Greenwich councillors swallowed their doubts to back plans for 801 homes, shops and a new cinema in the heart of Woolwich on Tuesday night after a last-minute plea for support from town hall leader Danny Thorpe.

The controversial Woolwich Exchange project will see scores of small businesses moved or closed and buildings on Plumstead Road demolished to make way for the scheme, one of a number which the council hopes will finally turn around Woolwich’s fortunes after decades of decline.

Plans include a new Picturehouse cinema in the old Woolwich Public Market as well as restaurants and bars. The cinema would be the first in Woolwich for more than two decades.

Despite the developers claiming the planning board showed “overwhelming support” in a press release issued on Wednesday, many councillors were clearly uncomfortable with aspects of the scheme. Planning chair Stephen Brain said he had “very, very strong reservations” about the project.

They criticised the lack of “affordable” housing in the scheme, and the heights of the new buildings, which will rise to 15, 17 and 18 storeys, with two 23-storey blocks. Council officers had recommended backing the scheme.

Just 19.7 per cent of the homes will be “affordable” – for London Affordable Rent or shared ownership – compared with the 35 per cent originally on offer in the first set of proposals, which caused an outcry because they also included the the mass demolition of shops and workspace mostly belonging to black and ethnic minority businesses.

Those original plans were revised after the covered market was given a Grade II listing, and the developer St Modwen and housing association Notting Hill Genesis said the loss of “affordable” housing was needed to cover the cost of keeping the market as well as retaining and refurbishing buildings on Woolwich New Road.

In total, 14 per cent of the homes will be on offer for London Affordable Rent – about half of market rents – with the rest of the “affordable” homes being for shared ownership.

Thorpe submitted a late letter of support for the project, which was not made public, ahead of the first planning board meeting held in person since last March.

Councillors, planning officers, staff and speakers donned facemasks and sat in the council chamber rather than the usual committee room after the Westminster government forced councils to stop holding remote meetings. The meeting was still webcast, but viewers at home could not see presentations or the vote – or even which councillors actually attended the discussion.

While the original scheme had been widely criticised even by Labour councillors, even its most high-profile speaker admitted to initial doubts about the revised proposal.

The council’s former cabinet member for regeneration, Sarah Merrill, urged councillors to back the project – but admitted that she initially had “great reservations” because of the height of the buildings and “the building of units that are clearly for a market external to Greenwich”.

“But that is the world in which we live and we have limited powers as a local authority,” she continued.

Merrill – who is now in charge of the council’s transport policies – said that when she discussed the issue with local people, “height was not raised as an issue”.

“If it had been, I would have had a fight. It’s a site with enormous social difficulties and in huge need of regeneration … a certain amount of height and density is the price you pay for regeneration on this scale, and it will revitalise Woolwich,” she said.

The issue of businesses being unhappy with the scheme “largely went away”, she added. “All the ones we spoke to had contact with the council and they had been offered relocation on the site or a deal – some wanted to close down, some wanted to move away.”

Kevin Veness, for local lobby group Speak Out Woolwich, criticised the lack of “affordable” housing and the design and density of the scheme.

“We keep being told there are 801 new homes for Woolwich, but are they really for Woolwich? I don’t see many of my neighbours being able to afford these properties,” he said.

Veness said the developers had missed the chance to reference local heritage into the design, such as the Matchless motorcycle factory, which stood close by on Plumstead Road until 1969.

Andrew Blundy, of the St George’s Garrison Church on Woolwich Common, reminded councillors that the planning inspector who threw out plans for the 27-storey Tesco tower last year had voiced concerns about views from the church.

“If you grant an application including a 23-storey tower, developers of the site behind the Tramshed theatre and the site in front of Tesco will regard that as a green light for developments of a similar scale and height – you will be changing the character of Woolwich town centre forever,” he said.

Woolwich Common councillor David Gardner said he had “got into some trouble” for opposing the original scheme, but the new proposal was “a significant improvement” with the covered market listed and the retention of building frontages on Woolwich New Road.

But he said: “Every day, I get pleas from my constituents who cannot find homes – they are generally in the private rented sector, moving between shorthold tenancies, sofa surfing and so forth, and we need social housing in Woolwich.”

The proposal “sadly failed” Greenwich planning policy in that respect, he said – something that had been emphasised in contributions from the local NHS and public health teams.

He added that the lack of family homes meant the scheme would encourage “fly by night communities – commute communities that will just be there for a few years and maybe sublet, or do we want families that will stick?“

Asked by committee member John Fahy why the development was catering for a “transient population”, John Hughes of Notting Hill Genesis said that there was an “absence of grants” to pay for more affordable-rent homes: “We would absolutely want to have more but we have to be mindful of the viability of the scheme.”

Andrew Clark, of the heritage consultants Purcell, said that the condition of the covered market was “very poor” and needed “significant investment”. A revived building with cinemas, bars and restaurants would “act as a community anchor”, he said.

When asked by Conservative councillor Nigel Fletcher why buildings on Plumstead Road were being demolished, Clark said that apart from two locally-listed buildings, they were “a mixed bag” and “in various states of repair” and to keep them would be too expensive.

“We all took the view that to keep them would impact detrimentally on the viability of the scheme,” he said, adding that Historic England had accepted that the benefits of the scheme outweighed the loss of the buildings.

Another committee member, Gary Dillon said he was “gobsmacked” at the idea that the developers were taking a commercial risk on the scheme, considering other developers were active in the area and Crossrail was about to open.

In response, Clark said the developers were spending well over £300 million on the scheme, and had taken on additional costs such as retaining the covered market.

When it came to the vote, Thamesmead Moorings councillor Olu Babatola said the benefits of the scheme outweighed the lack of affordable housing – and he was pleased that businesses and churches would be relocated or retained on site.

“I was going to meet someone and they said they would be standing in the ‘posh part of Woolwich’,” he said, gesturing across an imaginary road.

“This project will eradicate that if we approve it today. This will improve the image of the area.”

Woolwich Riverside councillor Fahy said he would also back the scheme, but with “strong reservations” over housing. “Looked at in the round, this development can create new opportunities in an extremely positive way,” he said.

While Fletcher agreed that the developer had done a “good job” of listening to criticisms of previous schemes, and praised the retention of the market, he said he would be abstaining.

“There are elements of it which I am concerned about,” he said, saying that the lack of “affordable” housing and retention of the market were not enough to overcome the harm done by the tall buildings.

Planning chair Stephen Brain said he would support the application “despite really, really strong reservations” about the scheme – noting that there would be a review of the amount of “affordable” housing as the scheme progressed.

The vote divided on party lines, with five Labour councillors – Babatola, Brain, Dillon, Fahy and Mariam Lolovar – voting for the scheme. Conservative councillor Geoff Brighty voted against while his party colleague Fletcher abstained. On a separate vote for listed building consent – needed for work on the market – the same five councillors supported the scheme, with Brighty and Fletcher against.

The decision will now have to be confirmed by London mayor Sadiq Khan before work can start on the site, which is expected to begin in 2023.

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