Foundations: Established to build 10,000 homes it built just 18!

In 2018 Liverpool submitted plans to build new homes at Ackers Hall Avenue. Foundations who were to run them has been sidelined and, as yet, subsidy has not been found to make the scheme work. If it does work it will take more than 300 years for the Council to deliver Mayor Anderson’s housing promises at the current rate of progress.

Formally established by Liverpool Council in January 2018, Foundations Ltd aimed to deliver 10,000 new homes over the coming decade with a focus on creating properties for the homeless, foster carers, large families, the elderly and people with a disability.

Many people thought that this was an attempt to start to build new Council houses but Mayor Anderson wanted to use the company to rebalance Liverpool’s social housing economy by revolutionising the rent to buy sector.

Speaking about the homes, that he promised to be of good quality and affordable, Mayor Anderson said in Spring 2018: “I’m delighted at the progress that is being made to get Foundations active in the housing market so we can start to change the lives for thousands of families across this city”.

However, the Company is now being quietly sidelined with just 2 directors left, one of whom is leaving the Council next Month and one member of staff working 1 day a week. It has provided just 18 homes on a rent to buy basis. Best estimates are that more than £500,000 has been spent on providing these homes ignoring the capital costs of building or refurbishing them.

Already gone are all the initial Board Directors announced with a fanfare and pictures led by former Cllr Frank Hont. They went last summer with no fanfare. The Notice Board on floor 6 of the Cunard still points the way to the Foundations office – but there’s no-one in them! Amusingly for us the Labour Group were turned out of the space into much more cramped accommodation. Perhaps they will come back!?

If you look at the Company’s accounts at Companies House you will see that that Company has only filed one notice of accounts when it was claimed that this is a dormant company.

That has not stopped extravagant claims being made about housing progress in the City. When Mayor Anderson, and he is still the Mayor, said that he was not seeking re-election as the Mayor he told us that one of the best things he had done was to get almost £800 million of housing debt to the Government written off. That just is not true. Almost 20 years ago I negotiated with the Labour Government the write off of the debts. Without that write off the Housing Associations could not have afforded to take over the housing stock of the Council. The then Labour Government agreed to the write off on the condition that we didn’t reopen the Housing Revenue Account.

That’s a technical way of saying we couldn’t build council houses. This did not just apply to Liverpool – only a handful of council houses were built in 13 years of Labour rule. All the money available to social housing went to housing associations. So, the only reason for asking the Government to write the money off again would be to build council houses. This is an idea that I am all in favour of. So, I asked how many council houses to be let at social rents are currently being built in Liverpool. The answer from the Council is a round one, 0!

I am trying to find out how much this farce has cost and I still don’t know. The published accounts are already running very late and the officers have yet to let me know what has been spent on staff, admin costs, Board costs, company costs and legal costs. I would also be interested to know what has been spent on the PR firm that was hired no doubt after a full and objective tendering process. Given that for at least part of the time the Company had six staff seconded to it and the Chief Executive was at Assistant Director level. I am assuming that £500,000 is a low estimate.

Why has it all gone wrong? I can only guess. Although it was announced with a fanfare it hasn’t even been allowed to close with a whimper. Reports to Cabinet last autumn hinted at the winding up of the Company when it established a strategic housing team but only if you read between the lines.

My guess then is that they couldn’t find a way of making the finances stack up. All social housing needs some element of subsidy. In an established organisation like a council housing department the rent on older, paid for homes goes to pay for new homes which in time become the older homes. This then needs supplementing by grants usually from the national government and by carefully costed borrowing.

At least that was the way and is still partly the way for housing associations. It was then broken by Thatcher’s Right to Buy which was slavishly followed by the Blair and Government Governments who continued with exactly the same restrictions of discounts to purchasers and the use of capital receipts from sales which they inherited from the Tories.

In fact, there are some plans proceeding in Denford Road in the Yew Tree area. If this does proceed the Council will get 75 homes but because of the subsidy needed no decision has yet been made on the split between rent to buy, affordable rent, (80% of market rent) and social rent (60% of market rent). No source for this subsidy has yet been agreed. It is entirely possible therefore that this scheme will not proceed. If it does go ahead with no other sites being processed it would take 300 years at the current rate of building to meet Mayor Anderson’s target of 10,000 properties!!

So, these are not social homes. Almost by definition they will be homes for people had a good enough earnings potential so that the end of 5 years, they could get a mortgage but who didn’t have enough money for a deposit. So, it appears that the only way that a subsidy will be provided would be from the hard-pressed taxpayers of Liverpool. Helping relatively well-off people by charging higher Council tax to the very poor doesn’t seem fair to me.

So, like the refurbishment of St Johns Market, investment in consultants over the possibility of completely funding Everton’s move which was never going to happen, and a range of ‘Invest to Gain’ schemes we have spent a lot of money achieving very, very little. Perhaps that’s why Joe Anderson’s political epitaph should be ‘talked big, delivered small!’

About richardkemp

Leader of the Liberal Democrats in Liverpool. Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
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3 Responses to Foundations: Established to build 10,000 homes it built just 18!

  1. David Evans says:

    Perhaps “Talked Big. Big Waist.” Would be a better epitaph for Joe and Liverpool Labour.

  2. David Evans says:

    Sorry typo there

    “Talked Big. Big Waist of Space.”

  3. Henry penshaw says:

    Good to hear you’re looking into PR procurement and activities, Richard, and hope you ask this across projects. As an unregulated glue that binds LCC, the media and others, it merits deep scrutiny in itself.

    There is no point having officers under the microscope otherwise.

    Wherever grubby public sector activity is uncovered, I feel it is valid and wise to ask if there are any private sector commonalities, and examine their role. Unfortunately, we appear to have more than enough examples to analyse objectively.

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