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LDA made secret deductions from compensation paid to Clays Lane tenants

The Clays Lane Former Tenants Association (CLFTA) has recently discovered, to its astonishment, that the London Development Agency deducted money from the compensation paid to forty of the tenants relocated under the Olympic Compulsory Purchase Order. Eleven of those relocated received no compensation at all.

During the relocation tenants were told all those relocated would receive the full compensation, although rent arrears could be deducted by agreement. However, the recently discovered deductions were made in individual discussions with housing officers. Other tenants and their advisors were unaware this was happening and it seems these tenants were unaware they were getting less than other tenants.

In Freedom of Information responses the LDA has agreed there was no policy allowing for deductions and no consultation occurred with tenants or their advisors. Apart from those tenants who received no compensation, the deductions, not including arrears, vary from a ridiculous £3 to an extraordinary £2,200. The LDA claims most deductions arose from storage or relocation costs, but has provided no details and this explanation certainly does not cover the more substantial deductions. It has said tenants could have complained if they were unhappy, although this is a classic catch 22 given that these tenants do not seem to have received any support or information about their rights when confronted with these demands from housing officers and no-one else knew this was happening.

Compensation packages for compulsory purchase are made up of statutory payments, to cover home loss, and other negotiated or discretionary payments, to cover disturbance and other costs. In a response to one tenant, who has since complained about the deductions from his compensation, the LDA claimed ‘discretionary’ meant it was entitled to make whatever payment it wanted to whom it wanted. However, this is not what discretionary meant in this context. It simply meant ‘not statutory’. These payments are agreed after negotiation but apply across the board once agreed. In an email to the tenant concerned advisors agreed with this interpretation:

‘The law entitles you to Home Loss payment (It was £4000) when you were rehoused. You are also entitled to Disturbance payment- this is to cover the costs associated with moving and setting up in your new flat. The LDA offered £2,625 as a fixed amount but offered to pay more where extra costs could be shown. In addition to the above were the Environmental Loss payment of £320 and £1,555 as compensation for higher rents that people would inevitably have to pay. These two payments were discretionary in the sense that tenants had no legal entitlement to them. But as I said before, the only circumstances where less than the full amount was paid, as far as I am aware, is where rent arrears were owed or at least said to be owed either to CBHA or the former Clays Lane Co-op.’

At no time were tenants told they would be subjected to these deductions. In the minutes of a staff meeting held in September 2006, also obtained through a FoI request, the LDA’s lead officer told staff administering the relocation that ‘all tenants leaving the estate should be paid the full compensation entitlement’. When this was pointed out to the LDA it simply denied this represented a policy, although it acknowledged there was no other policy.

It is unclear whether the LDA actually knew what was being done by the housing officers from Community Based Housing Association, the RSL which was managing the process. In the previously mentioned case the LDA has made different statements about his circumstances, which have then been changed when they have been contradicted by the tenant, as to why the tenant was refused the full compensation. It also claimed he had signed a document agreeing to the deduction, indicating his consent, when in fact the document was not signed.

In the 2005 Fluid survey report the LDA said: 'The LDA is committed to the relocation of all Clays Lane residents, and therefore will maintain a high degree of responsibility over the process in order to ensure that all residents are rehoused. No matter which RSL is in charge of the housing allocations, they will be accountable to the LDA. The LDA will steer the process and judge it according to regulatory 'benchmarks' to ensure its commitment to residents is carried out.'

The LDA has now said it does not have specific information about these tenants, whose estate it was compulsorily purchasing, and to whose rehousing it claimed it was so committed, and about what element of their compensation was deducted. It also says information held by CBHA, a part of Peabody Housing Trust, is not available under Freedom of Information even though CBHA was acting as its agent and received payments to manage the process, although it is asking CBHA to provide the information on a voluntary basis.

The Information Commissioner may yet receive a complaint!


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