Government could face legal challenge over developers’ grant

The Government could face legal action spearheaded by the National Housing Federation if it presses ahead with paying social housing grant to private developers.

The NHF believes it may have to resort to legal action following a defeat by just seven votes in the House of Lords of an amendment to the Housing Bill, which would have prevented housing associations from being unfairly penalised in favour of the developers.

In the same Lords vote on 3 November, so-called home information packs – for which home sellers would have to pay up to £1000 – were also voted down. But despite this the government this week said it now “fully expected the bill to pass before the close of parliament on 19 November”.

The next reading of the bill in the Lords is on 16 November, and if the bill goes through the NHF has said the government will be “discriminating” against housing associations on the issue of paying social housing grant to house builders.

That’s because housebuilders would not be subject to the same onerous European procurement regulations as social landlords (HT 10 September, page 14). European Commission regulations now require registered social landlords to undertake the lengthy process of advertising contracts of a certain worth in the European Union Official Journal – but make no such demand of private developers who receive social housing grant.

The minimum £20m bid participants must submit for a project in order to qualify for social housing grant in a pilot scheme that’s planned for February 2005 is also controversial.

The NHF says the threshold is too high and therefore favours private developers over social landlords, who tend to have smaller development programmes.

Jim Coulter, chief executive of the NHF, said: “The government should not discriminate against our members in the way that it seems likely to do. In all probability we will complain to the EC about the conduct of the UK government for proposing to act outside the spirit of the EC’s procurement ruling.

“We are not letting this one lie. We would be prepared to take legal advice over this issue as to whether a group of associations could take this forward as a legal action.”

An ODPM spokesman said: “Private companies are not governed by public law, so they will not be subject to the procurement regulations. Procurement rules should not put RSLs at a disadvantage. They can build the required timescales into any planning.”