Exchange of letters between former Cambridgeshire Mayor James Palmer and minister over affordable housing funds revealed

An exchange of letters between the former mayor of Cambridgeshire and Peterborough and a minister over the government’s decision to withhold housing funds has been revealed.

Wednesday, 26th May 2021, 1:26 pm
Former Mayor of Cambridgeshire James Palmer.

The letters between former mayor James Palmer and the minister for regional growth and local government, Luke Hall MP, have been released by the Ministry of Housing, Communities and Local Government in response to freedom of information requests, after the Cambridgeshire and Peterborough Combined Authority rejected similar requests, and after Mr Palmer repeatedly refused to release them himself. 

The exchange shows the conclusions of the government had been shared with Mr Palmer on March 3, well before board members received a separate letter on March 11 which was then leaked to the press and which included criticisms of the programme’s progress and value for money. 

It also shows that following the letter on March 3, in which the minister offered to “consider” providing more funds subject to the combined authority and mayor agreeing to certain conditions, Mr Palmer responded the next day in a letter which neither explicitly accepted or rejected the terms, and instead doubted the “efficacy” of the part of the programme the minister had asked him to refocus on. Instead Mr Palmer suggested an alternative – providing the money straight to the districts rather than the combined authority. 

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The government has been withholding £45 million of a £100 million scheme from the combined authority, some of which had been expected more than a year before Mr Hall wrote to the combined authority board on March 11 to say the government would not continue to fund the programme “on its current basis”, citing concerns over progress and value for money. 

At the time Mr Palmer  said the letter leaked to the press only contained “half the story”, saying he was confident that the combined authority would deliver on its programme to deliver 2,000 starts on new affordable homes by March 2022, and confident further funding would be received. He referenced another letter from Luke Hall on March 11 that he said he received in addition to the one which had been leaked, but which he refused to release. 

The two letters sent to Mr Palmer by the minister, one on March 3 and one on March 11, show the minister used similar language to that seen in the letter leaked to the press in terms of saying the government would “consider” making further funds available subject to the combined authority agreeing to alter the programme. 

But the letter on March 3 also asked Mr Palmer to “set out what further level of investment you would wish to seek on this basis and what you would reasonably expect it to deliver, in accordance with the conditions”.

The letter sent only to Mr Palmer on March 11 also says the government will “consider” providing further funds, but adds the “intent” of the offer is to “enable [the combined authority] to deliver existing schemes in your pipeline”

The letter from March 3 also includes a number of criticisms of the Cambridgeshire and Peterborough Combined Authority’s affordable housing programme, describing progress as slow, saying the impact of the loan fund Mr Palmer had touted as “innovative” was actually “minimal”, and doubting whether the combined authority would deliver 2,000 homes by 2022. 

Some of the letters were released under the freedom of information act to the Local Democracy Reporting Service, and others to the South Cambridgeshire Liberal Democrats, who made similar requests, and shared the information with the Local Democracy Reporting Service. 

Lib Dem Aidan Van de Weyer said: “This exchange of letters from March this year, hidden for two months by former mayor James Palmer, shows more precisely what we need to do to get the £45 million of housing funding back for the residents of Cambridgeshire. Government has invited us to present an overall package of housing that would give clarity to residents and housing associations about what can be achieved.”

He said there is a “real opportunity” to get the programme “back on track”, but that the combined authority “must act quickly” in order to “maximise our chances”. 

The leader of East Cambridgeshire District Council and combined authority board member Conservative Anna Bailey – who has been strongly critical of the government’s assessment and handling of the programme – said “considerable progress” has already been made on agreeing the release of further funding. She said the housing committee is expecting to approve allocations for new affordable housing schemes when it next meets in June. 

The leader of Cambridge City Council, Labour councillor Lewis Herbert, said “we can’t move on” until outstanding bits of information such as what was said between Mr Palmer and Mr Hall and the reasons why MHCLG made the assessments it made are made public.

He said: “It’s astonishing but true that combined authority board members have been kept in the dark on issues that needed to be sorted out. What’s at stake is a thousand families needing affordable homes”.

Mr Palmer was not reelected on May 6.

The new mayor and leader of the combined authority, Nik Johnson, said: “I am currently speaking with the Combined Authority housing team to establish the reality of what has been said and what we can work with. 

“I am also talking to the Minister of State for Housing, Communities and Local Government and his team to ensure we exceed their requirements of us and we secure all the funding needed to hit the combined authority’s current target of 2,000 homes by March 2022.  

“I have an ambition to deliver social and affordable housing for Greater Cambridgeshire that reaches deep into the communities of greatest need. I very much look forward to working collaboratively with the housing team and with the government to deliver on that commitment.”

A government spokesperson said: “The programme was behind schedule and not on track to deliver value for money.

