Examination of Witness(Questions 480-499)
THE RT
HON LORD
ROOKER
WEDNESDAY 30 OCTOBER 2002
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.
Chairman
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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