Examination of Witnesses(Questions 240-259)
MR JIM
COULTER, MR
JOHN PERRY
AND MR
ROBIN TETLOW
TUESDAY 22 OCTOBER 2002
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.
Chairman
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.
Chairman
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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