A decision to strip £170 million of funding from Medway Council will lead to “difficult choices and challenging decisions”.
That’s the message from newly-installed leader, Cllr Vince Maple, who admits to being stunned by the decision – an inkling of which he received on his very first day in the job.
The cash from the government’s Housing Infrastructure Fund (HIF) was aimed at supporting the building of more than 10,000 homes on the Hoo Peninsula.
In a wide-ranging interview with KentOnline, Cllr Maple warned the consequences of losing the money were stark and all areas of the Towns will be potentially impacted by it.
The council was successful in landing the HIF back in November 2019 with it seen as a major solution in helping the authority with its homes targets.
Medway has to provide 1,667 new properties a year between now and 2040 – a total of 28,500 – and largely rural Hoo was identified as the place to take the bulk of them.
The funding – £18 million of which has already been spent – was aimed at supporting new and improved infrastructure, including roads, a railway connection and public spaces.
However, a campaign was launched by local people, MP Kelly Tolhurst, rebel Tory councillors and local Independent councillors who were opposed to over-development.
The council has explained how work on the HIF project started well but soon ran into trouble as the economy shutdown due to the pandemic.
Then as Covid petered out and things began to return to normal, inflation started eating into the project with some construction costs rising as much as 40%.
It soon became clear that delivering the project at £170 million was impossible and Medway set about refocussing the plans.
Rather than ask for more cash from Homes England – the government agency in charge of HIF – it came up with a new proposal to deliver many improvements within the original funding limit.
Out went the £63 million train station at Sharnal Street, High Halstow, which was initially planned for the increasing number of Londoners relocating to cheaper-priced properties.
The scheme had already seen a major setback when plans to have a link to Strood were dropped in favour of a link to Gravesend.
In March revised plans were sent to Homes England followed by weeks of silence which were eventually broken with news the agency was recommending the government drop the funding.
More than 30 reasons were given by the agency in a letter – which the council declined to give to KentOnline when asked. Medway responded, countering the stated issues.
Cllr Maple said they had desperately tried to speak to Levelling-Up Secretary Michael Gove and his department about the decision without success.
Then on Tuesday last week, Ms Tolhurst broke the news the funding was definitely gone – leaving the council in the worst of all worlds.
Homes England wouldn’t go into the 30-plus reasons with KentOnline, saying only that it had become concerned about Medway’s ability to deliver the scheme.
Work has temporarily stopped on two approved projects, a community park between Saxon Shore Way and Main Road Hoo and a managed wetland reserve at Hoo St Werburgh.
Six road schemes, which were designed to improve the peninsula’s links to the rest of Medway, reduce congestion and improve air quality are also on hold.
Conversations are ongoing whether the council – and its taxpayers – will have to cover the £18 million already spent.
According to Cllr Maple, the consequences of losing the money are harsh and wide-ranging.
An unknown number of the 10,000-plus Hoo homes will likely end up in other areas and road and community wellbeing projects, which would have benefited all residents, won’t happen.
This brings into sharp focus Capstone Valley/East Hill and Chatham Docks.
The latter is the site of a battle between businesses and landowner Peel L&P to convert it into housing and leisure, and the former a much-loved part of the green belt.
Cllr Maple says these areas are very much in the mix for development, as are other parts of the Towns now.
In terms of Capstone, council-owned access land to the site might now be sold – it's believed to be valued at around £12 million.
Peel wants to build 3,625 homes at Chatham Docks – meaning the existing businesses employing hundreds will be forced out.
The company has previously said the development could meet 13% of the Towns’ housing requirement.
Cllr Maple wouldn’t commit to saving the docks or allowing the housing, saying: “We need to get Peel and Chatham Docks in the room together and not have this ongoing stalemate.”
But it would be “really difficult” to choose between homes and jobs.
And Hoo itself, where housing estates have sprung up in the last decade, may also see its fair share of development.
Cllr Maple said it would be “irresponsible” not to reach out to companies interested in building homes in Medway.
The other major headache it has is the lack of a Local Plan which governs where housing should go up until 2040.
Without this legal declaration, developers can easily challenge councillors’ decisions to turn projects down – asking the government’s Planning Inspector to overturn local decisions.
The HIF move makes Medway more vulnerable and could also see it lose out on cash from developers who can argue to pay less “106 money”.
A 106 Agreement is a deal where the company gives funds for local infrastructure as part of the planning permission process.
