Examination of Witnesses (Questions 120-139)
MR BRIAN SALMON, MR ALISTAIR CHANT, MR MARTIN JEWELL AND MR PETER COBB
TUESDAY 25 JUNE 2002
120. Is an adequate definition being used by any other housing authority or planning authority?
(Mr Jewell) A lot of them use quite convoluted definitions. Most of them are based around those three. The issue is not so much the definition but as to how that definition is put into practice when we are seeking to negotiate primarily the Section 106 agreements. The examples we have are manifold. The local plans very often say the right words in the context of PPG guidance and circular guidance. When you come to negotiate a Section 106 agreement, then you are constrained by the way that authority specifically operates. They may have a cartel of housing associations. You only can operate with one. They may and very often do put a higher specification then you would be providing for your own customers. Furthermore, they will insist on a particular mix of units to be provided and also a space standard and a higher space standard often than we would be providing in the marketplace. All of those constraints operate to make life difficult in terms of the progressive.
121. What does that say, more about the local authority or more about the buildings that you are putting up?
(Mr Cobb) If you take the space standards of authorities, which we can name or provide in writing later, they are contrary to the SDS, which is the standards set by the housing corporation, then I think that we, as private sector, can stand back from that and say that the public sector cannot even get its act together. So, to see whether or not that is compatible with private sector development perhaps is not the issue.
Sir Paul Beresford
122. Would it be easier if there was more subsidising of people rather than bricks and mortar? People and their circumstances change; bricks and mortar stay the same.
(Mr Jewell) I am not sure of the mechanism that would be
123. It is a very big issue, is it not? I understand the argument that people have moved towards housing benefit and away from subsidising the bricks and mortar, but it does seem to me that that is a very big issue which perhaps we should not pursue much further this morning. Do you want to comment?
(Mr Jewell) Simply that this used to happen way back in historic times where education authorities could providing housing for their staff.
Mrs Dunwoody: It is called tied housing.
Sir Paul Beresford: I was not meaning that.
124. Coming back to the planning system which you made comments about, what do you think in particular we could do to improve delivery of affordable housing by changes to the planning system? Do you think there is anything in the Green Paper that would assist in that?
(Mr Jewell) Not particularly, no. I do not think it goes far enough. In terms of delivery of affordable housing, I think there are some key elements. One is that I think there needs to be a recognition of the standards to be provided. The housing corporation sets them all out; they could equally well be mandatory on the delivery for affordable housing and standardised across all authorities. Secondly, the issue is the supply of land for housing, that which can be brought forward, related back to all the debate in the south-east about regional planning guidance, the Crowe Report and the Government's response to that immediately dampening down the supply in the face of a very strong demand. Obviously the more we can produce when the household sizes are decreasing; the demand for new dwellings is not so much population led as household division led. We need that response. I think there needs to be standardisation of Section 106 agreements. Every one is different and it virtually has no need to be different. There could be common clauses, model clauses, laid out. I think we need a funding regime which goes hand-in-hand with the planning process. Again, I would refer back to the Mayor's plan and the housing commission that he held where, all the way through, he is suggesting that the proportion of affordable housing and its funding go hand-in-hand.
125. As a follow up, it seems to me that you have virtually blamed everybody: you have blamed the Government, you have blamed the local authority, you have blamed the housing corporation and you have blamed people who sell land. Is there any one thing that you, as part of an industry, think you could do to improve the supply of affordable housing that is not somebody else's fault?
(Mr Chant) We can increase the supply of affordable housing by increasing the supply of housing per se. If the actual process of assembling, that is purchasing land either by acquisition, CPI or whatever through generation can be brought forward through the planning process
126. It is someone else's fault again, is it not?
(Mr Chant) We do not control the planning process; we can only respond to the planning process.
127. So there is nothing you can do without somebody else changing their way of doing things that would help? So you are all doing everything perfectly in the current system?
(Mr Chant) We are responding to the system.
128. You could not do anything better as an industry?
(Mr Jewell) I actually spent 32 years in local government planning, so I have a fair amount of experience of it on both sides. Of course there are things that the industry can do to get its act together in terms of the way that it can respond to local requirements in terms of the policies set out in each local plan and of course we can get our act together in responding speedily to requests and fighting the need. Yes, there are things that we can do. We do not recognise that it is anyone's particular fault. It is a working together to ensure delivery but there is a lot being asked of us.
