Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Minutes of Evidence

Examination of Witnesses(Questions 180-199)



  180. How would other fiscal devices stop the second home syndrome?
  (Councillor Clarke) We would like to see the legislation implemented which is promised on council tax, but that alone will not be sufficient because if you sell a £1 million house in the South East and buy a house for £300,000 or £400,000 house in the South West, £300 or £400 a year on council tax is not there.

  181. So what else is needed?
  (Councillor Clarke) I think new ways of shared equity. I think that in some cases and I have not worked this through—

  182. How will ways of shared equity stop the second home syndrome?
  (Councillor Clarke) No, it will not.

  183. That is the problem. You outline to the Committee that the real problem is the fact that you have people moving in paying exorbitant prices for second homes. What can we do?
  (Councillor Clarke) I am sorry, I misunderstood your question. I do wonder from time to time—and I will probably get shot for saying it—whether there is room to look at that new Schedule A tax because some of this ownership has nothing to do with domestic and residential accommodation. It is a form of investment and capital gains tax.

  184. Have local authorities discussed this at all?
  (Councillor Clarke) That particular opportunity or proposal?

  185. Yes.
  (Councillor Clarke) No, we have not. I am expressing a personal opinion that that gap now is so great that it is not bridgeable by other conventional means.

Dr Pugh

  186. My questions are directed to South East Development Agency. You started off talking about numbers and one number I picked up in your submissions was 2,790 people in bed and breakfast accommodation in the South East. What percentage is that compared with the total dwellings in the South East and how does that compare with other areas and other regions?
  (Mr Dunnett) I cannot give you at this moment in time a percentage off the top of my head with respect to your question, I am afraid.

  187. Is it better or worse than the North West or the North East?
  (Mr Dunnett) We have a substantial problem.

  188. Is it better or worse?
  (Mr Dunnett) I will give you a response to that after this meeting.


  189. You will give us a note?
  (Mr Dunnett) I will give you a note

Dr Pugh

  190. You do not really know that it is a problem, do you?
  (Mr Dunnett) I do. We have done a substantial review of homelessness. I have a study about six inches thick in my office, but I am not prepared to give that information to answer that question at this moment.

  191. Let us talk about the consequences of affordable housing. Is it in any way affecting the South East economy?
  (Mr Dunnett) It is substantially affecting the South East economy. If I could give you a couple of pieces of information first. We have done substantial research which is trailed in our report. I have a draft report in front of me from Roger Tym and Partners and Three Dragons which looks at the effects of affordability and using the affordability index as a methodology. I understand the capability and availability of an individual buying a terraced property. What we have found is that, in 43 districts—

  192. I am sorry, that is a slightly different point. I am under the impression—it may be an incorrect impression—that the South East economy has been expanding more rapidly than many other regions in the country throughout a consistent period of time and, throughout that period of time, property has been pretty unaffordable in your terms in the South East. So, where is the connection between the expansion in the economy and the affordability of property?
  (Mr Dunnett) The affordability of property is different across the region and it affects the public and the private sector differently. With respect to the private sector, which is the basis of your question, the private sector is experiencing significant difficulties in attracting low paid or low skilled employees in the areas of high housing cost which is to be expected: Surrey, Berkshire, Milton Keynes, Oxfordshire and Buckinghamshire. There is less difficulty from the private sector's perspective in hiring low skilled workers in areas such as Kent and East Sussex which have a completely different economy to the wealthy areas of the region. I would remind the Committee that Kent and East Sussex have a similar GDP and a similar population to the North East of England. As an economy, we have substantial areas in the South East which are deprived and therefore which are suffering significantly with respect to house prices.

  193. I am not entirely sure that I understand that answer, but can I turn to the public sector side of things. You wrote in your submission that the early indications are that if the question of affordable housing is not tackled, public services are likely to deteriorate substantially. I want to press you a little on these early indications. The performance of local authorities across the South East and across the whole of the country are monitored on a year by year basis very, very extensively. If there were a deterioration of the kind you have mentioned, you would expect to see South East authorities performing less well or councils performing less well than the North West and North East.
  (Mr Dunnett) That is true in the health sector and we can provide you with information subsequent to this Select Committee.

  194. Generally speaking, southern hospitals and PCTs are performing less well than—
  (Mr Dunnett) We have a higher incidence of poorer performing health delivery agents in the South East than other regions, yes.

