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

Examination of Witnesses(Questions 240-259)



  240. 83,000 houses a year and you have achieved 40,000. So we are a long way away.
  (Mr Coulter) Indeed, that is absolutely the case.

  241. What do you think should be done to try and meet the target that you are referring to? (Mr Coulter) There are two elements that we would like to see. Firstly, the way in which public resources to which private finance can be added will be expanded. Our estimate is that the prospect of the Corporation's programme increasing perhaps up to £1.7 billion will add about 8,000 homes to that overall target, so we are still short. Then there is the question of the planning side and the extent to which more can be done to improve the planning processes and land supply that would increase the sort of figures that the research is showing are coming from the planning system to the affordable housing sector.

  242. Will the allocation under the Government's Comprehensive Spending Review for new build help to meet the target?
  (Mr Coulter) It will be a step up. It will not meet the target ultimately.

  243. I go back to the question of evaluating the existing stock and the annual target; will the Comprehensive Spending Review make any impact?
  (Mr Perry) Can I deal with the local authority aspect of the ten-year target? I think the Government itself believes there is a risk that about ten per cent of the local authority homes that are below the Decent Homes standard may not meet the target within ten years. Our own estimates are that the Government could meet the target but the target is very heavily dependent on stock transfer and really about half the remaining stock needs to be transferred in order to achieve the target.

  244. Why transfer it in order to meet the target?
  (Mr Perry) Because the Government's spending programme provides sufficient for about half the stock to be retained and improved by the public sector and it depends on private finance through housing associations to renovate about half of the remaining stock.

  245. We are told because of the small number that private finance initiatives may not be a runner.
  (Mr Perry) The private finance initiative is not expected to be a big generator of contributions to the Decent Homes target in the social housing sector. We have got about 20 potential Pathfinder schemes of which the first is still to get off the ground, and I think the expectation is that the contribution from PFI will be about 20,000 units from current schemes. It is nothing like the contribution directly by either the public sector or housing associations through stock transfer.

  246. Where is the other finance initiative going to come from?
  (Mr Perry) There are really only two routes. The Government could provide more funds directly or it could encourage stock transfers so that funding comes in through the private sector. It is providing more funds directly and it is encouraging local authorities to set up arm's length management organisations. We are waiting though to see the further rounds of the so-called ALMO initiative which I understand will be announced in January.

  247. Can the local authorities be given more freedom in this matter to allow them to raise money to meet the target of improving the stock?
  (Mr Perry) The Government produced very interesting proposals in August about giving more freedom to local authorities, which I think are welcome, but in the short term the existing measures—the ALMO route, financing local authorities directly through resource accounting measures and stock transfer—can achieve the target, providing they are all pursued vigorously enough.

Christine Russell

  248. How would you like to see the carve up of the new allocation? I know you have said there is still not enough money for housing but with the funding announced in the new Comprehensive Spending Review, how would you like to see that new money divided up between new build, renovating existing stock and regeneration schemes?
  (Mr Coulter) We have a one year programme which gives us a certain amount of information. The Housing Corporation approved development programme is being treated in two separate ways in the next financial year. First, the regional cash flow is being uplifted on the existing needs indices distribution basis, and then we have the Challenge Fund which was established which is virtually rule free, in order to generate good ideas for innovative development and maximise output.


  249. Do you think it is really rule free or do you not think the rules and restrictions will come in as soon as people start putting in bids for it?
  (Mr Coulter) You will have to ask the Deputy Prime Minister that in the course of the next week, I guess, because that is where ultimately the decisions will be made. The intention certainly is to uplift, for example, the output of off-site manufacturing and to ensure that adds to the quality of housing stock and does not detract from it. CABE is going to be involved in stamping the quality of those designs and their output. The gaps we have are, firstly, we do not know what the future of the Starter Home initiative is. We have all criticised that in the context that it is a subsidy to purchase but does not produce new housing. That is an important change in the Challenge Fund's approach, for example, to Homebuy. We do not know yet what the Renewal Fund assessment will be in terms of the public resources and, as John said just now, we do not know what will happen to funding for the ALMO as part of upgrading the housing stock so it is rather difficult to make a forecast of what exactly will be produced as a result of perhaps some competing heads of expenditure in what we think we would all say is an inadequate overall resource, admittedly in a resource that is stepped up by £2.5 billion over the next three-year spending period.

Christine Russell

  250. What about the balance between the funding from local authorities and the Housing Corporation that at the moment is split and about 80 per cent goes to social housing and 20 per cent goes to other schemes, shared equity and co-ownership and schemes like that; what do you think of that balance? Should we maintain that 80/20 per cent balance?
  (Mr Coulter) Perhaps we could divide that response into two parts, first to deal with that 80/20 split and then maybe talk about what might happen with the Local Authority Social Housing Grant because that is an important potential issue for the Committee as the Government comes to its conclusions. 80/20 is not really a split that responds to any formulaic approach. It is really a matter of judgment which might otherwise be described as guesswork. It is the sum of what happens in regions.