“We remain committed to the devolution deal, and will continue to work with the combined authority to consider if further funding can be made available to support the delivery of more affordable housing in the local area.”

The exchange in detail 

As part of the 2017 devolution deal, the Cambridgeshire and Peterborough Combined Authority agreed to deliver 2,000 new affordable homes, with the government agreeing to provide £100 million for the programme, subject to it meeting certain expectations. 

By March this year, it was known the government had been withholding £45 million from the combined authority, some of which had been expected more than a year before. 

On March 11, the minister for regional growth and local government, Luke Hall MP, wrote to the combined authority board to say the government would not continue to fund the programme “on its current basis”, citing concerns over progress and value for money. 

In the letter, which was leaked to the press that day, Mr Hall also said that while he would not extend the programme’s deadline, that he would not close it either, and that he remained committed to funding affordable housing in the area, and would “consider” making more funding available to the combined authority for its housing projects. The government said on March 12 it would offer funding subject to the combined authority taking a “different approach”, but did not specify exactly how much funding it would provide. 

At the time Mr Palmer – who was not reelected on May 6 – said the letter leaked to the press only contained “half the story”, saying he was confident that the combined authority would deliver on its programme to deliver 2,000 starts on new affordable homes by March 2022, and confident further funding would be received. He referenced another letter from Luke Hall on March 11 that he said he received in addition to the one leaked to the press, which he refused to release even when asked by a fellow Conservative on the combined authority.  

At a committee meeting a few days after the letter announcing the blocking of funds was leaked to the press, Conservative leader of Huntingdonshire District Council, Ryan Fuller, asked for the other letter Mr Palmer had received to be made public, saying “we have had several reassurances in recent months around the £45 million being forthcoming that have turned out not to be accurate”, and adding he was therefore “less prepared” to accept reassurances without having seen the source of the information. 

The combined authority ultimately agreed to a number of government conditions in the expectation of receiving further funds for the affordable housing projects in the programme’s pipeline, up to March 2022. 

The combined authority also refused to release the letter when requested under the freedom of information act, but having received the same request, the Ministry of Housing, Communities and Local Government released the letter to the Local Democracy Reporting Service a few days after the May 6 election. Further letters from the exchange between Mr Palmer and Mr Hall have also been obtained via the freedom of information act by the South Cambridgeshire Liberal Democrats. And Conservative Anna Bailey, the leader of East Cambridgeshire District Council, and a combined authority board member, released a letter to the Local Democracy Reporting Service which she sent in December to Mr Hall.

The letter sent from Mr Hall on March 3 to Mr Palmer shows the minister described the programme’s progress as “slow”. The combined authority had allocated £40 million of the £100 million to give out in loans rather than grants, which the former mayor and others said would support the delivery of homes at zero cost to the taxpayer because the money would be repaid. Whereas under the grants system the money was provided to third parties to help them build affordable homes, and once spent the combined authority would need to request further funding from government – a possibility alluded to in the devolution deal. But the letters reveal the government’s assessment that the loans contributed to “just 53” homes, the impact of which it described as “minimal”, while adding that while the money may be repaid, that there is an “opportunity cost” to the loans. 

The letters show that as of January 2021, the government concluded work had started on 456 homes. Mr Hall said it was the government’s understanding that the programme was due to end in March 2021, meaning the combined authority would have been around 1,500 homes short with three months to go. The combined authority had argued that the end date of the programme was supposed to be March 2022. 

The March 3 letter says it was to be shared with combined authority board members and local MPs who had received a letter from James Palmer in December about the issue. The Local Democracy Reporting Service has not obtained any letters sent by Mr Palmer in December, but more than one board member claims not to have received the March 3 letter.

One letter the Local Democracy Reporting Serivce has seen from December on the issue is from Cllr Bailey to Mr Hall, where she criticised the civil servant who had led the government review of the programme. 

Cllr Bailey argued the government was wrong to say the deadline for the programme was March 2021, saying the agreement was for it to be delivered over five years and the combined authority was only set up in 2017, arguing the end date of March 2022 the combined authority was working to was the correct one. 

Cllr Bailey questioned how the end date of the programme could be 2022, saying the money was provided for a five-year deal to deliver 2,000 affordable homes, but that the combined authority was only established in 2017 and that it would be “unreasonable to expect the combined authority to deliver affordable housing before it had been formed”. She also noted that if the end date was March 2021, then that should also be true of Cambridge City Council’s own affordable housing project agreed under devolution, an issue which does not appear to have affected that programme. 

Cllr Bailey also said she left a meeting with the ministry’s official feeling “very concerned” about the “level of hostility” they displayed to the combined authority, and the official’s apparent “lack of comprehension” about the £100 million affordable housing programme they were supposed to be reviewing. 

