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

Memorandum submitted by Office of the Deputy Prime Minister

Examination of Witnesses(Questions 285-299)




  285. We are pleased to see you. Can you introduce yourselves for the record.
  (Mr Gahagan) I am Mike Gahagan, the Director of Housing in ODPM. My colleague is Henry Cleary and he is head of what used to be the Affordable Housing Unit. I say used to be because since the DPM's statement of 18 July, with the recognition that we needed to look wider than the provision of affordable housing to the provision of housing in general, it is now formally titled the Planning, Housing and Growth Unit, so it is the same thing with a wider remit.

  286. Is that your opening introduction or do you want to say anything more?
  (Mr Gahagan) No, that will do.

Mr Streeter

  287. What have you been doing since you were first set up under whichever title and what is the biggest issue that you have stumbled across and how are you going to tackle that?
  (Mr Cleary) We were set up at the end of last year. We were looking at affordable housing supply issues, how the system is working, how it could be improved, and we really focused on three areas: the first is the supply of sites, the land available, and how that comes forward; the second is the planning and negotiation of affordable housing schemes; and the third is new approaches in the areas of construction but also finance and other respects. So in general terms we were looking across the piece along the supply chain. We worked openly with partners. The agenda has now changed, as Mike has said, and we are now working to the DPM's agenda as set out in the statement of 18 July.

  288. Can I ask one question on that under the heading of new approaches. Do you agree that one of the problems with affordable houses to buy is that whilst you might put some subsidy up front and the young local couple or person buys, the issue has always been that in two or three years' time they sell it on in the open market and it is no longer affordable housing so-called. Have you been looking at that particularly in relation to possible new forms of legal tenure or other ways we might create to buy a property with subsidy which remained affordable housing on a long-term basis?
  (Mr Cleary) There are instruments available, for example those used in rural areas to help keep the housing in use for the local community. Our perception was that that was not a primary obstacle to the supply of affordable housing. It was a useful area to examine but the issue really is up front in how much housing we can provide.
  (Mr Gahagan) I think there is an additional element. In schemes like low-cost ownership or Homebuy, when the property is sold, the equity share that the housing association provided reverts back to the housing association so the money is not lost. There is an issue about restricting subsequent sale because the lenders obviously are nervous about that.

  289. All those schemes require a third party. I am talking about some kind of new scheme or new idea or new legal tenure that may not require the presence of a third party or retained equity in any way but nonetheless does the job we want it to do. I am not saying you have got an answer but you guys are very clever people and you are paid a reasonable sum of money to come up with new ideas.
  (Mr Gahagan) I like the word "reasonable"!

  290. Are you a key worker? Please tell me you are looking at it and you will come up with some brilliant ideas by Christmas.
  (Mr Gahagan) We are open to any suggestion on this. Ministers do want to. What I would say to you is in these schemes there is always a public subsidy of one form or another, it may be land or it may be money, but the figures do not stack up without that contribution somewhere in that scheme, and there is the issue about recycling, except through section 106 agreements.

Dr Pugh

  291. Please do not accept this as a personal question or an obligation on your part to declare an interest, but how many people working on the recommendations to Government a) live in the South East and b) are paid to make a living in the South East?
  (Mr Gahagan) Sorry?

  292. How many people within the unit working on the housing strategy are themselves beneficiaries of additional money because they live in the South East? Do the majority of them actually live in the South East?
  (Mr Cleary) Yes, all the members of the unit live in the South East and, as you will know, there is an element of consolidation there of the cost of living in the South East and London.

  293. I am sure that in no way biases your opinion to favour certain solutions rather than others.
  (Mr Cleary) I am not aware that it does. I should add that we have a lot of input from our regional colleagues, we have been working across the regions, and I hope that helps to counter it.

Christine Russell

  294. Gentlemen, I am not sure if you were present when the previous witnesses gave their evidence but if you were you would have heard Mr Tetlow saying that we could double the number of affordable units if central government gave far more robust guidance to local planning authorities. Do you agree with that statement? Secondly, when you introduced yourselves you said that looking at the planning system was one of your priorities. What conclusions have you come to from looking at the way the planning system is working in providing affordable units?
  (Mr Cleary) If I may, I would like to divide it into three elements. One is the planning policies themselves and particularly the housing need assessments that local authorities carry out. What we found in some cases is that they are very narrow. There are obviously some excellent ones, there are others that just focus in on one particular section of the market, for example those in statutory housing need, not extending to key workers and others across the piece. If you look at the housing policies in the South East, for example, we have had in recent years 40 per cent completions for four-bedroomed executive houses rather than the small units that you might expect. If you look at an authority like Basingstoke which is now requiring a minimum percentage of one and two bedroom units, that is right up front, and that is the first stage. The second stage is how is the negotiation itself carried out and there again your other witnesses alluded to this. We found an enormous spread of practice. We have some research on this which is still on-going and which, like our other research, will report and be published. There is quite a lot you can do to improve the efficiency with which negotiation is carried out. The third area is what you actually require, what is the level of contribution to affordable housing and how much of that is key worker. That third element, the issue of further guidance and further definitions and so on, a lot of things have been said to us on that and that really is now an issue for ministers and they are thinking about that in the context of the DPM's wider agenda.

  295. I think that the Department was looking at a system whereby planning applications that contained an element of affordable housing would be fast-tracked through the planning system?
  (Mr Gahagan) Yes.

  296. Is that right? Were there pilots set up? Have you had any interim results from those studies?
  (Mr Gahagan) That indeed is the research that I was just referring to. What that is designed to show is if you make available special help to a sample selection of authorities how far you speed up the system and improve its content and output. They are working with ten authorities spread across London and the South East on projects which involve 1,000 housing units and that work is about to report and should be completed by the end of this year and we will then obviously feed that into the process.


  297. You have no idea yet how it is shaping up?
  (Mr Gahagan) It is tending to support the points I made a moment ago, in other words, the spread of good practice, the importance of the housing needs assessment up front being broadened and the policies, and then it has some observations to make about what kind of affordable housing contribution we are seeking.

Christine Russell

  298. The Deputy Prime Minister in a statement in July dropped the suggestion in the Planning Green Paper to impose a tariff on all developers for affordable housing. Can we expect that there will be new guidance in place of that suggestion from the Department to the planning authorities about planning obligations?
  (Mr Gahagan) Yes. The original objectives to make the system more transparent, more certain, and to speed it up remain core priorities and we do want to take those forward, even though that particular way of doing it is not now being proceeded with.

Mr Streeter

  299. Is anyone looking at the issue of tax breaks and tax incentives on developers in providing affordable housing?
  (Mr Gahagan) Yes, this is something on which we commissioned research and we published that very broad piece of work covering instruments used internationally, so it ranges from encouraging developers at one end through to helping the saver and also encouraging employers, because one of the other areas that we found is that there is quite a lot employers can do. This is all published work and we have fed that into our colleagues in the Treasury who obviously have the lead responsibility on fiscal matters.

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