Examination of Witnesses (Questions 1-19)
MR NEIL SINDEN, MR HENRY OLIVER AND WILL HUTTON
WEDNESDAY 12 JUNE 2002
Chairman
1. Can I welcome you to the first session of the Committee's inquiry into affordable housing. Could I ask you to identify yourselves for the record, please?
(Mr Sinden) I am Neil Sinden. I am Assistant Director, Policy, for the CPRE, the Council for Protection of Rural England.
(Mr Oliver) I am Henry Oliver, Head of Planning and Local Government at the Council for Protection of Rural England.
2. I am not quite sure what has happened to Mr Hutton. I understand there was a family bereavement, so I am not sure whether he is going to be here or not. If he is, he will join you as soon as he can. Do you want to say anything by way of introduction?
(Mr Sinden) Only to say that we very much welcome this inquiry. We believe the issue of affordable housing is perhaps one of the most significant housing issues we face. But we would emphasise that this issue has important environmental dimensions as well as social dimensions in terms of the potential for added pressure for the release of greenfield land which could undermine efforts to promote the urban renaissance and do little to meet identified social housing needs. We believe the Government has made a good start in getting behind the idea of an urban renaissance, with Planning Policy Guidance note 3, but we do need much more by way of implementation of those policies, matching of fiscal measures with planning policy objectives, and also securing significantly more resources for social housing provision.
Mr Betts
3. Can we begin by getting the numbers sorted out. Is it your view that essentially you require a hundred thousand affordable new homes each year in this country? Is that a rough estimate? Would you agree with that figure and how it is calculated?
(Mr Sinden) Eighty-three thousand, we have heard previously, per annum; a hundred thousand per annum. I think that these figures are very much in the ball-park of what is needed in terms of affordable housing. We have no reason to question those estimates. We would point out—and I am sure the Committee may already be aware—that we are already at the moment under-providing by at least 50 per cent on those figures. We would argue that we have a significant over-supply of market housing which is not actually meeting the needs represented in the figure that you have just quoted. The other thing I would say is that it is interesting and informative to put that figure against the overall level of empty housing in England (800,000 empty homes across the country) and the Urban Task Force's own estimate of the amount of greenfield land that is already in the pipeline for housing needs, which would provide something like 658,000 new houses. There is a serious issue, but we believe that there is adequate land in the pipeline and there is a serious problem in terms of the under use of existing housing.
Chairman
4. Can I welcome Mr Hutton to the Committee. Could you just identify yourself for the record, please?
(Mr Hutton) I am Will Hutton. I am Chief Executive of The Work Foundation.
Mr Betts
5. I have just asked whether the figure of a hundred thousand new affordable homes each year was a ball-park figure that you could associate with.
(Mr Hutton) Yes.
6. To go back to the issue of land then, availability of land has been mentioned, but can we achieve that sort of figure without building on greenfield sites?
(Mr Sinden) I think it would be feasible; it is possible. The evidence suggests that there is adequate brownfield land out there to meet that kind of level of need, but we need a stronger political will, better resourcing and better integration of housing investment strategies with spacial planning strategies in order to achieve that. We would not, however, argue that no greenfield land need be taken to meet those needs. I think we need to address this issue on a case by case basis according to local circumstances. Some greenfield land will inevitably be necessary to meet a proportion of that level of need, but we would argue that much, much more can be done to make better use of existing brownfield opportunities, for example, through stronger promotion of higher density standards consistent with high quality housing development. The latest figures from the Government indicate that we are still only building at around 25 dwellings per hectare, way below the preferred range set out in PPG3 of between 30 and 50 dwellings per hectare. If we were to move up to an average of 40 dwellings per hectare we could achieve 60 per cent more housing on the same area of land. I think that just gives an indication of our argument that this is not so much a land supply issue but an issue of incentives to unlock brownfield potential.
7. Mr Hutton, would you basically agree with that? Do you think the Government's target therefore, of 40 per cent of housing on greenfield sites and 60 per cent on brownfield sites, is a little ambitious?
(Mr Hutton) As a framework target I have no fundamental disagreement with it. I think the biases are right. I think the question of releasing and building on brownfield sites is extraordinarily complex, however, because it demands just a different cultural approach to what occupiers of public and private and forms of social housing think is acceptable densities. Frequently these brownfield sites have got indifferent transport links and sometimes they are not even where people want to live. It does require an integration of approach towards economic development, a view of urban living, a transport infrastructure that may be outside the remit of this Committee, but it is obviously one of the main obstacles of developing brownfield sites. If you have that right, the number could be, as you suggest, even higher.
