Campaign victory: u-turn over Lovells' sell off? December 2006

Events in Little London have taken another dramatic twist. Last Thursday (14th December), a press release (see below) from the Leeds Lib Dem Group (part of the ruling council coalition) declared a last minute stay of execution for the three Lovells tower blocks in Little London. The flats had originally been ear-marked for sale to a private developer for refurbishment as private homes with the money raised being invested in paying for the £215 PFI scheme over 20 years. Now it has emerged that selling off the Lovells is no longer necessary to finance the PFI scheme and new options for the tower blocks are being prepared for consultation in spring 2007.

Incredibly, the Lib Dems are trying to claim credit for this u-turn, stating that it was due to their 'pressure'. This is nonsense and shows how politicians cannot be trusted. During the February consultation, the tenants and residents of the Lovells said 'no' to the sale of their homes and were simply ignored by the Council. We campaigned for months, went to the High Court, collected a huge 500-signature-strong petition, ensured constant media spotlight on the issue and made it clear to our local Lib Dem councillors that they would suffer at the next election. If the Lovells are no longer going to be sold off it is because of the tireless campaigning of tenants and residents. It is also clear that the council is going to make far more money from big pieces of development land that will be cleared by demolishing the Carlton Towers, the maisonettes and the shops, community centre and housing office.

The campaign fights on to stop the PFI and ensure decent, council housing and community facilities for everyone in Little London.

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Local Councillors win stay of execution for Lovell Park Towers

Following representations from local Liberal Democrat Councillors plans to sell off the Lovell Park Tower blocks in Little London to developers have been put on hold. New options are being worked on for consultation in spring next year.

Cllr Kabeer Hussain (Lib Dem, Hyde Park & Woodhouse) said :- “the recent success of the PFI bid to bring nearly a thousand homes in the Little London area up to decency standards, and build over a hundred new properties; does not depend on the Lovell Park Tower blocks being sold off to private developers for refurbishment and resale. In our view it’s therefore essential that we consult with residents in the blocks as to the best way forward.”

Cllr Linda Rhodes-Clayton (Lib Dem, Hyde Park & Woodhouse) added “as local councillors we’ve fought for the best deal for local residents and our first priority was to achieve the maximum possible investment for addressing the backlog of repairs the current administration inherited. Now that the Government has agreed to an investment of over £95 million in the PFI scheme for the area outside the Lovell Park Tower blocks we need to rapidly get on and find a solution for the blocks themselves.”

Cllr Penny Ewens (Lib Dem, Hyde Park & Woodhouse) summed up the outcome as a ‘win, win’ solution for local residents. “We seem to have achieved a real result, the investment and the opportunity to revisit the controversial proposals for the Lovell Park Tower blocks, without blocking the vital work for other properties. As we have always said, we put a high priority on consulting with local residents, and this proves that brings results.”

For further information please contact :- Please do not give out numbers to the public
Cllr Kabeer Hussain on 07709176007 (m)
or Cllr Linda Rhodes-Clayton on 07850733140 (m)
or Cllr Penny Ewens on (0113) 294 6976 (h)
Alan Kimber on (0113) 2474832

Emergency Meetings called in response to PFI decision

Following the official news of the PFI decision, Save Little London Campaign is holding two very important meetings over the next few weeks.

Tuesday, 5th December - 5pm onwards in The Rifleman Pub

'How do we respond to the PFI?'.

We are going to talk frankly and openly over a few drinks about how highs and lows of the campaign, what we have learned and what we do now.

Wednesday 20th December - 6.15pm at Space@Little London
(behind Little London Primary School, Meanwood Street LS7 1SR)

EMERGENCY PUBLIC MEETING
'Save Our Homes, Save Little London'

With Guest Speakers:

John McDermott, Leeds Unison
Stuart Hodkinson, PFI researcher at Leeds University
Plus: free legal advice

· Are we being told the truth about what will happen?
· Carltons to be demolished, Lovells to be sold off - who else will lose their homes?
· What is the Private Finance Initiative and how will it hurt the community?
· What compensation will people get?
· Can we still stop the PFI and get the investment the area needs?
· Free tea / coffee

Contact us at savelittlelondon@gmail.com or on 217-8608 if you want more details.

