Lucy Powell urged ministers to rethink legal action against Labour donor’s firm | Lucy Powell

As the Guardian reveals, Lucy Powell has called on ministers to reconsider costly legal action against a property developer set up by a Labor donor in her constituency; It was a move that could save his company millions.

Powell, the favorite to be elected Labor deputy leader this week, wrote to Angela Rayner, while a cabinet minister, on behalf of Urban Splash, a property developer in Manchester founded by party donor Tom Bloxham.

Days after Powell confronted Bloxham at a Labor Party fundraising dinner, he asked Rayner, then the housing secretary, to reconsider the government’s “disproportionate” legal action against the company.

Asked about the intervention, Powell said he was acting in his capacity as a constituency MP and did so in an “open and transparent manner.” He has denied doing anything inappropriate but MPs are under huge scrutiny after a series of lobbying scandals.

This case concerns a company called Urban Splash, which has been asked to repay £49 million of taxpayers’ money in March 2024, when the Conservatives are in power.

The money was spent on bringing seven buildings in central Manchester into compliance with post-Grenfell building safety laws, according to the housing department.

Ministers applied to the property court for a remediation order to legally require the developer to begin construction work.

But in his letter dated December 10, 2024, seen by the Guardian, Powell called for “every effort to be made to engage with Urban Splash short of lengthy legal proceedings” and warned that these would “ultimately cost taxpayers and possibly bankrupt Urban Splash.”

He included a letter he received from Bloxham on December 5th, in which he said it was great to see her at the Rose Network event the night before.

In his letter, he accused the housing department of “pursuing us with increasingly vindictive, heavy-handed lawyers” while trying to turn Urban Splash into a “scapegoat” to distract from its “continuing mistakes and incompetence.”

He wrote that he “felt betrayed by a government I helped elect and had great hope for,” and linked to a video celebrating the developer’s 30-year history that he said he showed Powell when they spoke.

Bloxham donated £8,807 to Labor in 2020, Electoral Commission records show, and previously donated to Powell’s predecessor Tony Lloyd, the MP for Manchester Central.

A spokesman for Powell said: “Constituency MP Lucy has made many representations to the government and relevant bodies on behalf of leaseholders on difficult cladding issues over many years and has spoken to many interested parties, including residents, property owners and developers.

“In mid-November, Lucy met with Urban Splash for a constituency surgery meeting in Manchester, where they set out the challenges they were facing. She asked for further details in writing so that she could make a representation on their behalf as her constituency MP, which she then did in the usual transparent and open manner. She was clear in all correspondence that developers should pay their fair share of the costs of improvements.”

A source close to Powell said he had a meeting with Bloxham in his constituency on November 15, 2024, where he discussed her case, watched the video she referred to and asked her to put her arguments in writing. They later ran into each other at a party fundraiser attended by more than 500 people on Dec. 4, and he wrote to her the next day, the source said.

Powell’s office said he had never received or facilitated cash or in-kind donations from Bloxham or Urban Splash before 2020, except on one occasion when he sponsored prizes worth up to £300 in Bloxham’s annual schoolchildren’s Christmas card competition.

Powell’s constituency office is located in Beehive Mill, which is renovated and owned by Urban Splash. His office said MPs were paying market rent for the property found by the spending regulator.

Powell met Bloxham and another Urban Splash executive at his 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 and warning it could go bankrupt as a result of the action. In each case, he stated that he was writing in his capacity as a member of parliament for the constituency.

In his letter to Powell in December, Bloxham wrote that Michael Gove’s “historic and gross mishandling of the post-Grenfell response” as well as the “continued errors and incompetence of the department and its advisers” “threaten the existence of the Urban Splash and the new government’s growth agenda”.

He wrote: “Continued pursuit of RCO [remediation order] “It’s not fair or equitable for many 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 United States will accept.” [Urban Splash] He can afford this rather than “wasting years fighting frivolous lawsuits and wasting millions of pounds of taxpayers’ money on legal fees”.

He said Urban Splash was facing a bill of up to £48 million when the company was valued at just £27 million. He said the department had incorrectly estimated its value at £75 million and was trying to involve other companies with the same directors as Urban Splash in its legal proceedings “rather than mediate or negotiate”.

A spokesperson for Urban Splash said the legal action “is an ongoing process so we cannot comment.”

There is no indication that the government took any action in Urban Splash’s favor after receiving Powell’s letters.

A spokesman for the Department of Housing, Communities and Local Government said: “We are taking ongoing legal action against Urban Splash to make them pay for repairs to the homes for which they are responsible. We make no apologies for taking strong action to make people’s homes safe and we are absolutely determined to hold developers to account.”