  251. Is the guesswork right or should we be coming up with a different guess?
  (Mr Coulter) I think the guesswork is subject to quite a number of pressures.

  252. Come on, you are dodging the answer, should it be 80/20 or should it be 70/30?
  (Mr Coulter) I think it should be regionally tailored and you would find in the context of how the housing market is operating, which this Committee has investigated in the Empty Homes inquiry, there would be a relatively small proportion in the Northern and Midlands regions (with the exception of the changing tenure mix and the regeneration schemes) and a much higher proportion than that in the Southern regions.

Christine Russell

  253. Are you therefore saying that in the South East it would be far higher in order to meet the key worker demands?
  (Mr Coulter) It would but you are then talking about competition between limited resources for a wider range of people who need housing. Local authorities are certainly very conservative about supporting a significant increase in home ownership schemes because they are under pressure with their statutory duties.

  254. What about the Chartered Institute, do you want to retain the 80/20?
  (Mr Perry) I do not disagree with what has been said on that. The crucial thing is it needs to be decided at regional level.

  255. What about within regions?
  (Mr Perry) You are going to have local authorities making their own decisions as well, are you not, about how resources are deployed?

  Chairman: We need to move on.

Mr Streeter

  256. Social housing has always been with us, it is very important, and you two know my own involvement in this area; I feel very passionately about it. Is it not true that the real crisis today is in the area of key workers most of whom wish to buy their own homes and imply cannot afford to in the southern part of the country? Are your organisations being creative and forward thinking enough or have you got stuck in a social housing framework and mindset? Should you not be screaming and kicking about this issue with either your own new ideas about how to get out of this mess or pushing the Government to do that?
  (Mr Perry) Both our organisations are very keen on mixed communities and we want to see both rented housing and housing for sale and we want to see low-cost home ownership within most communities as well. The difficulty in the situation where there are such limited resources for new build as opposed to resources for renovating existing stock is that we are forced into making very difficult choices. You are right that there is tremendous pressure, especially in the southern part of the country, from people who want to buy and the difficulties in the southern half of the country are obviously much greater than they are in the Midlands and the North. At the same time pressures on local authorities and associations in the south—homelessness, bed and breakfast and temporary accommodation—are enormous too. We are just trying to get the balance between those two in the southern part of the country and we are finding it very difficult given the restrictive nature of resources.
  (Mr Coulter) One should not under-estimate the amount of innovation for which housing associations are responsible. All of the shared ownership programmes really started with innovative projects some 20 years ago. The development of intemediate market purchase, particularly in the housing hotspots, is something which a lot of housing associations are now getting themselves involved in, effectively sitting between social sector and private fully market housing, so there are experiments that organisations are involved in even with the pressures to which John Perry referred.

  257. Do you think the private sector could be doing more, whether in partnership with local authorities or regions or housing associations in terms of making more low-cost home ownership schemes and houses and units available? If so, how could that happen?
  (Mr Coulter) Blue skies thinking would start a debate about changing the subsidy rules under which we operate, to look at ways in which equity between the private sector and the independent social sector could be used as a way of procuring more housing of the type you are talking about. Whether it is full ownership or part ownership clearly depends on the projects and the availability of personal incomes which must not be forgotten in the creation of that ownership. So we need to push the boundaries and territory out for more innovation and experiment.

Christine Russell

  258. Can I move on to planning applications and ask you gentlemen how realistic the Government is in expecting that developments will make a major contribution to affordable housing as well as children's play areas, access roads, and whatever?
  (Mr Tetlow) There has been some timely research, as you are probably aware, and the Rowntree Foundation report, issued last week, indicates that about 12,000 units per annum are being delivered by the planning system. It also points out that only 4,000 of those are being delivered without public subsidy, so I think when you look at it in those terms you can see that it is a relatively minor contribution. It is a useful supplement to the main programme but it cannot be seen as any more than that. In terms of the future it does have, I believe, more potential and I do not think that enough has been made of it. The system has been with us for ten years.

  259. So who is not making the most of it? Is it local authorities not exerting the power that they have over the developers?
  (Mr Tetlow) I think that is the case. There are a number of reasons. The most fundamental one is that many local authorities have not got up-to-date local plans with relevant policies in there. That has got to be a fundamental starting point to give them the confidence to negotiate. It also seems to me they are not giving the issue enough priority compared with other issues of planning gain, or perhaps even showing enough determination at negotiations, because certainly some cases I have been involved in would indicate when local authorities have been determined in their negotiations, they have been able to achieve a great deal. For example, there was a case in Gloucester not long ago that I was involved in, a public inquiry called in by the Secretary of State, for 3,000 dwellings on the edge of Gloucester. In the end the Secretary of State has gone back to the developers and said he is not minded to approve the application, principally because not enough affordable housing has been provided. The developers were offering 15 per cent, the council were seeking 40 per cent. I appeared as an independent expert to the inquiry recommending 30 per cent and the Secretary of State has come back and said 30 per cent should be the figure, and that is a significant number of houses.

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