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

Examination of Witnesses(Questions 380-399)



  380. And then you would be adding on service charges as well, so you are beginning to ask people to part with a very significant proportion of their income for housing, are you not?
  (Dr Perry) I think it is inevitable, certainly in London and the South East, that people are going to pay a higher proportion of their income in housing costs than they would in other parts of the country. Social rents less so, but certainly for any form of owner occupation, it will be relatively high.
  (Mr Hadden) And this is the reason why we have brought in the intermediate rent aspect of the programme where we are targeting rents at around 80 per cent of market rents for a lower level of social housing grant, so therefore trying to bridge the gap between ownership and social renting.

Mr O'Brien

  381. You have started allocated housing funds on the basis of priorities set by regional organisations rather than basic indicators of housing need. How does this work?
  (Dr Perry) We have regional housing statements. Our colleagues in our field offices around the country work with the Government offices, with the regional assemblies and with the regional development agencies to try and sort out housing need in that area in relation to the economic strategy and other strategies, and then they come up with a series of requirements and then we do our best to fund them to the extent that we have the resources. So, the thing is built up from a regional base.

  382. As a northern MP, I am suspicious that you will be transferring funds from the North to the South. Is this right?
  (Dr Perry) Not transferring. There was controversy last year when we did, midway through the year at ministerial request, transfer £15 million from northern allocations down to London and the South East, but—

  383. It is a fact then.
  (Dr Perry) We restored it fully this year.

  384. You restored it fully?
  (Dr Perry) Yes.

  385. So what about the pressure on the South East then? Does that not impact upon the resources?
  (Dr Perry) That was a temporary transfer that we made in order to try and stimulate more starts in the South East. It succeeded in doing that. So, for 2003-04, we have been able to completely restore the allocations to the northern areas.

  386. Any pressures from the Government to transfer resources from the North to the South?
  (Dr Perry) We work very closely with the ODPM and—

  387. Any pressure from the Government to transfer resources from the North to the South? Was that a "yes"?
  (Dr Perry) Ye . . .


  388. We need to get something on the record. It is quite difficult for the Shorthand Writer to get down that sort of comment.
  (Dr Perry) The short answer is "yes".

Mr O'Brien

  389. So what is the percentage then? What are we losing from the North?
  (Dr Perry) You are not losing anything at the moment.

  390. We are if you are transferring resources!
  (Dr Perry) There was an event last year which we have restored and the Challenge Fund, which is top-sliced from the whole programme, relates to London and the South East, but the rest of the £1 billion is being allocated in terms of regional strategies.

Mr Clelland

  391. When you say that there was an event last year which has been restored and you referred to "fully restored" earlier, do you mean that nothing has been lost or have we just gone back to where we were two years ago?
  (Dr Perry) That is correct.

  392. So we have lost a year in that sense. The transfer that you discussed earlier did take place and that has now been restored, we have just got back to where we were before.
  (Dr Perry) That is right. Even that transfer was actually quite a technical thing, it was called cash backing. It was not an actual transfer of allocations, it was a transfer of something called cash backing.

  393. Available funds for the North were diminished?
  (Dr Perry) Temporarily.


  394. Let us put it into units. Actually, the number of starts in the North was reduced so that more starts could be made in the South; is that right?
  (Mr Hadden) Not necessarily.
  (Dr Perry) No. That is why I said that it was quite a highly technical thing. It did cause some political controversy, but it did not actually affect the allocations to the North. It was about the amount of the programme which had cash backing in a particular year.

Mr Betts

  395. It seems to me that there are two main ways of funding social housing: one is the spin-off from planning agreements and the other is the funding from yourselves. Are those two processes really brought together in any meaningful way to provide a coherent approach to new social housing in the country?
  (Dr Perry) Can I say that there are other ways of funding social housing because there is the local authority social housing grant which is quite substantial and also it is not often noticed that housing associations build about 4,000 homes a year entirely from their own resources without subsidy. So, if you take those three things together, that adds to the pot.


  396. If you got to grips with the housing associations, you could squeeze them to use a lot more of their funds to actually build themselves, could you not? You are fairly generous at letting them carry pretty large funds, are you not?
  (Dr Perry) That could be another debate, Chairman. We do not think that the sector as a whole has a level of reserves which is anything more than prudent. The planning system, section 106—

Mr Betts

  397. We have different sources of funding. Is there really any overview taken? You will find that the spin-off from planning agreements is generally that perhaps a large one provides more units in (a) where there is development taking place and (b) whether that development will achieve a high value. Therefore, the process might very well restrict the number of units that are being built in poorer areas. Have you balanced that and given greater weight to the poorer areas when you come to do your allocations and looking at local authority allocations as well?
  (Mr Hadden) No, that is not a consideration that we take into account. The allocations for each of the regions are set by reference to the housing need index.

  398. You take no account of what has been produced from planning agreements?
  (Mr Hadden) Not in setting the allocation in the first place, no.

  399. That is simply seen as a bonus and not part of any overall strategy?
  (Mr Hadden) Yes—

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