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

Examination of Witnesses(Questions 360-379)



  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.


  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.


  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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