Latest newsletter now out

For full PDF (large) version click here
SAVE LITTLE LONDON NEWS
Issue 5, 1 December 2006

PFI gets green light - estate on red alert to save our homes

So it’s finally happened.

After nearly 6 years of delays, dishonesty and downright deception, this week the government ignored our opposition to the PFI and approved the Council’s plan to ‘regenerate’ Little London.

The decision was made after a legal challenge by a tenant to the ‘Comprehensive Regeneration’ scheme in Little London was rejected by the courts last week. The tenant lives in one of the Lovell flats and will lose her home under the council’s plans.

What clinched it, however, was the council’s promise to the government that it would foot the bill as the cost of the PFI scheme continues to spiral out of control.

That’s right, Little Londoners, YOU will pay for the demolition of your home, the fat cat salaries of consultants, accountants and lawyers, the profits for the banks, developers and architects who will now feast on our community like vultures.

It’s not just the people in the Carltons and Lovells who will be affected. Those of us who get to stay and have our council homes refurbished will also be in for a shock - see our Swarcliffe story inside.

Leaked documents in our possession reveal that the council has agreed to sell more land and reduce the promised improvements if the cost of the regeneration increases again.

Save Little London refuses to accept defeat. We won’t allow the council to demolish and sell off public housing- our homes - just so that corporations can profit.

The estate is now on a ‘red alert’ - we have to fight to save our homes and our community from the bulldozers.

What PFI will mean for Little London

DEMOLITIONS
Carlton Towers, Carlton Carr and Garth will be bulldozed
Community centre and shops to be flattened
All to clear land for private developers to build new housing that we won’t be able to afford

EVICTIONS
Tenants and lease-holders living in Carlton Carr, Garth, Towers and the Lovells will be forced to leave their homes and community
All to allow wealthier city workers to move in and yuppify the area

A LIVING NIGHTMARE
Builders trampling through people’s homes for months, baths that don’t fit, kitchens left unusable, floorboards through ceilings, roofs not properly sealed, dust and dirt everywhere
Just ask Swarcliffe!

How the council has lied to us all

Porky pie 1: ‘We’ll honour the vote’

Back in 2001, Leeds City Council promised to respect the vote on PFI. However, when we voted ‘no’ to PFI the council suddenly had a bout of amnesia and refused to accept the result. So it held another vote, this time cutting out some of the ‘no’ voting streets from the PFI.

Porky pie 2: ‘We won’t demolish Carlton Towers’

One of the council’s promises that swung the second vote was that Carlton Towers would be saved from demolition. Now the council wants to flatten them again.

Porky pie 3: ‘The PFI will benefit all of the community’

How will the regeneration benefit the 300-400 homes that will be evicted from their own community? The truth is this scheme is an attack on working class people. The council has said publicly that it wants to ‘change the mix of people’ living here - that’s social engineering.

Porky pie 4: ‘PFI isn’t privatisation’

PFI involves selling off public services and assets to private companies. It is privatisation.

Porky pie 5: ‘PFI is the only game in town’

A lie. The council chose to use PFI—it did not have to.

Porky pie 6: ‘The estate will be constantly maintained and invested in for 30 years’

Untrue. Now we learn it’s only 20 years - that’s 10 years less investment than we were promised.

The Swarcliffe PFI disaster coming to our estate

Back in 1999, the council made exactly the same kind of promises to the people of Swarcliffe. Here’s what has actually happened:

Massive delays: 3 year wait for work to begin caused by contract wrangling

New private homes built first... PFI companies only motive is profit – so up went the new private housing for the wealthy arrivals.

...after 18 months, not a single council home finished: there are 1600 houses to renovate on the estate. At this rate, it will take them 31 ½ years to finish all the refurbishments – that’s 2037.

Appalling standards: the council has fined the contractor for shocking work, including:
· Walls and ceilings smashed in
· Cracked walls and chronic damp ignored
· Baths and doors that don’t fit
· Bathrooms and kitchen left in chaos for months

Insulting compensation: after your home has been destroyed, you will get just £110 of B&Q vouchers to redecorate your whole house. You can’t even get this money in cash to pay someone to help you. What good is this to a pensioner, a pregnant woman, a disabled person?

