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

Examination of Witness(Questions 480-499)



  480. If something has gone wrong . . .
  (Lord Rooker) Birmingham is a local authority. It was nothing to do with the Housing Corporation. It was a local authority initiative.

  481. Would it not be helpful if there were a set of rules? It appears that everyone involved in shared ownership feels that they have to re-invent the wheel every time the scheme comes up.
  (Lord Rooker) That is unfortunate. I cannot for the life of me see why there cannot be model arrangements and model contracts. Going back to the analogy that I think was used earlier regarding factories, you have a platform for the basic product and you add a little bit to make it different. The basic platform is the same and that reduces costs. That can equally be the same in contracts for shared ownership for the legal profession as it is for the manufacturing industry.

  482. The Affordable Housing Unit told us that they were still considering ways of getting a better model. Could you give them some encouragement to get a move on with that?
  (Lord Rooker) Yes, I shall do that.

Mr Bill O'Brien

  483. The Comprehensive Spending Review announced that the Government intend to put the inspection of social housing of housing associations and of local authorities in the hands of the Audit Commission. However, the Housing Corporation will be the regulator. Are we duplicating services?
  (Lord Rooker) No. Regulation and inspection are entirely different functions.

  484. So far they have come under one head and it has worked.
  (Lord Rooker) There are different functions carried out by different people. Transferring the small number of people doing inspection from the Housing Corporation to the Audit Commission is not duplication at all. The regulation will continue as a separate function.

  485. You will transfer a few people over. There will be a chief executive, administrators for the inspectors and there will still be the chief executive and administrators for the Housing Corporation. Is that not duplication? You have just said to the Chairman that you want to reduce costs, but will that not increase costs?
  (Lord Rooker) I do not accept that it is duplication in the way that you put it. Perhaps we have not explained it sufficiently. The Comprehensive Spending Review announced that there would be a single inspectorate; it did not make any announcement about where it would go. That announcement was made only on 30 September, that it would go to the Audit Commission. Regulation and corporate governance of housing associations will remain with the Housing Corporation and the inspectors—in that sense the same people—will be reporting on the inspection to the corporate governance regulators in the Housing Corporation in the same way as they did before. Therefore, it is not a mater of duplication.

  486. Why did the Housing Corporation lose the inspectors' responsibilities?
  (Lord Rooker) Because we took a decision to have a single housing inspectorate. Therefore, the issue was whether to create a brand new quango, a single housing inspectorate, take it away from the Audit Commission doing it for local government and the Housing Corporation doing it for the voluntary sector, if I can put it that way, and set up a brand new organisation. That was one alternative. The other alternatives were obvious: to put it all with the Housing Corporation or with the Audit Commission. We had to take a view on which was the best way. We listened and had discussions with the Audit Commission and the Housing Corporation about it. There were no turf wars about it. Both organisations have different functions in respect of their other activities. It had to go somewhere once we decided on a single housing inspectorate. We took an early view not to set up a brand new organisation. Therefore, it was a matter of whether it sat with one or the other. The Housing Corporation was younger in the day in terms of the inspection than the Audit Commission. I do not know the numbers of people involved in the Audit Commission. In the Housing Corporation I think there are some 40 odd people. Therefore, it had to sit with one of them. It was not a matter of one organisation failing. That was not the issue. The issue was to get a single housing inspectorate.

  487. There is the matter of intellectual importance. There is no appeal from the inspectors.
  (Lord Rooker) Why should there be? Why should the local authorities have the right to appeal against the Audit Commission? They are auditors.

  Mr Bill O'Brien: Not according to the information that we have received.

