New legal loophole allows developers to shirk affordable housing obligations. Photo: Christopher Furlong, Getty
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Developers able to demolish affordable housing provision

A new law is allowing property developers to wriggle out of their affordable housing obligations.

A Bill that was quietly approved last year is allowing property developers to get out of their contractual agreements with local authorities to build or fund affordable homes.

The Growth and Infrastructure Act 2013 introduced new guidelines last April for developers to appeal their affordable housing obligations, if they could prove they would not make a “competitive return” on their developments if they adhered to them.

These obligations require developers to include a prescribed number of affordable homes in residential complexes they build, or else negotiate paying a subsidy to fund those affordable homes being built elsewhere in the nearby area.

Many people would agree that for councils to confer some responsibility for affordable homes onto developers in this way is only fair. After all, left to their own devices, most developers seek to maximise profits by focusing almost exclusively on building lucrative executive accommodation.

The new rules, shoe-horned into the Town and Country Planning Act, mean that residential developers can fight their way out of their obligations, despite having agreed them as a condition of gaining planning approval.

A developer simply has to argue that honouring their agreed contribution towards affordable housing has become commercially “unviable” for their business's development.

The government has introduced this loophole based on the idea that differing economic conditions between the planning stage of a development and its construction or completion can render initial agreements to build or fund affordable housing “unrealistic”.

Not only does the new appeals process seem unfair in offloading all commercial risk from developers on to local councils, but it also appears open to exploitation by rapacious developers who might present cases of confected “economic unviability” in order to maximise profits.

Some recent waivers issued by councils are worth examining. Last October Oldham Council was left £450,000 out of pocket after waiving the subsidy payment that developers Wiggett Construction had agreed to pay in lieu of making a fifth of homes in their new site in Greenfield “affordable”.

The company had originally agreed to pay £700,000 in three stages. Having paid the first installment of around £230,000, the company was due to pay the second upon the sale of the 45th property on the site. Oldham Metropolitan Council decided to waive the subsidy when Wiggett was just one house sale away from that benchmark, however, leading to outrage from local residents.

The same council also allowed another developer, Tamewater Developments, to escape paying more than £280,000 in agreed affordable housing subsidy earlier this month.

According to Construction News, 10 appeals are currently under consideration by the Planning Inspectorate to reduce or eliminate affordable housing obligations under the new law.

Among them are bids to remove requirements for 290 affordable homes in a Gloucestershire development and a £9 million contribution towards affordable housing in Blackpool.

As many developers are only just waking up to the possibilities of this new loophole, the impact on the number of affordable houses built is yet to be realised.

In order to appeal, developers must submit appropriate up-to-date evidence that overturns the original viability appraisal and indicates that they will not make a competitive return under current market conditions.

The crucial question is, of course, what benchmark profit margin equates to a “competitive" return? The government guidance does not spell it out. Industry experts suggest that most developers expect to make in the region of 20 per cent profit. Are local councils simply allowing developers to avoid paying their contribution towards affordable housing if it threatens their usual profit margin?

When the demand for affordable housing has reached such exorbitant and desperate levels as it has across the UK, developers should not be allowed to renege on promised contributions towards their provision whether it threatens their profit or not.

Lucy Fisher writes about politics and is the winner of the Anthony Howard Award 2013. She tweets @LOS_Fisher.


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Jeremy Corbyn supporters should stop excusing Labour’s anti-immigration drift

The Labour leader is a passionate defender of migrants’ rights – Brexit shouldn’t distract the new left movement from that.

Something strange is happening on the British left – a kind of deliberate collective amnesia. During the EU referendum, the overwhelming majority of the left backed Remain.

Contrary to a common myth, both Jeremy Corbyn and the movement behind him put their weight into a campaign that argued forcefully for internationalism, migrants’ rights and regulatory protections.

And yet now, as Labour’s policy on Brexit hardens, swathes of the left appear to be embracing Lexit, and a set of arguments which they would have laughed off stage barely a year ago.