Parking privatisation: half the garages have been knocked down in one area, while the rents have increased for those remaining. Cars are forced to park on the streets, increasing insurance rates.

The Rumour Mill
· The council is emptying Lovell and Carlton Towers, Carlton Garth and Carr - each time a tenant moves on, their home is being shut up. There are mice infestations growing in the Lovells · Carlton Barracks and Blenheim School could be sold off and demolished to make way for more student flats
· It’s being said that a new community centre is no longer in the PFI plans

What on earth is ‘PFI’ and why do we oppose it?

The Private Finance Initiative is a really bad way of paying for public services. Instead of government or council using our taxes or borrowing money to build and run new schools, hospitals, or council homes, a private consortium of banks, developers, accountants and firms does so instead…for up to 35 years!

The problem is that not only do these companies make huge profits, it also costs them far more to borrow than a government or council. These profits and extra costs are then paid for by us through government subsidies. PFI thus transfers wealth from poor tenants to rich shareholders!

The fraud doesn’t stop there. Because PFI schemes are so expensive (about 30% more than normal) government won’t give local councils all the money they need to pay the private company. So councils are often forced to sell off land or property to raise the money themselves – this is exactly what’s happening in Little London.

The Carltons are being demolished to clear a huge development site for a private developer to come in and build private homes that it will sell on for a huge profit. The Lovells are being sold off to raise money that will then be paid to the private company running Little London estate for 20 years!

As costs rise, the council must keep finding the money from somewhere—more land sales, more public service cuts.

How can we stop this PFI madness?

- Legal challenge

There are strong grounds for taking the council to court for its misleading consultation and its disregard for people’s basic human rights.

If you are interested in taking Leeds City Council to court, get in touch.

Lobby the government, your councillors and MP

Send 100s of emails and letters to your so-called elected representatives demanding they investigate what is going on.

Make an appointment with Hilary Benn MP to explain why the PFI is wrong for the community.

- Write to the media

The British press loves a scandal, especially involving politicians and corrupt local councils. Hostile media coverage often forces decision-makers to change their minds. Write letters to the local and national press, ring radio phone-ins, invite journalists to investigate Leeds City Council’s behaviour.

- Get campaigning

Join the Save Little London Campaign. We can achieve far more working with each other than we can by ourselves. Our regular meetings are a source of solidarity and support. Over the next few months, we plan to hold public meetings with other tenants’ groups, lobbies, demonstrations, community events and film nights as part of a high-profile campaign. Joining the Save Little London Campaign is FREE

- Link up with others

Hook up with other anti-privatisation campaigns in Health, Education, Local Government, and other public services.

Get involved in the new grassroots City Wide Defend Public Housing Network.

Do your homework

Start investigating the companies that might takeover the estate, look at their record on standards, employment, their profits etc.

KEEP FIGHTING

Leaked documents reveal soaring costs of Little London PFI

Save Little London has been leaked confidential financial documents [1] warning of huge potential cost rises to the PFI housing regeneration scheme that could threaten further homes and public assets in our community.

The documents were part of a recent report by housing officers to Leeds City Council's Executive Board on 15 November 2006 explaining why the PFI scheme was again delayed and the cost implications. The information in the confidential documents is explosive. It shows how much the PFI scheme is actually costing and the extraordinary way in which it will be financed.

The True Cost of the Little London PFI

We can reveal that the PFI will not cost £85m as we were told during February's consultation, nor £95m as the council is now telling is, but an enormous £215m over a 20 year contract period. The public figure of £95m is the amount of 'PFI credits' the government will give to the council to part fund the scheme. PFI credits are the estimated 'capital investment' needed in Little London - new buildings, refurbishments, physical improvements etc.

However, because the council must pay the private sector to run the investment scheme and then manage the estate for 20 years, the true cost of the PFI is another £120m. This figure does not represent any investment in the area - just the amount it costs to pay the private sector to carry out this investment and improvements over 20 years.