They could now argue their schemes are a lot less viable without the HIF so should pay less in contributions.
The final decision to strip Medway of the funding came after Labour wrestled the council from the Tories for the first time in more than 20 years.
Asked about the timing, Cllr Maple said: “I don’t know, but I don’t think it was political.”
But he was quick to point out Mr Gove’s department had just handed back £1.9 billion of its funding to the Treasury rather than give to projects nationwide.
He added: “This whole situation is pretty devastating, not just for us and the administration, but for the people of Medway.”
His urgent “to do” list and top priority is to formulate a long-awaited Local Plan by 2025.
He said: “The Conservatives had 20 years to do it. We have been here 50 days. The Local Plan is at the heart of what’s needed in Medway.
“We are continuing to press for a meeting with [Mr Gove] and are deeply disappointed not to have the opportunity so far.”
In the meantime, Medway is exploring a commitment from the Department for Levelling Up to identify funding help outside the HIF bid.
Unsurprisingly, Rochester and Strood MP Ms Tolhurst has a different take on the situation, saying from the outset she knew the HIF wouldn't work.
She said: “My view was it was never enough [funding] to deliver what they needed to deliver; I knew for a long time they would struggle. That’s why I challenged it.”
She said even before the pandemic and inflation there were “significant problems with its progress” and communication with Homes England was ongoing.
“From the outset it would have been a bad outcome for my residents,” she said. “Then they reduced the scheme to make it a lesser outcome.”
She added Homes England had been clear the £170 million was for the whole scheme to be delivered and before the decision to scrap the funding, independent experts had looked at its progress.
They advised the agency that the project wasn’t delivering.
The MP says it’s now for the Labour-run council to deliver a Local Plan and it isn't inevitable Chatham Docks would become housing.
As the dust settles from the decision, a former top councillor has called for change at Medway – saying the authority needs to concede it brought the decision on itself.
Tory Rupert Turpin, who lost his seat in the May local election, was a long-time critic of the proposals and the way the council went about the project.
He believes there was a "culture of secrecy" at Gun Wharf which was led by council officers, resulting in the alienation of elected councillors and the community.
Ecological and transport assessments were never published and a HIF delivery board was a "closed shop" with key people like ward councillors and Ms Tolhurst not being allowed to sit on it and get information.
He also believes Homes England questioned the practice of using HIF cash to partly pay existing council officer wages to save cash from its budget.
The train proposals were always destined to fail as no company would come on board without the rail link being massively subsidised by the council.
"This was always pie in the sky," he said. "It would never happen. Why would a company like Southeastern sign up for something they knew would be loss-making?
"The whole HIF has been a massive cock-up from the start. The council officers led the council leadership by the nose and over-promised so much.
"We need a new culture at the council, we really do. And Labour should be a new broom and take this on.
"Right from the start, the council's handling of HIF was opaque - no one knew what was going on for real. There needs to be questions asked why this went so badly wrong."
The former Cabinet member has also been a fierce critic of plans to turn Chatham Docks into housing and leisure.
When asked whether this is now inevitable because of the HIF collapse, he said: "I don't think the docks should be punished for this; they are two very different issues."
In response to Mr Turpin, the council said the scheme was overseen by a Member Advisory Board, including then leader Alan Jarrett and three cabinet members.
There were regular briefings of ward members and a series of updates to Cabinet, the full council and relevant committees.
Furthermore, there we were three major public consultations which led to changes in design and then a design freeze as the comments of residents and stakeholders were taken into account.
In terms of ecological and transport studies, officers were due to submit the highway planning application in September.
The council had been modelling and reviewing the subsidy required to run the rail service in its early years.
The potential impact of this on council finance was part of the decision making around pausing that part of the scheme.
Although the decision was led by the construction costs rising as a result of high inflation.
Cllr Maple added: “We will continue to work with the parish councils, community groups and members of the Hoo Consortium of landowners and housebuilders to come forward with a solid Plan B for Hoo, focusing on improving the wellbeing of all residents by providing sustainable transport, access to open spaces, employment opportunities and new homes.”
In relation to Mr Turpin's claims they’d been unhappiness with HIF funds being used to partly pay council officers, the authority said: “All capital projects need existing and additional resource to deliver the agreed outputs. This is standard practice and the same principle was applied to the HIF project, and agreed between Homes England and Medway Council.”