The example of free movement is glaring and obvious, but worth rehashing. When Labour went into the 2017 general election promising to end free movement with the EU, it did so with a wider election campaign whose tone was more pro-migrant than any before it.

Nonetheless, the policy itself, along with restricting migrants’ access to public funds, stood in a long tradition of Labour triangulating to the right on immigration for electorally calculated reasons. When Ed Miliband promised “tough controls on immigration”, the left rightly attacked him.  

The result of this contradiction is that those on the left who want to agree unequivocally with the leadership must find left-wing reasons for doing so. And so, activists who have spent years declaring their solidarity with migrants and calling for a borderless world can now be found contemplating ways for the biggest expansion of border controls in recent British history – which is what the end of free movement would mean – to seem progressive, or like an opportunity.

The idea that giving ground to migrant-bashing narratives or being harsher on Poles might make life easier for non-EU migrants was rightly dismissed by most left-wing activists during the referendum.

Now, some are going quiet or altering course.

On the Single Market, too, neo-Lexit is making a comeback. Having argued passionately in favour of membership, both the Labour leadership and a wider layer of its supporters now argue – to some extent or another – that only by leaving the Single Market could Labour implement a manifesto.

This is simply wrong: there is very little in Labour’s manifesto that does not have an already-existing precedent in continental Europe. In fact, the levers of the EU are a key tool for clamping down on the power of big capital.

In recent speeches, Corbyn has spoken about the Posted Workers’ Directive – but this accounts for about 0.17 per cent of the workforce, and is about to be radically reformed by the European Parliament.

The dangers of this position are serious. If Labour’s leadership takes the path of least resistance on immigration policy and international integration, and its support base rationalises these compromises uncritically, then the logic of the Brexit vote – its borders, its affirmation of anti-migrant narratives, its rising nationalist sentiment – will be mainlined into Labour Party policy.

Socialism in One Country and a return to the nation state cannot work for the left, but they are being championed by the neo-Lexiteers. In one widely shared blogpost on Novara Media, one commentator even goes as far as alluding to Britain’s Road to Socialism – the official programme of the orthodox Communist Party.

The muted and supportive reaction of Labour’s left to the leadership’s compromises on migration and Brexit owes much to the inept positioning of the Labour right. Centrists may gain personal profile and factional capital when the weaponising the issue, but the consequences have been dire.

Around 80 per cent of Labour members still want a second referendum, and making himself the “stop Brexit” candidate could in a parallel universe have been Owen Smith’s path to victory in the second leadership election.

But it meant that in the summer of 2016, when the mass base of Corbynism hardened its factional resolve, it did so under siege not just from rebelling MPs, but from the “Remoaners” as well.

At every juncture, the strategy of the centrist Labour and media establishment has made Brexit more likely. Every time a veteran of the New Labour era – many of whom have appalling records on, for instance, migrants’ rights – tells Labour members to fight Brexit, party members run a mile.

If Tony Blair’s messiah complex was accurate, he would have saved us all a long time ago – by shutting up and going away. The atmosphere of subterfuge and siege from MPs and the liberal press has, by necessity, created a culture of loyalty and intellectual conformity on the left.

But with its position in the party unassailable, and a radical Labour government within touching distance of Downing Street, the last thing the Labour leadership now needs is a wave of Corbynite loyalty-hipsters hailing its every word.

As the history of every attempt to form a radical government shows, what we desperately need is a movement with its own internal democratic life, and an activist army that can push its leaders as well as deliver leaflets for them.

Lexit is no more possible now than it was during the EU referendum, and the support base of the Labour left and the wider party is overwhelmingly in favour of free movement and EU membership.

Jeremy Corbyn, John McDonnell and Diane Abbott are passionate, principled advocates for migrants’ rights and internationalism. By showing leadership, Labour can once again change what is electorally possible.