It seems some councilors at Wandsworth are bit sensitive about the reporting I have been doing around the Battersea Power Station Project.
In the last few days a number of councilors have been tweeting the following:
Doubling costs: the truth about Battersea Power Station that the Observer & @georgenturner won’t want you to see: https://t.co/ixie7NlZU4 …
— Cllr Ian Hart (@IanHart14) July 22, 2017
The truth that I am hiding from you – all rather amusing given the months it took me to extract details of the planning application for Battersea Power Station from Wandsworth Council.
The argument that they are seeking to make is that Battersea Power Station has been hit by massive increasing costs, which is what they say makes the scheme unviable, and why the developers need to dump affordable housing.
They are rather missing the point.
My article on Battersea dealt primarily with the deal done with the developers at the planning stage, before a brick had been laid. Before any cost increases had been incurred.
After having got hold of the previously confidential documents attached to the original planning application it became clear that Wandsworth Council had done a deal with the previous owner of the site, Treasury Holdings, to drop affordable housing. They gave the company a more valuable planning permission which it needed to recoup the huge sums it had paid for the land – nothing to do with rising costs on construction.
The council’s advisors were clear that if planing guidance had been applied strictly then the council could have demanded over 1000 more affordable homes. They choose not to.
Secondly, now that the deal is out in the open, the developer may well try to deflect attention by squealing about rising costs, but the fact that costs have been rising at the project is meaningless unless you know what is happening to revenues too. And they have been hugely increasing over the original estimates.
In 2010, with the original planning permission was granted, developers estimated that the project would generate £6.6bn in revenues. By 2016 that estimate had risen to £8.8bn. Both estimates I have accounted for future price growth. The additional £2.2bn is over an above the increase in house prices predicted at the time of the application.
Finally, the whole episode brings up the core problem with the way financial viability is treated in the current planning system.
Even if costs had been rising to the extent that it wiped away almost all of the profit for the developer, why is it that the public has to pay?
Developers often claim that they require high profits to compensate them for the risks they undertake. But where is the risk in the project if you can just go back to the council for a handout of more luxury homes if the going gets tough. Risk after-all should have an upside and a downside.
I understand why Conservative councilors are sensitive about the issue. The Labour party in Wandsworth have been campaigning on the the lack of affordable housing at Battersea, and they feel the need to defend their actions.
But Labour equally are cutting the same deals all over London in boroughs they control. What is needed is for politicians on all sides to engage with the issues and think though why our city is failing so miserably to deliver the kind of housing we need.
A good start would be for councils to start publishing the deals they propose to make with developers before planning permission is granted, rather than 7 years later (and only then after some resistance). That way we could have a proper debate about the appropriate contribution to be made by developers.
You did well to get any details about the pre-planning deal, these are often kept off record. The big developers have far too much control over the planning process what with Section 106 agreements and the LA can use delegated powers to keep decisions out of scrutiny by committee. Everything favours the intentions of a big developer and site owner. If they do not like a decision they can go to appeal. Often lawyers rather than anyone else make final decisions. Its convoluted and expensive, the interests of a broader public are not represented, social needs sidelined.
As an opposition member of a London planning committee, we were not ever going to be told what was really going on. When it got to the point where developers told us that prices had shifted so they couldn’t produce the affordable housing if they were to make their profits, we seemed to give in every time. I still don’t see why financial profits should be given precedence over public interest; but the words “public interest” never appeared.
My feelings exactly. Something is terribly wrong with the whole process of planning and development (particularly housing) when profit for the private developer takes precedence over all else, even to the detriment public need.
You are quite right. The whole system stinks.