In a letter to Mr Palmer on March 3, Mr Hall acknowledged that both Mr Palmer and Cllr Bailey had “made criticisms” of the way the ministry had engaged with the combined authority while it was reviewing the programme, and that the two questioned the “conduct” of the department’s officials during this work. Mr Hall said “these are not reflections which I recognise”.

In response to a request from the combined authority to extend the deadline by a year, from March 2021 to March 2022, in line with Cllr Bailey’s points on the timeline, Mr Hall referenced the issues of the programme’s progress, and said “there is no guarantee” that even if the extension were granted that the combined authority would hit the 2,000 homes target. 

And he quoted from a letter from 2017 which originally offered the combined authority the funds and set the terms of the programme, which referred to “2,000 affordable housing starts by 2020/21 as agreed in the CPCA Devolution Deal”. 

The devolution deal document from March 2017 – which also established the combined authority alongside legislation passed that year – does not explicitly say the 2,000 homes will need to be started in five years, or by 2020/21, although in the same section that it outlines the affordable housing programme it does also reference the number homes needed over the period 2016-2021. But another document produced by the government around the same time says the funding will be provided over “five years” and the funding will run from “2016/17 financial year until March 2021”.

While Mr Hall said he would not extend the deadline to March 2022, he also said he would not close the programme, and would consider making funding available up until March 2022. Something which Mr Palmer noted in his press statement at the time, saying he had secured the date he wanted and has always said was correct – that the programme would run to March 2022 – albeit the government had said it would approve schemes on an individual basis and subject to conditions, and had not explicitly committed to providing the £45 million.

Also in the March 3 letter Mr Hall outlines the conditions that the combined authority would need to sign up to in order to receive more funding, which were later included in a combined authority document which was made public. 

In the March 3 letter , Mr Hall says the government will “consider making further funding available” to the combined authority for affordable housing up to March 2022, “subject to conditions”. 

As per the details later included in combined authority papers, it says that in order to receive further funds the combined authority will need to “evidence on a scheme-by-scheme basis” that it is meeting the government’s new conditions. It said that should the combined authority agree to the conditions, it should “set out what further level of investment you would wish to seek on this basis and what you would reasonably expect it to deliver, in accordance with the conditions”.

And it also said the combined authority would cease to be the agent for Cambridge City Council’s own affordable housing programme, and that it must provide evidence that it had passed on all the money it received for the city to the council.

Mr Palmer responded to Mr Hall’s March 3 2021 letter the next day, questioning the “efficacy” of the way the grant programme operates, saying giving grants to housing associations to help deliver affordable homes – in line with what  Mr Hall had proposed – is a “duplication” of what Homes England already does. 

In his March 4 reply to Mr Hall, Mr Palmer did not say if he accepted the government’s conditions so that it could then consider providing affordable funds for the programme. Instead, Mr Palmer then suggested that the districts receive money for affordable housing themselves, rather than have the combined authority in charge of the programme. 

“A potential solution could be that funding is devolved directly to the districts to deliver localised solutions, as with Cambridge City Council, allowing the combined authority to refocus resources on more sustainable solutions within our housing strategy,” Mr Palmer said.

It is not clear if there was further communication between the two before March 11, but on that day the combined authority board received the letter that was leaked to the press and became a focal point for the issue. It is also not clear if the letter from Mr Hall which was leaked to the press and announced the project would not be funded on its current basis would have been sent if Mr Palmer had not written back to the earlier letter without accepting the conditions. 

On March 11 Mr Palmer did also receive a separate letter to the one sent to the rest of the board, also from Mr Hall, which defends the grant scheme by which the programme operates. 

It reiterates that the government will “consider” providing more funds subject to agreeing the new conditions set out several days earlier, but adds the “intent” of the offer is to “enable [the combined authority] to deliver existing schemes in your pipeline”. 

Mr Hall also requests more detail from Mr Palmer if progress is to be made on the suggestion of providing funds to the districts instead of to the combined authority. Something which does not come up again in the later letter seen in the press or in subsequent combined authority meetings on the subject. 

Mr Palmer responds to Mr Hall on March 17, the last day of a deadline set by government, saying both he and the combined authority accept the conditions and will seek further funding having agreed them. 

Mr Palmer was not reelected in the May 6 elections, and instead lost out to Labour’s Nik Johnson in an electoral upset. While the combined authority has agreed to the government’s conditions, the combined authority has not yet made any announcement regarding the receipt of any further funding. 

Mr Palmer said in his election campaign that it was “not true” to say the combined authority had “lost” £45 million, saying the government had agreed to fund the homes in the programme’s pipeline, which was up to March 2022, and that the next government payment of £20 million will be agreed at a combined authority committee in June.