Council leader and local MP Stella Creasy under fire over housing proposals where just 20% of homes will be ‘affordable’

A new controversy over the use of public-private housing schemes has erupted in one of Labour’s north London strongholds, closely mirroring the row in neighbouring Haringey that resulted in the resignation last month of the party’s most senior woman in local government.

Divisions over a flagship regeneration scheme in Walthamstow – now a magnet for younger middle-class homebuyers – led to its council leader rebuking shadow chancellor John McDonnell after he publicly suggested that the development plans should be dropped.

Other prominent Labour figures at risk of being sucked into the row are local MP Stella Creasy, considered to be at risk from leftwingers’ plans for mandatory reselection of parliamentary candidates, and London mayor Sadiq Khan, who will have a veto on the development. The application to build four tower blocks is expected to land on his desk imminently.

Labour councillors signed off on the plans despite nearly 1,000 letters expressing concerns ranging from the lack of affordable housing to the loss of a large chunk of the only public space in the town centre.

With local elections due in May, Labour’s opponents are licking their lips

In December they gave the green light to a proposal by Capital & Regional, one of Britain’s biggest shopping centre and retail park groups, to redevelop Walthamstow’s central shopping mall. The plan involves building more than 500 new homes, just 20% of which will be classed as affordable. This is an area where many longer-term residents are uneasy about rising property prices, even as others welcome gentrification in the form of artisanal bakers, craft brewers and wine bars.

With local elections due in May, Labour’s opponents are licking their lips. “What’s that saying? Never interrupt your enemy when they are making a mistake,” chuckled John Moss, a Conservative councillor whose party is hoping for gains here even as it braces for heavy losses elsewhere.

Conservative objections to the scheme centre on the sheer number of new homes and how few of them are affordable, although Moss adds that the party could support the plan in a different format.

However, the gravest threat to the scheme comes from Labour’s own ranks. On 8 February, McDonnell addressed a meeting in Walthamstow convened by a group opposed to the plans. He warned councils to abandon schemes that depend on the private sector and referred to the situation in Haringey, where Claire Kober stepped down as leader following months of opposition to a £2bn regeneration scheme.

The meeting was promoted by the local branch of Momentum, although a spokesperson said members would prefer that local campaigners take the lead in opposing the development.

Some of the noisiest opposition has come from Nancy Taaffe, chair of the Waltham Forest Save Our Square campaign, who has waged a guerrilla campaign against the council and Creasy on the pages of community Facebook groups. Taaffe has also organised protests, including one slated to take place in Walthamstow town square on 24 February.

Defenders of the scheme are eager to point out Taaffe’s membership of the Socialist party, the successor to Militant, whose members were expelled from Labour by Neil Kinnock during a previous civil war for control of the party. She is also the daughter of Peter Taaffe, the veteran Militant and Sociaist party leader who now harbours hopes of being readmitted to Labour.

Nancy Taaffe accuses Waltham Forest councillors of being 'loyal to the ideas of Tony Blair'

“This is about opposing the taking of the public land and a model that has become turbocharged because councils are in a panic about their grants from government being cut,” she said. Taaffe derided Waltham Forest councillors as being “loyal to the ideas of Tony Blair” and pointed out that their leader, Clare Coghill, had joined other local authority chiefs to sign a letter criticising a call by Labour’s national executive committee for Haringey to rethink its public-private initiative.

Creasy and Coghill were unavailable for comment but Waltham Forest said the plans would bring £200m of private investment and 8,000 square metres of additional retail space.

“A new and expanded Mall would give a significant boost to the local economy, giving our residents the opportunity to shop in the borough, rather than going further afield, which has a detrimental effect on the local economy,” the council added.

The extent of support among voters remains to be seen.

Bill Foster, a popular local blogger who chronicles the changing face of the area, gave voice to the mixed feelings of many, expressing concern about the loss of public space on the one hand but adding that “something has to give” in order to tackle the housing shortage.

“I have lived here for about 20 years and when I first moved most of my friends treated it as if I was moving to the dark side of the moon,” he said.

“That attitude has definitely changed, but it is a double edged sword. I think a lot of people were wanting somewhere nice to go for a drink, or nice cafes. Now those things have arrived and people are railing against them, but they have also got what many of them wanted.”