Labour incompetence loses us another £600,000

The Council wants it both ways. It claims its broke yet fails to collect the money it can do from wealthy developers.

Another day, another example of Labour incompetence. At a time when the Council is desperately short of money, it’s looking for £34 million of savings for the next financial year, the Labour members of the planning committee have reduced the section 106 demand from a developer by 80%.

This will mean a £600,000 loss to the Council after the developers, a wealthy property company, pleaded poverty and asked for a total exemption from the payment.

Section 106 money is a payment to the Council to provide a range of physical small-scale developments which will ameliorate some of the adverse consequences inherent in any new development. It cannot be used by the Council against its council tax problems, but it can mean the provision of facilities that the Council would otherwise have to pay for if it had the money to pay!

Typically, the money is used to pay for parks and playgrounds and the creation of green spaces. In Allerton Road we used the money from Tesco to improve the medians in the middle of the road, improve crossings and plant trees.

So, this money is important to the Council as it tries to deliver what communities need at a time when it is strapped for cash.

The developers must be laughing all the way to the bank. Typically, a developer will seek to make a minimum 20% profit from a development. By adding on the £600,000 its profits may be reduced to 18.5% on the estimates of the sale price for the apartments. It would have been so sad if the company had had to reduce its profit margins by this fractional amount!

Liverpool has a serial record of not collecting this planning gains cash. Over the past few years, it has failed to collect at least £4.5 million of tax that it had included in planning conditions.

The most egregious example of this is Fox Street. The planning conditions included a provision that the developer would either pay £1 million+ or it would develop a 120-space underground car park to deal with real parking problems that already existed in the area. The Council failed to notice that the developer did neither. By the time we tried to get the cash the developer had gone broke. As an unsecured creditor we got nothing!

To add insult to injury we then had to pay out more than £300,000 for a fire marshal system as dangerous cladding had been used.

This is the story just of those developments where the planning committee decided to collect money. In case after case, it allowed the developer to plead poverty and make no S106 payment. I have no doubt that good profits have been made on sites, for example in the Baltic area, where S106 was waived.

The word has got round that Liverpool can be suckered by any old sob story. My colleague on the planning committee, Cllr Pat Moloney, tried to call the developer’s bluff and was supported by the two other opposition councillors. Unfortunately, all Labour members of the committee failed to realise that they were needlessly chucking the council’s money away.

I’m not a betting person but if I thought that the Labour members of the planning committee were poker players, I would learn the rules!! They folded their hand at the first sign of resistance. They didn’t look at the company behind the application as they should do for the financial considerations.

So just remember when Labour plead poverty and say they can’t afford things look at the things they do. £13.5 million overspend already for the Strand/Lime Street developments incurring a £4.5 million in interest payments and more costs to come. £2.5 million overpaid to social care contractors much of which is irrecoverable. A Mayoral system which costs £0.5 million a year, dodgy contracts, mates rates procurement, assets given away at knockdown prices or for nothing.

My Mum used to say, “If you look after the pennies, the pounds will look after themselves”. I just wish she was alive today to give the Labour councillors of Liverpool a piece of her mind.

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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