Alistair Burt

  488. I turn to a non-contentious area.
  (Lord Rooker) Less contentious than the road we were about to go down!

  489. "Right to buy" is back on the political agenda in a way in which it has not been for some years. The Government have said that they want to review the problem of abuse of right to buy but so far have not published any ideas on how to do that. Can you tell us how extensive you believe the abuse is of the current "right to buy" schemes?
  (Lord Rooker) I shall have to fall back on saying that we are looking at the issue. At the present time we are having some research carried out, which will not be available to Ministers until November or December. I imagine that it will be when John comes back to the House and announces the Community Plan and he will announce what we are proposing to do. I say "what we are proposing to do" rather than whether we are proposing anything at all. In the evidence that you have already published there is evidence about the rules for "right to buy", good though they may be, for good reasons. Introducing the right to buy is probably the largest single transfer of wealth that has ever occurred in this country and before it was a national policy it was done first in Birmingham. Therefore, we had some early experience of it. For example, the announcement in the King's note about the Ocean estate in your evidence, completely put to the sword such schemes because the right to buy would have taken up all the money. There are of course financial manipulators—I suppose some might call them entrepreneurs—involved in the process of encouraging people to have what might be called deferred sales in some areas, where people buy but not with a view to living there. The idea of the "right to buy" schemes was so that the tenant could have the right to buy, and not necessarily for the buyer to become peripatetic or a landlord. On the other hand, one has only to look at the legislation for the right to buy, much of which is primary legislation. In order to achieve any change in primary legislation one has to say what one intends to do and one needs a Bill to go through the House. That can take the best part of two to three years. By the way we have no intention of stopping the right to buy. I want to put that on the record. We have no intention of abandoning the right to buy as a principle. If one wanted to be really radical, if you consider the many changes that would be required to primary legislation because of people using their lawful rights, including the manipulators, there may not be anything to buy at the end if one is not careful. Some action can be taken by secondary legislation and we are considering some of these options at the present time. We have to make a judgment on this, that in some hot spot areas the manipulation of the right to buy is causing a serious problem and in others it is not. Therefore, one has to take that view. There are different rules between rural and urban areas on right to buy as it exists today. We are looking at a range of options and I am not able to discuss them with you this morning. We have not reached any decisions at all, but we shall reach a point where it is likely, by the publication of the Communities Plan, that we will say whether we need a tweak here or there, either on the financial basis or on a geographical basis. At the moment we have not made any decisions.

  490. I appreciate your clear statement that you do not intend to abandon the principle of "right to buy". Would you be tempted in any way to extend it to housing associations, particularly if you could devise a mechanism of putting the money from the sale of properties back into new ones?
  (Lord Rooker) No. I go back to something I said in answer to an earlier question. There has been a fundamental misunderstanding of the structure of the voluntary sector of housing associations. One of the reasons why regulation and corporate governance is important to just over 2,500 housing associations is that they have borrowed some £24 billion of private money—not public money but private money. We want the lenders to carry on lending. Indeed, one of the discussions that I had before we made the decision about the single housing inspectorate was with the lenders to assure them that the corporate governance of regulation of managers would remain the same, so that their lenders would have comfort in a system with which they are very comfortable. To say to a group of organisations that have borrowed so much money—some £23 billion—"By the way, with regard to the asset on which your lenders have lent and on which they receive an income stream back, we are going to force you to sell at less than market prices"—that is the assumption—"with possible discounts". You only have to say that to show what a nonsense it would be to the private lenders. That is a fundamental misunderstanding that this was not like council housing. It was not funded in the same way. If one wants to scare off private lenders into the voluntary sector you start talking about selling off their assets cheaper than they are. Therefore the answer to your question is no.

Mr David Clelland

  491. I appreciate the situation varies in different locations. Should it be left to local authorities to decide whether to exercise the right to buy policy or not?
  (Lord Rooker) No. I think the Government would be fundamentally opposed to that. That would be a return to pre-1980 when it was up to local authorities. As I have already said, Birmingham was selling council houses before the right to buy scheme started. It was up to local authorities whether they sold their assets or not. Sometimes there was the approach of the public landlord knows best, whatever the situation and they would not sell, following decisions taken by councillors, all of whom were owner-occupiers, I might add.

  492. What about the Government having a "we know best" approach and why is all the expertise vested in your department?
  (Lord Rooker) I do not believe that all the expertise is vested in our department. Whitehall does not necessarily know best on everything. The argument is that that would be a return to pre-1980 and in effect that would cause a blanket removal of the right to buy. That is something that we are not prepared to do.

