Lucy Powell has urged ministers to reconsider costly legal proceedings against a property development company in her constituency founded by a Labor donor, in a move that could have saved her company millions, The Guardian can reveal.
While she was a cabinet minister, Powell, favorite to be elected deputy leader of the Labor Party this week, wrote to Angela Rayner on behalf of Urban Splash, a property developer in Manchester founded by party donor Tom Bloxham.
Powell called on Rayner, then housing secretary, to reconsider the government’s “disproportionate” legal action against the company, days after meeting Bloxham at a Labor Party fundraising dinner.
When asked about the intervention, Powell said she had acted in her capacity as a constituency MP and had done so “in an open and transparent manner.” He denied doing anything inappropriate, although MPs are under great scrutiny after a series of lobbying scandals.
This case concerns a company called Urban Splash, which was asked to repay £49 million of taxpayers’ money in March 2024, when the Conservatives were in power.
The money had been spent on bringing seven buildings in central Manchester into compliance with post-Grenfell building safety laws, according to the housing department.
Ministers applied to a property court for a remedial order to legally force the developer to pay for the works.
But in his letter dated December 10, 2024 and seen by The Guardian, Powell called for “every effort to be made to engage with Urban Splash outside of lengthy legal proceedings” and warned that these would “ultimately cost the taxpayer and likely put Urban Splash out of business.”
She attached a letter she had received from Bloxham on December 5, saying 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 make Urban Splash “a scapegoat” to distract from its “continued errors and incompetence.”
He wrote that he “felt betrayed by a government that I helped get elected and had 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 donated £8,807 to the Labor 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 constituency MP, Lucy has made many, many representations to the government and relevant agencies over many years on difficult cladding issues on behalf of tenants and met with many of those involved, including residents, landlords and developers.
“In that capacity, in mid-November, Lucy met 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 she could make a representation on her behalf as MP for her constituency, which she then did in the usual, transparent and open way. She was clear in all correspondence that developers should pay their fair share of the costs of remediation”.
A source close to Powell said he held a meeting with Bloxham in his constituency on November 15, 2024, where he discussed his case, watched the video he referenced and asked him to put his arguments in writing. The source said they then met at the party’s fundraising event on December 4, which attracted more than 500 people, and that he had written to her the following day.
Powell’s office said it never received or facilitated cash or in-kind donations from Bloxham or Urban Splash, except in one case before 2020, when Bloxham sponsored prizes in its annual Christmas card competition for schoolchildren worth up to £300.
Powell’s constituency office is located in Beehive Mill, a regenerated building owned by Urban Splash. His office said he paid market rent for the premises, which was discovered by MPs’ expenses watchdog.
Powell met Bloxham and another Urban Splash executive at his constituency office on April 4 and wrote to Rayner again on April 22 and August 6 urging ministers to hold a meeting with the company, which he warned could become insolvent as a result of the action. In all cases she stated that she was writing in her capacity as a constituency deputy.
In his letter to Powell in December, Bloxham wrote that Michael Gove’s “historic and gross mishandling of the post-Grenfell response” along with “the continued errors and incompetence of the ministry and its advisers” were “threatening the very existence of Urban Splash and the new government’s growth agenda.”
He wrote that the RCO’s “continuing search [remediation order] It is not fair, equitable or equitable for several reasons.”
He argued that ministers should “sit down and have an open conversation about the merits of the case and come to an agreement that the U.S. [Urban Splash] can afford” rather than “spending years in pointless litigation wasting millions of pounds of taxpayers’ money on legal fees.”
He said Urban Splash was facing a bill of up to £48m when the company was worth just £27m. He said the department had incorrectly estimated its value at £75m and that “rather than attempting 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 on behalf of Urban Splash after receiving Powell’s letters.
A spokesperson for the Ministry of Housing, Communities and Local Government said: “We are taking legal action against Urban Splash to make them pay for fixing up the homes they are responsible for. We make no apologies for taking strong action to make people’s homes safe, and we are absolutely determined to hold developers to account.”
