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Lucy Powell urged ministers to reconsider costly legal proceedings against a property development firm in her constituency founded by a Labour donor, in a move that could have saved his company millions, the Guardian can disclose.
Powell, who is the favourite to be elected Labour’s deputy leader this week, wrote to Angela Rayner on behalf of Urban Splash, a property developer in Manchester founded by party donor Tom Bloxham.
Powell asked Rayner, who was then housing secretary, to reconsider the government’s “disproportionate” legal action against the company, days after bumping into Bloxham at a Labour party fundraising dinner. She had met company executives about the case two weeks prior.
Asked about the intervention, made while she was a cabinet minister, Powell said she had acted in her capacity as a constituency MP and had done so “openly and transparently”. She denied she had done anything inappropriate, though MPs are under huge scrutiny after a series of lobbying scandals.
This case refers to a company called Urban Splash, which was asked to pay back £49m of taxpayers’ money in March 2024 when the Conservatives were in power.
The money had been spent on making seven buildings in central Manchester compliant with post-Grenfell building safety laws, according to the housing department.
Ministers applied to a property tribunal for a remediation order to legally require the developer to stump up for the works.
But in her letter dated 10 December 2024 and seen by the Guardian, Powell asked that “every effort is made to engage with Urban Splash outside of lengthy legal proceedings” and warned that these would “ultimately cost the taxpayer and will likely put Urban Splash out of business”.
She attached a letter she had received from Bloxham on 5 December, where he said it had been good to see her at the Rose Network event, which took place the night before.
In his letter he accused the housing department of “increasingly vindictively pursuing us with heavy handed lawyers” while seeking to turn Urban Splash into “a scape goat” to distract from its “continued mistakes and incompetence”.
He wrote that he was “feeling betrayed by a government I helped get elected and have so much hope for”, and linked to a video celebrating the developer’s 30-year history, which he said he had shown Powell when they spoke.
Bloxham gave £8,807 to the Labour party in 2020, according to Electoral Commission records, and previously donated to Tony Lloyd, Powell’s predecessor as MP for Manchester Central.
A spokesperson for Powell said: “In her capacity as a constituency MP Lucy has made many, many representations to the government and to relevant agencies over many years about difficult cladding issues on behalf of leaseholders and met with many of those involved including residents, freeholders and developers.
“In that capacity in mid-November, Lucy met with Urban Splash for a constituency surgery meeting in Manchester, where they raised the difficulties they were facing. She asked for further details in writing so that she could make a representation on their behalf as their constituency MP which she then did in the usual way transparently and openly. She was clear in all correspondence that developers should pay their fair share of remediation costs.”
A source close to Powell said she held a meeting with Bloxham in her constituency on 15 November 2024, where she discussed his case, watched the video he referenced and asked him to put his arguments in writing. The source said they then bumped into each other at the party fundraising event on 4 December, which involved more than 500 people, and that he had written to her the following day.
Powell’s office said she never received or facilitated any donations in cash or in kind from Bloxham or Urban Splash, except in one instance before 2020, when Bloxham sponsored prizes in her annual schoolchildren’s Christmas card competition to the value of up to £300.
Powell’s constituency office is housed in Beehive Mill, a building regenerated and owned by Urban Splash. Her office said she paid market rent for the premises, which were found by the MPs’ expenses regulator.
Powell met Bloxham and another Urban Splash executive in her constituency office on 4 April and wrote to Rayner again on 22 April and 6 August urging ministers to hold a meeting with the company, which she warned could go insolvent as a result of the action. She stated in all cases that she was writing in her capacity as a constituency MP.
In his letter to Powell in December, Bloxham wrote that Michael Gove’s “historic, huge mishandling of the post-Grenfell response” alongside “the ministry’s and its advisers’ continued mistakes and incompetence” were “threatening Urban Splash’s very existence and the new government’s growth agenda”.
He wrote that the “continued pursuit of the RCO [remediation order] is not fair, just or equitable for a number of reasons.”.
He argued that ministers should “sit down and have an open conversation about the merits of the case and agree a deal which US [Urban Splash] can afford” rather than “spend years in pointless litigation blowing £millions of tax payers money on legal fees”.
He said that Urban Splash faced a bill of up to £48m when the company was worth only £27m. He said the department had incorrectly estimated its value at £75m and that “rather than trying to mediate or negotiate” it had sought to include other companies with the same directors as Urban Splash in its legal action.
A spokesperson for Urban Splash said the legal action was “an ongoing process so we cannot comment”.
There is no indication that the government took any action in Urban Splash’s favour after receiving Powell’s letters.
A spokesperson for the Ministry of Housing, Communities and Local Government said: “We are taking ongoing legal action against Urban Splash to make them pay for fixing homes they are responsible for. We make no apology for taking strong action to make people’s homes safe, and are absolutely determined to hold developers to account.”
