Mayor ‘wantonly diverted’ £40m of housing cash

Mayor Dr Nik Johnson

Left: Dr Nik Johnson, recently elected mayor of Cambridgeshire and Peterborough with (centre) former mayor James Palmer and Lewis Herbert, leader of Cambridge City Council. Major changes to delivery of affordable housing are imminent. - Credit: Archant

Cambridge City Council leader Lewis Herbert fuelled the political fall-out from the mayoralty election for Cambridgeshire and Peterborough.  

In a scathing criticism he describes how mayor James Palmer “wantonly diverted £40 million to East Cambridgeshire District Council and Laragh Homes”. 

He says it will be returned back “and used where most needed and promised, to create life changing opportunities for around 1000 local households without adequate and affordable housing”. 

Our local democracy reporter Ben Hatton takes up the story of what will happen next.   

The combined authority has laid out plans for how it hopes to receive almost all the outstanding money from the government for its beleaguered affordable housing programme. 

The government has withheld £45 million in funding for affordable housing from the Cambridgeshire and Peterborough Combined Authority (CAPCA).  

The funds were originally included as part of an £100 million affordable housing agreement as part of the 2017 devolution deal, but after providing £55 million the government has withheld the remaining £45 million citing concerns over lack of progress and value for money.  

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 In a report to its housing committee on June 21, CAPCA has outlined a list of schemes that would see it meet and exceed the affordable housing programme’s target of helping to fund 2,000 affordable homes by March 2022 – a date the government has contested, saying it should have been done by March 2021. 

The report suggests any decision by the government to provide further funds will be made by a minister, who will be advised by civil servants on whether or not individual schemes should be approved.  

The report says the government has already indicated it will support plans that the combined authority says would require an additional £2 million and help deliver a further 770 affordable homes – which would take the programme’s total to 1,503.  

The homes would also be funded through returns from loans the combined authority has already paid out as part of the programme, which the government has insisted must not be loaned out again. 

But the report also suggests that civil servants are either not recommending or not providing any recommendation at all to the minister on the combined authority’s plans to seek a further £40.7 million, which would help deliver a further 957 affordable homes. 

According to the report, MHCLG officials have said they are “not prepared to recommend” at this time that the minister approve five of the proposed schemes – which have not yet been approved by the combined authority housing committee – which total £23.8 million and would help to deliver 538 affordable homes.  

Proposals for a further £16.9 million that would help deliver 419 affordable homes will be put to the combined authority housing committee for approval on June 21.  

Regardless of whether or not the combined authority approves them though, they too will be subject to receiving some of the withheld funds.  

And the combined authority report says “we understand that MHCLG are going to report this to the minister without recommendation to see if he might be prepared to support”. 

However, if all the proposed schemes are approved, a further 1,727 affordable homes would be funded, which, on top of the 733 already funded, would take the programme’s total to 2,460. 

The programme works by offering grants – and under the previous administration, also loans – to support housing associations, developers and Community Land Trusts to deliver affordable housing, or in some cases to convert homes already being delivered to affordable housing.  

The newly appointed lead member for housing at the combined authority, and leader of Cambridge City Council, Labour’s Lewis Herbert, said: “We were the only combined authority to make affordable housing our central priority in 2016, to fund and help thousands of families in desperate need of new homes they could afford.  

Cambridgeshire Brexit meeting, at Cambridge Union Society, (l-r) Heidi Allen MP, Lewis Herbert Leade

Lewis Herbert, Leader of Cambridge City Council, - Credit: Archant

 “Under the last mayor, after four long years only a paltry £15 million out of £100 million in promised government funding was actually secured and invested as promised.   

 “So, it is vital that we persuade government that changed leadership means they can trust us with the £45 million they never paid over because the previous leadership went AWOL.” 

 Cllr Herbert said the programme’s position “is definitely not as rosy as mayor Palmer tried to blag during the election”, but said “there is an excellent pipeline of shovel ready projects and our combined authority team will be working their socks off to secure all or most of that £45 million”. 

Mayor of Cambridgeshire and Peterborough James Palmer

As mayor James Palmer called for more developers to come on board with his £100k homes project following a surge in applications. The scheme is being wound up. - Credit: Archant

 He added: “As important, £40 million wantonly diverted by mayor Palmer to East Cambridgeshire Council and Laragh homes will be returned back, and used where most needed and promised, to create life changing opportunities for around 1000 local households without adequate and affordable housing.” 

 According to the combined authority report, under the previous Conservative administration, more than £40 million was loaned to two developers, Laragh Developments and a development company owned by East Cambridgeshire District Council, to help deliver affordable housing.  

The rationale was for the combined authority to loan the money instead of giving it away in grants, creating a revolving fund which would continue to fund affordable housing and never run out.  

But critics said that although the money was due to be repaid, it led to about £1 million in funding per affordable home delivered, and in a letter revealed under the Freedom of Information Act, a government minister said the idea had an “opportunity cost”.  

The former mayor, Conservative James Palmer, said throughout his term that he was confident of delivering the programme’s target of 2,000 affordable homes. 

He said criticism levelled at him during the election campaign that he had “lost” the money was not true, noting the government’s indication that it would help fund the projects in the programme’s pipeline and potentially new proposals as well.  

Mayor Dr Nik Johnson

Mayor Dr Nik Johnson - Credit: Archant

In the election campaign, Mr Palmer stood by the revolving fund concept, and disputed and criticised the government’s negative assessment and handling of the situation, as have other Conservative combined authority board members.  

Mr Palmer stepped back from politics after coming second in the May 6 mayoral election.