  493. Why would it cause an abandonment of the right to buy? You said that Birmingham was already doing it.
  (Lord Rooker) It would not in some local authorities. It could be done on reasons not related to housing need. You would have to set up a whole range of issues. If you give local authorities choice, as we wanted to, there would be less ring-fencing of funds and there would be less argument about the policy. It would be put back to local government and would be fraught with difficulties. That would be turning the clock back to pre-1980. That is something that we have said we would not do.


  494. What about considering replacing the right to buy with the right to acquire? Quite a lot of people in the South East of England would like to take the money and go to other parts of the country where they could buy outright one house and in some cases they could buy half a dozen. Would that encourage some people who live in under-occupied dwellings in council properties in the South East to move to other parts of the country?
  (Lord Rooker) There are schemes now that are not very well advertised. I accept that.

  495. Very few people use them.
  (Lord Rooker) I know. When I went to the launch of a project in the summer I met people who have gone from London boroughs to live in the Midlands and the North. They said, "I did not know that this part of England existed". A great problem is that everyone thinks that the world is like the place where they live. Because of the concentration on this capital city they do not realise that the rest of the country is a lot better.

  496. If you offered people the right to acquire they may at least go to have a look.
  (Lord Rooker) People are encouraged to have a look, even with rented properties. It does not necessarily have to be done through the right to acquire. We do not have enough mobility and people in under-occupied, rented, public sector dwellings in the South East are not forced out due to under-occupation. The rules in the tenancy agreement do not operate in that sense so do not encourage them to do that. I do not want to throw in a red herring, but it may be that changes in housing benefit will be a catalyst for people in some cases to say, "Yes, I could take a smaller dwelling and keep the same amount of housing benefit if it was done on a flat rate basis". That would enable people to move to smaller dwellings.

Mr Clive Betts

  497. The Government expressed concern about the complications and the slowness of Section 106 negotiations and then proposed that we move to a tariff system. That idea was then dropped and we are again back to the Section 106 system. Are there any proposals to try to improve the performance of the 106 negotiations?
  (Lord Rooker) We have to do that. Having dropped the idea of tariffs it is incumbent upon us to put some flesh on 106. We dropped tariffs for a variety of reasons. Some were technical reasons as well as practical reasons. We think that we can get what we want out of a re-worked 106 with better guidance issued on 106 which we hope to do before the turn of the year or it may be early next year. These things never happen as quickly as Ministers want. We shall have to consult on it anyway. We want to encourage more councils to operate 106. We have to issue another circular and some guidance on it, as my officials said to you last week. We have to make Section 106 a reality, having dropped the idea of tariffs. We have to make it more transparent, so that people do not think that businesses have bought planning permission with deals behind closed doors and things like that. It has to be more transparent. From the developer's point of view, the advantage of tariffs was that it would be more predictable, but somehow we have to put into the advice on operating Section 106 something that is more predictable for developers so that we do not have protracted negotiations. Sometimes it takes longer to negotiate the Section 106 agreement than the actual planning permission for the development. That is an absolute nonsense.

  498. One of the issues raised with us is the ability of local authorities to negotiate on a site-by-site basis rather than on a local authority-wide basis.
  (Lord Rooker) I think there should be more flexibility. At the moment Section 106 has to be tied or connected to the actual site or development, which is very restrictive. It depends on the geographical location and what is available in an area. Some developers baulk at that and just pay over a sum of money to the authority to spend elsewhere. There are not enough authorities using Section 106. The other thing is that it is sometimes only on big schemes where 106 is used. One advantage of the tariffs would have been that we could apply tariffs to more developments than 106 has traditionally been applied to. Therefore, with our new guidance we had to ensure that Section 106 applies to more developments than it has done hitherto.

  499. One issue raised in the planning Green Paper was that of contributions to affordable homes from non-residential developments?
  (Lord Rooker) Yes.

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