8. In terms of the greenbelt, does it have to be absolutely rigidly applied or, in terms of affordable housing, could you not have a sort of situation where you might specifically release a very small amount of land in the greenbelt specifically for affordable housing, say at the end of a transport link? That might be a reasonable way forward to try to create more affordable housing in attractive areas?
(Mr Hutton) I would accept that only if it were part of a larger strategy. I am uneasy about piecemeal relaxation of greenbelt restrictions, actually. But I could imagine how you might want to do that if you felt that the rest of the piece was making sense. But if the rest of the piece is not making sense, what you are doing is that you are just inching the door open a bit and because these are frequently very desirable places to develop you will bias developers in that direction. Be wary about going down that road.
Chairman
9. You could argue that really the greenbelt is just a kind of middle-class perk, is it not, to keep working-class people out of the countryside. Farmers have wrecked it and why should he not let people who want affordable housing move into that sort of area. They can have nice gardens within in and it is what people want.
(Mr Hutton) That was not George Orwell's view.
10. You could argue that that was 50 years ago and that 50 years ago towns were unpleasant places and you needed to give people the opportunity to walk out into countryside fairly quickly. With modern transport people could travel a bit further.
(Mr Hutton) You start with affordable housing and you quickly find yourself in big systemic questions about land use in the round, urban life in the round. My own view is that British cities sprawl and that it is a small island and what we should be going for—and here I very much buy into the Urban Task Force and one of Lord Roger's recommendations (and, indeed, the Government's)—is high density urban living.
Christine Russell
11. Mr Sinden, I think you told us this morning that you consider the land supply is adequate, but what about the price of that land which can be prohibitively expensive, not only in the south-east but in other parts of the country too. Is it not in fact the price of the land that is reducing the ability for developers to build affordable housing?
(Mr Sinden) This comes to the heart of the issue and it is a complex aspect. We would argue—perhaps referring back to the previous questions and answers—that even releasing greenbelt land for development on a massive scale that would be needed (arguably, let us say) to meet estimates of housing needs would only have a minor impact on house prices. The evidence, from research conducted for the Government, suggests that massive greenfield land release on a politically unacceptable scale in the south-east would only reduce prices by a few per cent. It would do nothing to bring market housing within the reach of people on moderate incomes. By releasing greenbelt land we would argue that we are not actually tackling the problem. We are not bringing market housing down to a level at which people on moderate incomes can afford, but, more importantly perhaps than that, we are not providing social housing for people who cannot compete on the open market. That is the first point we would make. We think that the relationship between house prices and land prices is not a clear one. We would argue that house prices themselves actually affect the price that is paid for the land and not the other way around. So that land availability is not the most important factor in terms of determining land prices. The issue is a much more complex one than that. We believe that house prices are much more sensitive to macro-economic factors such as interest rates, the affordability of mortgage finance and so on, than the availability of land per se.
(Mr Oliver) I think we have made the point that perhaps the average key worker—if there is such a person—could afford a mortgage of perhaps £70,000 in the south-east and the average house price in London and the south-east at the moment is something like £170,000. You are talking about a fairly large reduction in price and whether it is likely that that would happen from land release is, I think, very, very doubtful. It is also worth pointing out, particularly in relation to rural areas—but it also applies to urban areas—that there does need to be much stronger policy for local authorities to be able to secure that element of affordable housing. That land is generally allocated in plans, it is just that it often ends up being built as open market housing. The affordable housing is not built and you have over supplied market housing. You also need greater use of the existing tools by local authorities, because I think it is fair to say that they do not all use the resources that they have and the tools that they have, and you need the money to unlock the land. As has already been said, it is a very complex issue and it requires a number of measures.
12. The CPRE would support new legislation which would give additional powers to local planning authorities to insist that a percentage—what percentage do you think?
(Mr Oliver) For example, we would like to see the idea of some form of specific site designation in planning either for social housing or for a mix of housing, what the Countryside Agency refers to as "sites for social diversity". We would like to see that looked at. There are complications, there are difficulties, but it needs to be examined. We would also like to see the threshold in terms of site size—which local authorities can specify a proportion of social housing on—brought down both in rural areas and in urban areas.
