Circle Housing and Orchard Village

Jon Cruddas Excerpts

Thursday 12th January 2017 Commons Chamber

[Jon Cruddas (Dagenham and Rainham) (Lab)]

This debate is about Circle Housing’s Orchard Village development in the South Hornchurch part of my constituency. Circle was a group of nine housing associations formed following a merger in 2005. It now no longer exists, having merged only last month with Affinity Sutton to form Clarion Housing Group, the country’s largest housing association with nearly 130,000 homes and half a million tenants, and with plans to build another 50,000 homes.

Orchard Village was formerly known as the Mardyke Estate. Back in 2007, the London Borough of Havering balloted residents to find out whether they agreed to a stock transfer. When more than 60% said yes, the site was taken over by Old Ford housing association—one of the Circle housing associations—in March 2008, and redevelopment work started in late 2009. When finished, over four phases it will contain 555 new homes available by mixed tenure, and all six of the original Mardyke tower blocks, of up to 13 floors, will have been pulled down.

Willmott Dixon was contracted for the first three phases on a design-and-build contract arrangement. This contract was terminated in August last year, as I will explain later. Hill Partnerships has been contracted for phase 4, the final phase. As an aside, the estate has been the setting for two recent award-winning British films—“Made in Dagenham” and “Fish Tank”. Unfortunately, the project has been dominated by questions of build quality, estate management, standards of repairs, the performance and costing of heating systems, fire safety, parking, exposure to various hazards, and many other issues.

Before I go on, I want to make it clear that I view housing associations as playing a vital role in any successful resolution of the escalating local and national housing crisis. Housing associations have a proud history of delivering for their tenants. More generally, they are part of a rich tradition of mutualism and co-operation in this country—part of a charitable and non-profit-making commitment to social housing stretching back well into the 19th century on behalf of working people. For decades, they have played a civilising role in our society, and I hope that will continue. Given our local experience, however, I fear that this historic legacy could be threatened if we are not careful, especially if housing associations and the Government increasingly see their role as housing developers rather than as organisations rooted within traditions devoted to the social and economic well-being of their residents.

I suggest that Orchard Village estate should be a test case for the sector and its future direction, given the urgent need for greater independent scrutiny and regulation on behalf of tenants and buyers. To be clear, I am not making a party political point; in fact, the opposite is true. The Orchard Village project began under a Conservative council and Labour Government. When problems have emerged, all political parties have raised concerns. For example, in February last year Roger Evans, a Conservative member of the Greater London Authority, raised concerns with the then Conservative Mayor of London in Mayor’s question time by highlighting the build quality on the estate. Unfortunately, the then Mayor simply said that the homes would be National House Building Council-certified and that Circle would rectify any plumbing defects—as if this reflected the scale of the problems on the estate. This intervention by Mr Evans followed a complaint to Havering Council by the local councillors for the South Hornchurch ward. None of these councillors represents my own party. Indeed, none represents any party represented in the Chamber at present. There is, in short, wide cross-party agreement concerning the quality of the build, and I trust that the Minister appreciates that.

I put on record my appreciation of the work of the three local councillors in South Hornchurch—Michael Deon Burton, Philip Martin and Graham Williamson—on behalf of their residents on the estate, and of the work of the newly formed Orchard Village residents association chaired by the tireless Colin Nickless.

There have been literally hundreds of complaints by residents. I have scores of resident complaints covering all aspects of building and repairs. In every instance there are multiple complaints about each property, and most of them involve long-term problems regarding resolution of the faults.

The main problems include failure to build homes to an adequate standard with regard to damp, mould, noise pollution, fireproofing and adaptions; failure of the maintenance service; unacceptable response times for repairs, with the treatment of vulnerable residents and tenants being of particular concern; homes without adequate insulation in all phases of the development; heating issues whereby homes with vulnerable residents are left for days without heat, as well as excessive heating bills and major concerns about the standing charges on district heating systems. In short, there are serious allegations that homes have been built in breach both of building regulations and of the funding conditions stipulated in grants from the Homes and Communities Agency and the GLA, and that has had a consequent effect on the wellbeing of my constituents.

On 10 November 2016, the newly formed residents association submitted a formal complaint to Havering Council about their treatment by Circle Housing and its agent Willmott Dixon. That is currently being investigated by the council under the corporate complaints procedure. As well as raising the issues with the council, I have been in contact with the Health and Safety Executive and the HCA, met the social housing regulator and the Mayor’s office, and corresponded with Public Health England. Residents have lodged their concerns with the relevant ombudsmen throughout.

The issue of the regulator and Circle Housing is particularly important. In 2015, the HCA downgraded Circle Housing from G1 to G3. The HCA increased the rating earlier last year, given the improvements in the repairs service, although that was challenged at the time by residents.

The Department for Communities and Local Government is well aware of all of the issues. On 16 August, I wrote to the Secretary of State about the problems. The Minister for Housing and Planning responded on 12 September, saying that

“the regulatory standards had not been breached in this case”

and that the Department was, therefore,

“unable to take regulatory action”,

not least because it does not have a statutory mandate to deal with individual cases. I accept that that is the ombudsman’s role. The Minister concluded:

“I appreciate that your constituents will feel disappointed by this decision”.