How the Little London PFI will be financed

The documents reveal who pays for PFI. The Government will put in £7,922m a year or £165.385m over 20 years; Leeds City Council will put in £1.521m a year or £41.445m over 20 years, and have to find an additional £8.930m in interest payments.

So how will the council find £1.5m a year?

Just under £1m will come from the council's existing housing budget - that's the account into which we pay our council rents and the government pays subsidies. But the extra £0.5m will have to come from what the documents call "other resources".

In other words, the government has deliberately under-funded the PFI scheme so that the council has to find money from other budgets. Given that councils are already cash-strapped and in debt due to government under-funding, this inevitably means either cutting services elsewhere or selling off land and other public assets to raise the cash.

So now we realise the real reason why the council’s regeneration scheme involves selling off three Lovell multi-story tower blocks to a private developer, and demolishing 152 other council properties in order to create a major development site for new home building. These sell offs and demolitions are about raising 'capital receipts' - the money raised by selling of council assets such as land and buildings - to part-fund its financial contribution to the PFI scheme.

Delays, rising costs and more bad news

Incredibly, the leaked council documents reveal that because the government has taken so long to decide on whether to approve the PFI scheme, Leeds City Council has had to find an extra £149k per year for the 20 year duration of the PFI contract, or £2.98m. This is because any delay in a PFI scheme will massively raise the overall costs.

Why does this happen? PFI involves a long contract – in this case a 20 year contract – in which future costs must be predicted now. Each delay changes the future cost, usually by increasing it because of predicted inflation rates and so on.

The government’s incompetence has meant that the PFI regeneration will not start before January 2009. This means that the expected increase in capital costs by the new estimated start date of service will have risen from 15% to 17%.

If this was just a one-off increase caused by an unexpected, one-off delay, the medicine might not be so hard to swallow. But this is PFI where escalating and unforeseen costs are the rule, not the exception. It’s no surprise then that the leaked documents alert the Authority’s Executive members to a number of future scenarios under the “sensitivity analysis” that could place the affordability of the PFI scheme in doubt.

For example, an increase of the inflation rate by just 0.5%, combined with a rise in building costs of 0.5%, and a further 6 month delay due to difficult contract negotiations, would increase the Council’s contribution by some £364,000 a year for 20 years – that’s an extra £7.28m. In the worst case scenario set out in the leaked documents, a moderately changing economic environment could add an extra £600,000 a year of Council contributions over 20 years – that’s an additional £12m on top of the present £30m figure. [2]

In an alarming development, officers have convinced the Council to "agree that, should any affordability gap arise beyond this level, to make a commitment to supporting this project through other mechanisms including capital receipts from the area or through reviewing the project scope without impacting on value for money".[3]

This means that the Council could be forced to sell off – or give away as is often the reality – more land to the PFI contractor and chosen developer, or change the specification of the PFI scheme to reduce costs and/or increase capital receipts for the project. Or what is also called writing ‘a blank cheque’ from the public purse to the private sector.

Nightmare scenarios

Save Little London cannot see how the Council can raise any more capital receipts from Little London or change the project scope without radically changing the regeneration scheme we were originally promised.

Scenario 1: the council drops its affordable housing promise

The council promised to place up to 75% to 80% of the new and refurbished private housing on the estate in so-called ‘affordable’ schemes. By breaking this promise, more profits could be generated from the regeneration for the private sector, off-setting rising costs.

Leeds City Council has a history of allowing private developers to get around their statutory requirement to provide 25% affordable housing in city-centre schemes of 25 units and over by accepting one-off commuted sum payments. The Council’s record of then translating those sums into affordable housing has been poor.

Scenario 2: the council reduces promised refurbishment standards to council homes

The council promised that some 910 council homes would be refurbished to a standard above the government’s own Decency level. Councils are obliged to bring all their properties up to the Decency standard by 2010. By committing to do more than it legally has to, Leeds City Council could easily turn round to tenants and say that ‘due to unforeseen financial circumstances, we are only able to meet the Decency standard’.

Look at any PFI scheme and you will find allegations and evidence of contractors cutting costs and increasing profits by using inferior materials, cheap and unskilled labour, and changing the design of a hospital or home to reduce the amount of money spent on it. Go to the Swarcliffe estate in Leeds where a PFI scheme is currently going on and you will see how this works – the standard of refurbishment is so bad that the council is refusing to sign off a single home until things are improved and has fined to contractor.

