The moment the housing secretary, Robert Jenrick, took his place at a Tory fundraising dinner at London’s Savoy hotel alongside Richard Desmond – and watched a promotional video of a planned £1bn development on Desmond’s phone – was not the first time a wealthy developer had become close to a politician with the power to block or approve plans.
The planning system has historically cast developers and politicians in poacher and gamekeeper roles. But in recent years an increased focus on financial negotiations between public authorities and developers has made simple yes/no decisions into more complex transactions, sparking concerns the system lacks transparency and is vulnerable to corruption.
After years of austerity, cash-strapped councils have become more reliant on using planning deals with developers to provide affordable housing and funds for community infrastructure such as schools and play centres.
It was this financialisation of planning, in the form of the community infrastructure levy (CIL), that snared Jenrick and Desmond over the latter’s plan to turn a redundant printworks in east London into a £1bn housing-led development. The CIL is a per-square-metre charge which councils have been able to apply to large projects since 2010.
Jenrick’s decision to overrule the local council’s rejection of the plan and intervention to affect how much Desmond’s company would have to pay towards local infrastructure, tied him up in knots. At one point he had to tell Desmond by text that they could not meet because it was important “not to give any appearance of being influenced by applicants of cases that I may have a role in”, documents revealed.
But he also urged civil servants to expedite the decision, to apparently help Desmond avoid an additional £45m cost from the CIL. He eventually had to quash his own approval, conceding the decision was unlawful.
Multimillion-pound negotiations such as over Desmond’s CIL payment now form the centrepiece of many planning applications. Section 106 agreements – deals over how much affordable housing and other community benefits developers will fund – have long been standard. But since planning changes by the coalition government in 2012, developers have also been able to complain to planners that their demands are eating too much into their profits. They are allowed to present financial viability studies, essentially spreadsheets based on often speculative and hard-to-check numbers which argue that if they spend too much on affordable housing, they won’t make enough money. These have often not been made public.
All in all, a planning system that used to be concerned primarily with land use has become much more about land value.
Each side appoints financial consultants to probe the other’s workings, creating “an arms race”, according to Bob Colenutt, author of The Property Lobby, an investigation into the housing crisis.
“The negotiations go on behind closed doors and thousands of units of affordable housing are at risk,” he said. “It is murky and not transparent. It also causes delay when the developers argue about not being able to provide policy-compliant schemes.”
The desire of developers to win support from politicians and public officials outside of the public forums of planning committee meetings has also spawned lobbying consultancies dedicated to persuading planning committee members and other politicians to back their clients’ plans.
Desmond, for example, used the Thorncliffe lobbying firm for his east London scheme. It promises to “build support among politicians” for planning applications and claims a 95% success rate in getting approval. Its website declares that it employs elected councillors and says its team adhere to the highest ethical standards.
An investigation by the Guardian in 2018 found nearly 100 councillors in the capital worked for property companies or lobbying and communications consultancies involved in planning. Some also sat on planning committees.
One politician to often meet with these consultants as well as their clients was Robert Davis, the former chairman of Westminster city council’s planning committee, who was entertained or received gifts almost 900 times, often from property industry figures including lobbying companies, between 2012 and 2017. He once registered two lunches on one day.
He denied any impropriety before quitting as deputy leader of the council following the Guardian’s disclosures.
Boris Johnson, who believes the Jenrick matter is “closed”, knows the planning system well from his eight years as mayor of London, when he had the power to approve or veto major developments and to negotiate levels of affordable housing.
“The system is one of negotiation,” said a major developer speaking on condition of anonymity. “When Ken Livingstone was mayor of London, everyone knew he wanted to do the last part of the deal. You would turn up in front of Ken and he would do business.”
One scheme Johnson considered when he was mayor was a plan by the billionaire Reuben brothers to turn Westminster’s Millbank Tower into 200 apartments and a 150-bedroom five-star hotel. He approved it in April 2016, concluding that “the maximum reasonable amount of affordable housing in this instance is zero”.
Developers have raised their eyebrows at Desmond’s admission that he directly lobbied Jenrick – seeing it as something of an own goal.
“As a developer the last thing you do is talk to the secretary of state because you get into exactly this [controversy],” said one. “You know not to get anywhere near the politicians.”
At a council level, it is different. Council leaders and planning committee chairmen can be approached before planning applications are submitted. Developers know they have something councils badly need: cash.
The pressure on councils to use planning to deliver funds to invest in public services had only been increased by austerity, said Nick Johnson, a former director of the Manchester-based property developer Urban Splash, making them “alert to the opportunity of planning deals to prop up their finances”.
“There’s a real tension,” he said. “You have to question whether they are being completely objective about the decisions they are taking.”