How a profiteering property company, with the Council’s compliance, are building city centre housing just for the well-off

On 18 July the Council’s Planning Committee approved a new luxury housing development at Eastside Locks. Only 5% will be ‘affordable housing’. It exemplifies the relentless creeping neoliberalisation of the city, driven by profit-greedy property companies with the compliance of the Council leadership, which is reinforcing social inequality in Birmingham.

Eastside Locks is on the Digbeth Branch Canal and near the HS2 station.  What is planned is 753 homes in apartment blocks, including four 9-storey blocks and a 37-storey tower. Of these only 37 units – 5% – will be ‘affordable housing’ – far below the Council’s normal target of 35% and only half of even the Government’s target of 10%. [1]

So-called ‘affordable housing’ is far too expensive for people on low incomes.[2] But they are not the intended buyers. The proposal would provide 364 one-bedroom homes (48%), 369 two-bedroom homes (49%) and just 20 three-bedroom homes (3%). It is aimed at the lucrative market of young professionals. The facilities for an estimated 1769 residents will include a residents’ lounge, a games room, a gym and a cinema.

‘Five per cent affordable housing is pitiful’ says councillor at Planning meeting

At the Planning Committee meeting the plan was strongly criticised by Committee member and Labour councillor Peter Griffiths, former housing chief. He said:

‘Five per cent affordable housing is pitiful. In displacing affordable housing and social housing to the outer city and to neighbouring authorities we are reneging on our need to build and to get developers to build an appropriate amount of affordable housing in the city.

The low wage economy would require workers living close to the city centre to actually be able to walk to their jobs because they don’t have the money to do other. It’s just not satisfactory that we continually offer developers this get-out clause when they can’t even build to the Government’s required level of 10 per cent affordable housing.

Shared ownership will bring in the money, it will just take a little bit longer to get the money back, but they still get the price of the sale. So I really don’t see why we can’t be a bit stronger on affordable housing.’ [3]

Cllr Griffiths was echoed by Conservative councillor Gareth Moore, who said ‘We’ve compromised far too much with the developers’. He made the additional point that the homes would not go towards meeting the city’s housing needs because most of them would be bought up by investors, including from overseas, to rent out for profit, like with many other city apartment blocks.

Cllr Moore and Labour councillor Lou Robson raised a number of other criticisms including the number of apartments which would not receive enough sunlight, the shortage of parking spaces, the high levels of nitrogen dioxide, and the loss of natural habitat.

In the prior consultation the Canals & Rivers Trust had noted that ‘The area aligning the Canal is identified as a wildlife corridor and a potential site of importance to wildlife’ and voiced concerns including about ‘Lack of information and consideration of impact upon Conservation Area and heritage assets including the canal itself’. Historic England expressed concerns regarding the application on heritage grounds, and the visual impact of a 37-story tower.

How did the Council leadership respond to these criticisms?

You might have expected that the Cabinet member for Homes and Neighbourhoods, Cllr Sharon Thompson, or another Cabinet member or Ian Ward himself would have been present to reply to these criticisms and present the case for this major city centre development. But they weren’t, not a single one of them was at the meeting. Instead they had delegated the task to the council’s assistant director for development, Richard Cowell. He made no concessions to the criticisms and flatly defended the five per cent provision of affordable housing provision as ‘over and above’ what was expected, according to the developer’s viability assessment which he confirmed met government guidance.

The meeting then voted on the proposal and it was passed with 6 for, 5 against and no abstentions.

What about the Housing and Neighbourhoods Overview and Scrutiny Committee? It has five Labour councillor members: Akhlaq Ahmed, Marje Bridle, Penny Holbrook (chair), Mahmood Hussain, Shabrana Hussain. What role did they play in the Eastside Locks planning process? The answer seems to be: none. The agendas of their meetings, and their future work programme, are rightly concerned with issues such as homelessness and HMOs, but there seems to be no mention of the equally important issue of the dominance of the city centre housing market by profit-seeking predatory investors and the resulting further reinforcement of the existing stark social inequalities in Birmingham’s geography.

Who is behind the Eastside Locks development?

The company is St Joseph, the new Birmingham subsidiary set up by the Berkley Group, a major property developer based in London and the south-east but which has decided to move into the high-end housing market in Birmingham. Its founder and chairman Tony Pidgley believes Birmingham has a ‘world class future’ and is now a better place to invest than London.

As well as Eastside Locks St Joseph has a development of 404 apartments at Snow Hill Wharf, in the Gun Quarter. As its website says, ‘Snow Hill Wharf brings luxury living to Birmingham. Right in the heart of the city, discover the benefits of high quality apartments and canal-side living.’ Snow Hill Wharf offers high quality apartments with ‘Members club style facilities’. And other sites in Birmingham are being planned.

What is the attraction of Birmingham?

