Battersea Power Station scheme facing "significant challenges" over cost, councillor claims

The £9bn redevelopment of Battersea Power Station is facing “significant challenges” due to “escalating cost”, according to Wandsworth council councillor and chairman of the planning applications committee Richard Field.

The revelation comes after the council approved a request by the developer behind the redevelopment of the power station to review its affordable housing quota.

“The escalating cost of restoring the power station building means this development project is facing significant challenges and the committee had a very difficult choice between accepting a potentially lower number of affordable homes, or refusing the application and risk losing all of them. This development also directly funds the Tube extension which is bringing 25,000 jobs to Battersea, so the stakes are extremely high,” Field said.

He added: “We would never accept a potential reduction in low cost homes unless the case was overwhelming.”

In an earlier version of the statement, published on the council’s website, Field had said “the escalating cost of restoring the power station building has pushed this entire development project into serious financial trouble.” The statement has since been updated to remove the reference to the project being in “serious financial trouble” and replace it with “facing significant challenges.”

Battersea Power Station Development Company (BPSDC) – under the scheme’s existing planning consent agreed to deliver 636 affordable homes out of a total 3,444 – applied to Wandsworth council to amend its section 106 planning obligations earlier this year.

The developer requested that a viability review be conducted towards the end of the scheme to reassess how many affordable homes it is able to deliver, potentially putting up to 250 affordable homes at risk.

The council’s approval of the request means that 103 affordable homes, which were meant to be delivered as part of a Foster + Partners-designed building in Phase 3 of the scheme, directly behind the power station, will now be shelved and potentially instead rolled into Phase 5 – which is earmarked for 147 affordable units – subject to the proposed review.

In return, BPSDC offered to begin construction of 386 affordable housing units planned for later in the scheme as early as next year. These units will be built on a separate site to Battersea Power Station – the site of the former Dairy Crest distribution centre and the Sleaford Industrial Estate, near to New Covent Garden Market.

In its application BPSDC argued that a reassessment of the affordable homes provision was required due to increased economic uncertainty and construction cost inflation. It added that its viability position had “not remained at the level envisaged by the original appraisal”.

BPSDC said in the document it was still targeting 15% provision of affordable homes across the development and, if economic conditions improve, the proportion could increase up to a maximum of 33%.

Field also hit out at London Mayor Sadiq Khan who said on Twitter the day before the planning committee meeting: “As Mayor, I’m extremely concerned these plans & have sought advice on how to stop this happening. We need more affordable housing, not less.”

Field said: “The Mayor of London was asked to engage in this decision making process several weeks ago but remained completely silent until the day before the committee when he launched a surprise social media campaign rather than contacting the council. Mr Khan very recently approved a vast housing development in Merton with 9% affordable housing so his shock campaign tactics are hard to justify.”

Commenting on the review of affordable housing a spokesperson for Battersea Power Station said: “Battersea Power Station is determined to deliver 15% affordable homes, equating to 636 homes, and the team is working very hard to make that happen.

“We understand that asking for flexibility on when the affordable homes are delivered across this 15 year project is not straight forward, but our priority is to make good on the trust people have placed in us by starting on the first 386 affordable homes this year, which is three years earlier than the requirement in the original planning consent.

“The restoration of the iconic Power Station, delivery of the new tube line and creation of what is a new town centre supporting 20,000 jobs is a vast and complicated endeavour but we are determined to make this a genuine community and we are clear that includes a genuine mix of housing – affordable and market-priced.”