Homes, sweet homes

“Letting Londoners down” was how the capital’s mayor, Sadiq Khan, described Wandsworth council’s decision, earlier this month, to let the developer behind the £9bn Battersea Power Station redevelopment cut the number of affordable homes the scheme would deliver by 40%.

According to Khan, the council appeared to “have had the wool pulled over their eyes”. The council hit back that the viability study Khan wielded in his attack was out of date, and that it effectively had a choice between accepting a lower number of affordable homes, or refusing planning and risking all of them. To muddy the waters of the huge riverside development further, a statement from the head of Wandsworth’s planning committee on the scale of the issues facing the project was amended on the same day it appeared, finally settling on the verdict the scheme was “facing significant challenges”.

This week, exactly what those challenges entail has been set out by Rob Tincknell, the chief executive of the Battersea Power Station Development Company. The man heading the project likes to use the motto “don’t do ordinary”, and the string of complexities on the project prove it is anything but: rebuilding the iconic chimneys before the rest of the power station, an onsite hospital for site workers, and a punishing construction schedule that required the handover of 30 homes a week in the first phase of the work.

If schemes the size of Battersea include just 9% affordable housing, it doesn’t create much hope of the UK dealing with its most serious housing crisis since the 1960s

Extraordinary, too, however, is the fact that the cost of dealing with asbestos on the project has rocketed to £44m from just £190,000 indicated by initial asbestos surveys. This is a 200-fold rise. Meanwhile, complications with rebuilding the chimneys have caused the cost of doing so to soar £20m to £48m, and unforeseen challenges with piling and building an underground energy centre have led to other huge rises. On top of this, like so many other London jobs, the scheme has been hit with the double whammy of rising construction costs, and an aversion among contractors to bearing risk due to political and economic uncertainty.

While some of these issues – landmark chimneys clearly among them – are specific to Battersea, others – rising costs and risk aversion - are not. And because of this, the “some is better than none” argument put forward by the council in relation to an affordable housing cut is not unique to the project either. This stance is not restricted to London. Up and down the country, changes in market conditions often lead councils to accept changes to previously agreed levels of affordable homes. And, with costs predicted to rise in line with labour shortages, and potentially be exacerbated by Brexit, those market changes are only set to become more evident.

Despite Khan’s scathing attack on Wandsworth, it’s easy to see how a council in this position could feel its hands are tied. However, despite this, and no matter how justifiable a cut in the number of affordable homes on a particular scheme may be (though taking a hit on a scheme peppered with multimillion-pound homes doesn’t perhaps elicit immediate sympathy), for a country with a clear crisis over housing provision and affordability, this trend is not sustainable. If schemes the size of Battersea include just 9% affordable housing, it doesn’t create much hope of the UK dealing with its most serious housing crisis since the 1960s.

The system for delivering affordable housing urgently needs fixing – and the government needs to look at itself as much as it looks at the private sector

Councils pushing for the highest viable amount of affordable homes in private developments is the right thing to do – but, particularly in the current market, it is not a mechanism that can be relied on to deliver on the scale and with the certainty the country needs. If the saga around Battersea indicates nothing else, it shows that the system for delivering affordable housing urgently needs fixing – and the government needs to look at itself as much as it looks at the private sector, if not more.

One part of the solution is to increase public sector delivery of affordable homes. Amid the entanglement of negotiations with the DUP, the EU, and her own party, Theresa May has gone noticeably quiet over her vision of a “new generation of council housing” – though it’s gratifying to see Khan last week unveiling a £1.7bn deal with housing associations and councils to build 50,000 affordable homes.

Then there was that other Tory manifesto commitment to find a way for the public sector to benefit from the land value rises that are created in areas surrounding developments. These funds could then be diverted back to infrastructure, or more affordable housing.

In tandem, a focus on policy that promotes homes for rent – both social and private sector – needs to be far more embedded than it is now.

At a time when first-time buyers in London need an average deposit of just under £100,000, the public sector needs to take far greater responsibility for planning the delivery of affordable homes. Leaving it to the vagaries of the market, when the market itself is abounding with uncertainty, is a colossal abdication of responsibility.  

Sarah Richardson, editor