There are two reasons Berkley has moved into Birmingham. One is the slump in the London housing market. According to Construction Enquirer 28 September 2018:

Luxury London house builder Berkeley Group is making a beeline for Birmingham with ambitious plans for major schemes. Berkeley Group chairman, Tony Pidgley, said he had ambitious plans to expand in the city as the firm’s traditional central London market cools and planning redtape in the capital slows new schemes. The company said pretax profit fell 20.7% to 775.2 million pounds in the year ended April 30 1918.

The second reason is Birmingham City Council’s shameful willingness to comply with Berkley’s policy of refusing to meet affordable housing targets. The Guardian headline of 3 September 2018 was ‘Berkeley calls affordable housing targets ‘unviable’ as chairman earns £174m’. The report says that ‘in 93% of Berkeley’s 57 London developments the company told local authorities that their affordable housing targets were unviable.’ It continued:

The housebuilder Berkeley Group’s founder and chairman, Tony Pidgley, has earned £174m over the past decade, and is set to be paid another £48m by the company over the next five years, which will make him one of the highest paid bosses of a public company in Britain.

His pay package has attracted the anger of politicians and housing campaigners as an investigation by the Guardian and Finance Uncovered reveals that the company has reduced its affordable housing obligations in the overwhelming majority of its London developments.

While for years Berkeley has successfully persuaded planning authorities that it could not make a profit from its developments if it met affordable housing targets, it has raked in £2.9bn of profit over the past seven years.

Berkeley’s shares have soared on the back of the profits, creating a fortune for the company’s senior executives, who since 2008 have been given shares worth £610m. Pidgley himself holds an additional 4.4m shares, worth £163m. The shares have more than trebled in value over the past decade.

Although the company has restricted future bonus payouts following shareholder anger, the top six executives could still collect another £127m over the next four years. Pidgley, who has amassed a £310m fortune according to the Sunday Times rich list, is set for up to £48m. [4]

Birmingham Live 27 September 2018 carried a revealing report of the cosy relationship Pidgley has with Birmingham Council:

‘Mr Pidgley, who was made a CBE in 2013, said Birmingham City Council had been a major factor in attracting him to the city. “It’s a city that’s growing, with all the right credentials, but also the right political leadership.” He said he saw the relationship with the public sector as key and Waheed Nazir, the city council’s strategic director for economy, was a big part of that. He explained’:

“I rang up Waheed one day and we were considering a number of places to work. ‘You want manners, collaboration and the truth, I rang him up and he said ‘When? Today? Tomorrow?’. We want certainty and when we ask the question of a local authority we want an answer.”

In other words, Birmingham City Council has proved a compliant partner for Pidgley’s profiteering, happy to do deals that cut affordable housing to the minimum, even if it’s far below what is supposed to be the Council’s criterion of 35%. Eastside Locks provides the evidence. Under the headline ‘’Pitiful’ amount of social housing in canal scheme’ the Birmingham Post 25 July 2019 reported that ‘The developer, St Joseph, a subsidiary of Berkley Group, said ‘providing any higher percentage would reduce profits and threaten the viability of the scheme.’’  The Council capitulated.

Two immediate steps the Council should take

The real solution is a radical transformation of the whole corrupt profiteering housing market, and for that we need a Labour government. But the Eastside case has shown that the Council needs to take two urgent measures right now.

First, the Council must drive a much harder deal with property developers. No deal unless they meet the Council’s 35% ‘affordable housing’ target – using Shelter’s definition, not the government’s. And include into that a substantial quota of social housing.

Second, the Eastside case has revealed the democratic failings of the Council’s planning process. It takes place with very limited public participation. Yes there is consultation through the submission of written responses. But there is no face-to-face discussion, no dialogue between Council, developers and citizens. For major building developments there should be at least one open forum where the Council leadership and the developers can present their case and citizens and community organisations can present their responses and questions. In addition the Housing and Neighbourhoods Scrutiny Committee needs to get to grips with the issues posed by big city centre housing developments and hold the Council to account as it is supposed to.

Birmingham Against the Cuts

31 July 2019

Notes

  1. See planning application 2019/02161/PA via https://eplanning.birmingham.gov.uk/Northgate/PlanningExplorer/ApplicationSearch.aspx

You can find the Planning Committee meeting on the Council meetings calendar (CMIS). There is also a webcast.

  1. See the excellent exposé ‘Birmingham’s new ‘affordable’ housing is anything but, major investigation shows’ in the Birmingham Mail 14 February 2019 – https://www.birminghammail.co.uk/news/midlands-news/birminghams-new-affordable-housing-anything-15826583. See also ‘Birmingham City Council presents: “How to manufacture a housing crisis”’ in the Birmingham Momentum Newsletter 29 July 2019 – momentumbhamnews@riseup.net.
  2. It is proposed that the 37 units (5%) would be provided as shared ownership.
  3. https://www.theguardian.com/business/2018/sep/03/berkeley-calls-affordable-housing-targets-unviable-as-chairman-earns-174m

 

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1 Comment

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One response to “How a profiteering property company, with the Council’s compliance, are building city centre housing just for the well-off

  1. Bob Whitehead

    The Labour manifesto for the last local elections talked about “municipal socialism” and “for the many not the few”.

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