13. Can I ask Will Hutton about the whole issue of land hoarding where a developer has actually got the outline consent but still does not build homes on the site. How great a problem is that, and what could be done to reduce the amount of land hoarding?
(Mr Hutton) I do not have the most recent figures, but as I understand it—and you might have the numbers at hand—there is something approaching 80,000 units which have planning permission but which have not been built on. I think the figure is in that order of magnitude. Plainly with house prices running at this kind of rate of increase and the affordability issue in parts of the south east beginning to be a crisis, if that is what you are calling hoarding, then it is a problem. It is a big problem. What can be done? You hear of a paradox where the unintended consequences of good measures can be bad. I think the unintended consequence of sections one and six measures is paradoxically to kind of provide incentive to hoarding because developers say "We now have to make our rates of return off a smaller proportion of any site that we acquire" and they are incentivised actually to hoard land thereby in order to get themselves the returns they want off a smaller proportion of the overall site. What could be done? Well, here again the Committee has I think a big choice to make. It depends how much you want to address systemically what is going on or to drive deeper into a kind of micro-regulation of the land and property market because plainly one of the measures that would be available to the authorities is to withdraw permissions—which they already do actually—but to tighten the withdrawal period if land is not built on.
14. So you would support the recommendation in the Planning Green Paper to reduce the length of time that you can hold on to a planning consent. You have to build within two years instead of five years.
(Mr Hutton) Yes, I do in the round support that.
Chairman
15. They would, in fact, be able to apply again, would they not? If it was suitable for housing once, it would almost certainly be suitable for housing again.
(Mr Hutton) Yes, but you would always run the risk of not getting it, or another group getting it.
Ms King
16. Given that it costs more to develop brownfield sites and therefore you get fewer affordable houses, does that mean that brownfield development requires greater Government subsidy?
(Mr Sinden) Quite possibly. We would not accept the premiss of that question necessarily. There may well be problems. Let us not get confused by the term "brownfield"; brownfield can refer to heavily derelict or contaminated land, but it can also refer to underused land or empty buildings or redundant buildings. There need not necessarily be an extra cost or initial cost in unlocking some of the brownfield land or previously used land and building. Clearly there are problems with large areas of derelict land which need remedial treatment before they can be brought forward for development and that could well justify additional public expenditure to unlock those sites and bring them forward. Nevertheless, we would also emphasise that within the current framework of planning policies, as set out in PPG3, a lot more can and should be being done by local planning authorities, by Government and by regional government to promote, for example, more effective urban capacity studies so that we have a better and clearer idea of the amount of potential that there is out there to use previously developed land before greenfield sites, and to control much more closely through phasing mechanisms the release of greenfield land so that we have developers incentivised to use brownfield first before greenfield.
17. On the subject of planning, do you think the current suggestions in the Planning Green Paper are going to speed up the system?
(Mr Sinden) We have a range of concerns about many aspects of the Planning Green Paper and we would not want to go into those in great detail here. We feel that at the development control level where planning applications are submitted and local planning authorities take decisions on those applications, a number of the proposals in the Green Paper could well help speed that process of decision making.
18. Will they deliver more affordable houses?
(Mr Sinden) They could well do. If you are talking about the proposals for a tariff system I will hand over to Henry Oliver who will give you our concerns about that.
(Mr Oliver) Is that what you would like an answer on?
19. I think we are coming on to tariffs at a later point, but basically I wanted to know if you think the new suggestions in the Planning Green Paper are going to increase the provision of affordable housing.
(Mr Sinden) In the Planning Green Paper taken as itself, we think that the policy proposals there would probably be neutral in terms of levels of provision. In relation to the planning obligations consultation process and the proposals for the new tariff based system which ostensibly ministers have said should enable local authorities to increase affordable housing within their areas, we have doubts about whether or not that will actually be achieved.
(Mr Oliver) If I might just add to that without dwelling on tariffs at this stage that there is an issue raised by a number of respondents—probably practically all respondents—to the Planning Green Paper of the skills and resources required in the planning system not just at local authority level but elsewhere. I think that is actually a key element of this debate. To be able to do a good urban capacity study, for example, is something that a lot of local authorities cannot achieve at the moment.
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