  195. And Councils?
  (Mr Dunnett) The evidence we do have is the difficulty that local authorities are having and experiencing in hiring and recruiting—

  196. That is a different point. I am talking about performance and how you are doing. Can I finally make the point—I think you know what I have been driving at—if you were more successful in, as it were, resolving some of these recruitment problems, the economy would thrive further and there would therefore be a further requirement for labour in the South East and the problem would complicate itself again. Would it not be possible to work on redirecting economic growth to other areas of the country?
  (Mr Bevan) I think there are two elements, if I may respond to your question. The first is that our regional economic strategy specifically sets out to identify how we can improve the efficiency of economies of the underperforming parts of the South East and if we cannot allow the underperforming parts, which I noted earlier are very similar to some of the worst areas in the United Kingdom—we are a very large area—then it is very difficult to see how we can actually achieve that form of transfer to other parts of the country. There are substantial numbers in the South East who are underperforming. Six hundred thousand adults do not have basic skills. We have the third highest number of poor performing houses. So, our first response is with respect to the economic strategy in the South East to enable the poorer parts of the South East to be able to benefit from the growth as opposed to spurring the success in the successful areas. The second answer—and we do have significant support for this point and evidence to support it—is that the companies who come to the South East are there for specific locational reasons and the vast majority of any companies, were they to move, would not move to other parts in the United Kingdom; they are more likely to move to places in Europe.

Chris Mole

  197. It is the often held view that the areas with the greatest need for new housing are the areas that have the lowest availability of brownfield land. What can RDAs like yours do to maximise their use of brownfield?
  (Mr Dunnett) The particular challenge in the South East is the lack of large brownfield sites. The sites which sit on national land use database and show a significant amount in number are predominantly airfield sites which are not as appropriate for future development. The South East England Development Agency has been, over the last two years, working with all the local authorities in the South East and with departmental officials and we hope before Christmas to launch what we are calling the Brownfield Land Assembly Trust. The particular issue in the South East is that there are many thousands and tens of thousands of small sites, one-tenth of an acre in size, which are scars to the urban fabric, if one wants to use that sort of terminology, but also are unsited in local capacity sites. So, what we have been working to is to assemble packages of these two sites into critical mass levels to provide economies of scale and to be able to put them to the private sector who are not taking these sites forward because of their complexity, the amount of working capital required in taking them forward and the difficulty and complexity of the planning system and that the cost of capital is too high over a three to four year period to bring these together. So, we are looking to do that on a programme basis with local authorities to plan them, to remediate them, to assemble them, to service them and to bring forward sites which would otherwise not come forward.

  198. How critical is the concept of having a high density of housing builds in meeting your 60 per cent target?
  (Mr Dunnett) If I could make one comment and then pass to my Regional Assembly colleague. SEEDA set up in its first regional economic strategy to surpass the Government standards recognised in the South East. We cannot encroach on the green lands, if I can put it that way. It is absolutely essential to meet the demographic requirements of the South East to actually retrofit the required homes, which are required for single person/single parent families in predominance, back into the urban fabric.
  (Mr Bevan) We are actually meeting a 60 per cent target at the moment but that is because the overall targets are quite low. If we were meeting the overall regional target, we would still need 1,500 more brownfield dwellings a year. The emphasis on brownfield is problematic. The calls on brownfield sites in terms of infrastructure and other assembly issues make it much more difficult to get affordable housing as part of that development component. In a sense, affordable housing is easier to achieve on greenfield sites and I think it is true to say that the sequential tests for PPG3 is actually slowing down release of greenfield sites and that is one of the reasons why overall figures in the South East are declining.

  199. Is the use of brownfield land in locations that are closed to employment increasing the need for people to travel across green belts and is that more or less sustainable with development of green belt itself?
  (Mr Bevan) For example, the announced growth areas in Thames Gateway, Milton Keynes and Ashford are all in the less pressure areas of the region. Those areas where pressure on housing is greatest are not going to benefit from that sort of joined up investment and I think that is really what is required, a more holistic approach. We were talking before in the previous evidence about urban design plan approach to redevelopment. We need that sort of approach too in those pressured areas like Thames Valley and like Hampshire. The tools available to local authorities to do that are very limited. Section 106 agreements are very cumbersome and the skills and resources that local authorities have without those sort of special development vehicles that the Government are talking about are very limited.

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