So disappointed were the residents by the Minister’s letter that they actively considered a legal response to the regulator’s decision, but that was ruled out when the regulator subsequently informed us that its investigations were ongoing, so it was not possible to make a legal challenge.

On 21 December, just before Christmas and just after the merger was completed, Circle Housing was criticised by the housing regulator for risking “serious harm” to its tenants, given the continuous concerns regarding the repairs service. The HCA issued a regulatory notice saying that Circle had breached the home standard, with a

“large number of outstanding complaints”

affecting vulnerable tenants. Obviously, that decision is welcome, but I have to tell the Minister that the view among residents is that the announcement was delayed until after the merger. They believe that if the announcement had been made earlier in the year, it may have had significant implications for Circle Housing, given its earlier downgrades, and, therefore, the merger.

The important point is that we were disappointed with the Minister’s response, particularly in the light of the regulator’s findings in December. It is especially disappointing if we compare the Minister’s response with that of the newly merged Clarion group since the takeover. In contrast to the Department, it has accepted the significance of all the issues. Arguably, that is the type of response that we might have anticipated from the Department and the regulator, which are supposed to act on behalf of the residents.

Clarion Housing Group has established a new project team to resolve the issues at Orchard Village. In turn, the project team has appointed Pellings to act as an analyst and sort out the full extent of the problems on the estate through internal and external surveys. Pellings has also been instructed to undertake a full survey of building quality compared with the original building specifications on the site. Aaron heating services has also been employed to review the heating systems. We shall see what they uncover over the next few months.

We are awaiting a report from the fire brigade on fireproofing and fire risk on the estate. I, as well as local councillors, now receive a weekly briefing on the progress of the casework. On 19 December I was forced to contact Public Health England about concerns regarding combustible gas exposures on the estate. Clarion has now appointed expert consultants to investigate, and tests began on air quality this week.

Interim compensation payments are being made available for phase 3 residents in particular.

This month’s meeting of the Circle housing board is also discussing the question of buying back the shared ownership and freehold properties. The contract with Willmott Dixon was terminated for non-performance in remedying serious defects, and Clarion is considering the legal consequences of that. Most significantly, the full building spec survey will tell us whether Willmott Dixon built the homes to the appropriate standards, and what the legal consequences are if it did not. That is all to be welcomed, and it is a tacit acknowledgement by Clarion of the reputational damage that might affect the new housing association if this is not sorted out, not least because of the major building programmes and opportunities that are likely to open up across Barking and Dagenham and Havering over the next few years.

The point is this: why was none of that fully taken on board by the Department? If there had been no merger, would we just be carrying on as we were with the Department and the regulator—and everyone else, apart from the residents—telling us that nothing was wrong? What recourse do residents have in such cases? Of course, it should be to the Department. The Minister is formally responsible for housing supply policy, home ownership policy, planning policy, planning casework oversight, estate regeneration, the HCA, the Thames Gateway, building regulations and so on. Is the system working? Is the only solution to wait for a merger and for the merged organisation to put its hands up?

Between 2010 and 2016, Circle Housing received more than £250 million of public money. Within the local community, people assume that there have been breaches of public grant compliance in the building standards—we shall wait and see whether that is the case—and we are talking about grants of £31.2 million over the three phases of the development. The outstanding investigations initiated by Clarion and the council will, we hope, get to the bottom of all this.

More generally, legal issues are ongoing, including exposure to mould and damp, which is leaving children hospitalised. Freeholders and shared ownership leaseholders are starting legal proceedings over misrepresentation of their properties and failure to repair, and seeking damages to cover their suffering. There are issues for the Department. Basically, do we need a review of the system of regulation? The HCA found against the residents even when the new merged organisation accepted the legitimacy of some of the residents’ concerns and decided to investigate other key parts of the case independently. Should it not have been the investigations of the regulatory system that secured that outcome, on behalf of the residents?

Overall, Orchard Village holds a light up to some of the changes occurring in the housing association sector, aided by Government strategy. The danger is that housing associations are, in effect, turning into housing developers. Consequently, they appear to be in danger of losing their historical role, and, indeed, their historical ethic. Yet the Government are actively committed to deregulating the sector further to ensure that housing associations are not treated as part of the public sector, so as to build more homes. I accept the logic behind their position on deregulation, but what is the cost in terms of oversight and accountability on behalf of residents, such as my constituents in Orchard Village? The Government argue that further deregulation will not change their strong regulatory framework. Well, the experience of Circle Housing and Orchard Village does not bode well in terms of whether that works at present.

More generally, the Government now appear to have redirected attention back toward housing associations to resolve the escalating housing crisis, rather than just relying on the market. That is obviously a good thing, because the private sector business model for housing supply has, for too long, been built around land banking and rationing. Yet the Government rethink poses dangers for the sector in reconciling housing associations’ role as developers with their historic purpose.

My real fear is this. I hope that we do not look back in a few years’ time and realise that we missed the warning signs—similar to the experiences of building societies in the financial services sector—as key non-market institutions are swept up in a dash for growth, with the collateral effect being the removal of their original ethical purpose. I hope that the experience of Orchard Village will act as a warning, and that, locally, Clarion can turn the situation around on behalf of residents. Nationally, we must preserve the integrity of housing associations as part of a genuine mixed economy across the housing sector.