenham, Sky City in Wood Green, and Haringey Civic Centre.
WHY DID THEY DINE OUT 13 TIMES WITH PROPERTY PR FIRM?
Two weeks ago the Ham&High asked why senior Haringey councillors had met with a top property PR firm for 13 free lunches or dinners since July 2014.
Today we can reveal the company that hosted the freebies, Terrapin Communications, lists two of the three shortlisted bidders for the huge Haringey Development Vehicle (HDV) deal - Lendlease and Starwood - as clients on its website
Despite repeated requests Terrapin has not responded to our questions about whether it has worked on the HDV bid on behalf of these two companies.
But we did ask Haringey Council if the £2bn deal had ever been discussed at Terrapin-hosted lunches.
A spokesman said: “It is impossible to account for all of the conversations that took place at these events which involved a large number of people who are not from Haringey including London borough leaders and GLA representatives.”
The free hospitality, worth £770, included a dinner at the exclusive MIPIM property conference in Cannes, France.
The councillors who attended the meals were council leader Claire Kober, housing and regeneration boss Alan Strickland and finance boss Jason Arthur.
Lendlease did not respond to our request for comment and Starwood had no comment.
COMMENT COUNCIL LEADER CLAIRE KOBER: ‘WITHOUT THIS WE CANNOT DELIVER HOMES’
“In February Haringey will decide who will work with the council to deliver one of the country’s largest regeneration programmes, the Haringey Development Vehicle.
Over 20 years it will deliver 5,000 new homes, a new town centre in Wood Green and thousands more jobs.
All of this development will be on council-owned land - which without this private investment and expertise could never deliver the new homes and new jobs.
The Haringey Development Vehicle signals a big change of approach. In the old days we’d sell-off land and lose control.
Our new approach means your council take a 50 per cent share of the Haringey Development Vehicle and a private partner will take the other 50 per cent share.
We’ve chosen this approach to manage risk by sharing it with a partner, while ensuring that profits from development would not all go into a private partner’s pocket.
Instead our share of the profits will go back into public services in Haringey.
This is another example of how Haringey is leading the country.
In August GCSE and A-level results rose in Haringey as they fell across the UK. And in October the first new further education college in the UK for 20 years, Ada National College for Digital Skills, opened its doors in Tottenham Hale.
All of these changes from jobs to housing to skills are about a simple ambition - giving our residents the same opportunities and quality of life at least equal to the best in London.”
* Do you have a story for the Investigations Unit? Contact journalist Emma Youle on 020 7433 0122 or emma.youle@archant.co.uk
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