Examination of Witnesses(Questions 360-379)
DR NORMAN
PERRY AND
MR NEIL
HADDEN
WEDNESDAY 30 OCTOBER 2002
360. Will you carry out the inspections now?
(Dr Perry) We carry out the inspections at the moment.
361. That is right.
(Dr Perry) It is a new function that we established
over the last 18 months and we have a threefold regulatory system:
we look at the financial viability of housing associations, we
look at the effectiveness of—
362. What about the quality and value for money?
If they are going to carry out the inspections and then report
to you, is that not duplicating the system?
(Dr Perry) Not really because the Housing Inspectorate
is not a regulator, it is carrying out—
363. But you carry out the inspections now and
regulate.
(Dr Perry) We do, but our staff—
364. So, if they are bringing in an inspector,
taking you off that but you still regulate, is that not duplication?
(Dr Perry) No, not at all because our inspection staff
are relatively small in number and they will be transferred across
to the Audit Commission and will report from there to us.
Dr Pugh
365. Over the last few years, your funds have
gone up quite appreciably since 1997 and they are scheduled to
go up to £1.2 billion but, as the funds have gone up, the
number of houses built has not gone up proportionally. What has
gone wrong?
(Dr Perry) Nothing has gone wrong. The real world
has intervened in response to changing patterns of housing demand.
More of our programme is now being invested in the south of England
and in London and land costs and building costs are higher there
than in the Midlands and the North and effectively the way in
which land and building costs have risen has meant that the number
of units which we can deliver through the funding programme, as
you rightly say, has not kept pace, but then that is an issue
which actually underpins some of the discussions you had a moment
ago about off-site manufacturing because, over the long term,
we do think there is scope to bring down building costs but not
immediately.
366. In terms of targets that you set yourself,
rates of production and all that sort of thing, are you getting
nearer to the targets in the South East or further away from it
all the time?
(Dr Perry) We do not set ourselves rates because we
are set public service targets by the ODPM and the Treasury and
we achieve 100 per cent of those every year, so there is always
an agreed set of output targets which we achieve. In terms of
priorities we are seriously addressing some of the issues in the
South East, I think we are all aware that there is an affordable
housing problem in the South East, to whose solution our programme
contributes but is nowhere near being the whole part of the solution.
367. We need 40,000 affordable homes per annum;
how many homes will be built as a result of the new programmes?
(Mr Hadden) We anticipate a programme of 22,000/23,000
homes next year.
368. Can the housing associations cope with
that kind of programme?
(Mr Hadden) Yes. We are overbid by a factor of four;
we have schemes that we can choose from to fund.
Chairman
369. And they will actually all be able to deliver
on time?
(Mr Hadden) Yes. A very important part of the bidding
process is the delivery of the scheme to make sure we meet our
completions target which Dr Perry has talked about.
Sir Paul Beresford
370. You mentioned the pressure on the South
East and the value of land in the South East. Not all areas in
the South East are quite like that, the Thames Gateway is an example.
Should the Government be doing more to take the pressure off some
of the heavy areas in the South East putting infrastructure into
some of the less pressurised areas so as to pull demand across
from those less pressurised areas?
(Dr Perry) I think it is doing both. Certainly in
the Challenge Fund, the bids we have had in are spread across
the South East and, with the best will in the world, it will be
a few years before the big strategic sites come on stream. There
is a lot of infrastructure that needs to be put in first and we
are seeing at the moment in response to that Challenge Fund that
people are using ingenuity. There is quite a lot of land still
around. In the Housing Corporation, we do not yet believe that
there is a land constraint on providing affordable housing as
much as a resource constraint—
Mr O'Brien
371. But they are not making any more.
(Dr Perry) They are not making any more but the rate
of re-use of what we have already can be higher and in fact under
the pressure of the sorts of issues with which you are familiar
in the Committee, there is quite a lot of land coming forward
and some that is still available. So, 85 per cent of the housing
that we fund is built on brownfield sites.
Alistair Burt
372. How do you decide the balance between funding
social rented or shared ownership properties? Your memorandum
says that it stands at the moment at about 90/10. How is that
balance worked out? Is it the market or is it a decision by yourselves?
(Dr Perry) We agree those figures with ministers,
so in effect it reflects the policies of the Government. We are
increasing quite substantially the amounts on low cost home ownership
because, for the current year, about 18 to 20 per cent of the
homes which will result in the programme will be low cost home
ownership.
373. Are you going to revise that further in
relation to key workers and the increased concern there is about
finding affordable homes for key workers?
(Dr Perry) "Yes" is the answer. There is
always a balance to be struck because there is still the very
strong demand for traditional rented housing for people on low
incomes and we should not forget that but, under the pressure
of demand in the South East, our programmes of low cost home ownership
and shared ownership are extremely popular and we could really
buy as much as the Government are willing for us to buy.
(Mr Hadden) Within the Challenge Fund that was referred
to earlier, we are testing out two models to help key workers
access affordable housing, intermediate renting and new build
home buy projects, in order that we can test the market.
374. Witnesses to the Committee have been concerned
that, for some key workers, even under the new scheme, homes are
just not affordable for them, they just cannot afford it. How
will a nurse on £15,000 a year manage?
(Mr Hadden) One of the things that we are also doing
through the Challenge Fund is working closely with the NHS housing
co«ordinator, John Yates, and we have bids which involve
contributions from NHS Trusts which will help to bring down the
costs and therefore will make these schemes much more affordable
to nurses and other people in the health sector.
Chairman
375. What sort of prices are we talking about?
(Mr Hadden) It varies depending on where you are in
the country with the costs of building that scheme and the incomes
people have, so is not easy to generalise.
376. If you are telling us that it is going
to be affordable to a nurse, you must be able to tell us the sort
of price that you want it to come onto the market at as a shared
ownership scheme.
(Mr Hadden) No. The intention of the Challenge Fund
is to get in proposals from housing associations working in conjunction
with others, so that we can then sift through those proposals
and go for the ones that we think best meet the needs that we
identify alongside these other bodies like the NHS, local authorities
and other regional bodies.
377. So you are not taking many plaudits, you
are just saying to them, "Go away and think about it and,
if you come up with some good ideas, we will look at them"?
(Mr Hadden) Correct, we will look at them.
(Dr Perry) The Challenge Fund, by definition, was
challenging the housing associations and their private development
partners to come up with ideas that would give us the maximum
amount of output for the resource that we had. It might have sounded
as if we were trying to dodge the question on house prices but,
quite honestly, whether or not land has come into the equation
free or at a discounted price from a local authority or a public
body and whether or not there are resources coming in from housing
associations' reserves all affect the price which a purchaser
has to pay and the exact—
378. We understand that but what we are saying
is, what are the sort of targets that you are aiming at when you
are judging these bids? What are you going to be looking for when
you think someone has succeeded in putting in a good bid? What
is the sort of price we are talking about?
(Mr Hadden) The targets are high level ones. We are
expected to produce over 4,000—
379. Everyone has high level targets. Let us
just have the level rather than the height.
(Mr Hadden) We do not have them. It is not part of
the Challenge Fund, as has been explained. We have invited proposals.
We are testing new markets. We want to see what good ideas are
out there and we will be putting together a package to take to
ministers and officials before any announcements are made on the
projects.
(Dr Perry) To try and be helpful, Chairman, if you
took a nurse or a teacher on about £20,000 a year and took
a normal multiplier, maybe three times salary for mortgage, and
then talk about a 50 per cent equity share/50 per cent paying
rent, then you are talking about a house which would have a headline
price of about £100,000 which is about what it costs to provide
a house for a housing association in London at the moment.
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