Scenario 3: the council reduces the number of homes to be refurbished

Similar to above, the council might suddenly decided to reduce the PFI area in order to cut out a number of houses and make the scheme less expensive. In 2002, the council changed the PFI area to exclude Woodhouse from the scheme when a number of streets voted no in the controversial ballot. So it can happen.

Scenario 4: the council demolishes more council housing to sell land to developers

The Council may suddenly discover asbestos or severe structural damage in properties previously given a clean bill of health, prompting their demolition to clear more land for developers. In the confidential report, Council officers point out to the Council’s Executive that the Council could reduce its annual revenue contribution to the project by around £70,000 a year for every £1m additional capital receipt allocated to the scheme. This is a not-so-subtle way of telling the council to sell more land to the private sector.

Corporate profiteering

Private developers will not be the only corporations to benefit from the outsourcing of public services under the Little London PFI scheme. Since December 2000, when the Council first decided to initiate the PFI bid to Central Government, the following companies have been contracted to provide various services to Leeds City Council in preparation of the Little London regeneration programme:

· Gleeds – the Council’s technical advisors, they have jointly developed with LCC Output Specification for the works covered by the Project Agreement;
· PricewaterhouseCoopers – financial advisors to the project
· KPMG, – the City Council’s external auditor: has assessed the overall project
· Kings Sturge – has carried out stock condition and valuations
· Banks of the Wear – consultancy employed as the Independent Tenants’ Advisor in 2005-06
· CHS – consultants employed as Independent Tenants’ Advisor in 2001-02
· DLA Piper – the Council’s external legal and commercial advisors

In addition to the £ms already spent through staff time, consultation events and consultancy costs, Leeds City Council estimates that it will need to spend £3m during the procurement period and has already allocated £1.3m from the Housing Revenue Account for 2006/7.

Running down the estate to force people out

As public money is wasted on consultancy and legal fees, as well as the continual delays to the PFI scheme, tenants and residents accuse the Council of deliberately running down the estate further to ‘persuade’ those it wants out to leave. Leeds North West Homes, the Arms Length Management Organisation (ALMO) running housing in the area, has apparently stopped all new lettings in any of the properties scheduled for sale or demolition. Each time a tenancy turns over the property is closed up and secured from the outside.

We argue that this is “constructive eviction” – the council is deliberately creating lifeless ghettos that will be attractive to squatters, drug addicts and mice infestations and convince those remaining to get out as soon as they can. The ALMO has even been denied funds from central government to carry out improvements or basic repairs to council stock before the PFI regeneration. Broken windows that need new frames are simply being nailed shut and empty properties that need anything more than minor repair work are not being re-let.

Enough is enough

The leaked documents contain a glimpse of the future horror in Little London under PFI – we have to stop this crazy scheme from happening.

Notes

[1] Leeds City Council (2006), Report of the Director of Neighbourhoods and Housing to Executive Board. 15 November 2006. Subject: Little London Housing Private Finance Initiative – Outline Business Case update. Appendix 1 (not for publication, Exempt/Confidential – Access to Information Procedural Rules 10.4 (3)
[2] The Council report outlines the following four key variables that could affect the affordability of the PFI: (i) Inflation: the affordability of the project is assumed on a 2.5% inflation rate.; if inflation was to rise to 3%, Leeds City Council would have to find an extra £58,000 a year on top of the £561,000.; (ii) Subsidy Rate: if the subsidy rate was cut from 6% to 5.9%, this would reduce the Council's subsidy rate by £54,000 a year; (iii) Increased Build Costs: if building costs increased by 1.5% above the current forecast, this would cost the Council an additional £209,000 a year. This is considered unlikely by the Council’s advisors, Gleeds, but an increase of 0.5% – scored as a ‘medium chance’ – would add £66,000 a year to the cost; (iv) Procurment Delay: a year long delay - which could realistically happen as part of a judicial review - would cost an additional £266,000 a year.
[3] P. 100, Leeds City Council (2006)