129. Could you not recognise that 35 per cent at least of affordable housing would be a reasonable proposal?
(Mr Chant) I think the difficulty with percentages is that it is very difficult to say "yes" or "no" because the issues we face at the grass roots which differs from authority to authority is that it is all about funding. If you ask for 35 per cent affordable housing and there is the adequate funding to make it work, yes, 35 per cent. If it is 35 per cent and there is no funding for it, it cannot work.
130. So it is the same argument with 50 per cent?
(Mr Chant) It is the same argument with 50 per cent.
131. Let us be clear. If you have a particular site, you think that 50 per cent could go to affordable housing if the funding was there; is that right?
(Mr Salmon) Yes.
132. Then the question is, is the funding to come from the public, from the other 50 per cent, or is it to come from subsidy coming from the housing corporation or somebody else? Is that really the issue?
(Mr Salmon) It is part and part. If I could just give an indication of an example. Imperial Wharf which is providing 50 per cent social housing. One of the criteria there is that the TCI grant there is 130 per cent, which is a very, very high level of grant, but we are also-cross-subsidising from the private sector in order to finance it. The balance there, against the amount we paid for the land, enabled us to do it.
133. In terms of actually selling the private part of it, it does not really matter what the percentage is, it is purely the funding that is crucial.
(Mr Salmon) Not purely, no.
(Mr Chant) It is one of the underlying factors of the percentage and, far too often, negotiations start about proportions of affordable housing for a planning process, should it be 25, 30, 40 or 50 per cent, without clarity of the tenure and how that tenure is to be funded.
(Mr Cobb) The whole of the argument is really a fiscal one. It is all about having sufficient incentive in the process for people to actually enter into it, to take risk, because there is a significant risk in embarking on a development process when you do not have a planning permission and you are exposed to all the other constraints to development. You have to make it viable for people to actually enter into that risk environment, you have to make the rewards sufficient and you have to make the whole of the economical process balance so that the outputs are, at the end of the day, somewhat less than the inputs, otherwise there is no point in doing it.
134. If house building is only to be a matter of fiscal incentives, are you saying then that you would rather do without any planning obligations?
(Mr Cobb) No, not fiscal incentives. House building or any other commercial operation exists because of a financial process, does it not? House builders do not get up in the morning to go and make huge losses. They are actually doing it because they have a shareholder base or are expecting to get some reward for having invested in the business. If the house builder is not making a profit from his process, then he can go away and shell peas, grow daffodils or something. He will not actually build houses.
135. He will not make a profit out of either of those!
(Mr Cobb) He might be happier!
136. What do you say about planning obligation negotiations? Are you saying they are unreasonable? I know that you would rather not need to have them, but are you saying they are unreasonable, unrealistic or what?
(Mr Chant) At times, they do not reflect what is required to make the scheme work. First of all, you need to have a clear understanding; there needs to be clear agreement with no possible avenues of change or variation. So, from day one, both the authority, the community, the developer and everyone knows what they are getting out of it, what the benefit of the development is. As long as those bases are viable, there will be development. If they are unviable requests, there will not be development. As long as they all agree from day one and they can continue throughout the process, it should work. The problem we face is that things change and there are policies which are not clear, policies which overlap, and other responsibilities such as funding and housing corporation investment and timing and issues like that which are frustrating. There should be clear guidance and clear delivery strategies.
137. Can I ask you about density. PPG3 clearly recommended that one way of providing greater numbers of housing units is to increase density. Bearing in mind that the most desirable properties, certainly in London, tend to be Victorian and Georgian traditional terracings, why are you house builders still building at around 25 units a hectare when you could go up to 50?
(Mr Cobb) That is going to be a very difficult one for either myself or my colleagues to answer because I would say that overwhelmingly all our developments are in excess of the PPG3 guidelines at 50 dwellings per hectare. So, the very nature of where we are developing, particularly in brownfieldand again both of us are brownfield developers; we are not greenfield developers; we are urban developersis that we are trying to optimise densities. The only time that we fail to achieve PPG3 densities is when there is a local political environment which is blatantly a nimbiest type of movement where they are not interested in Central Government dictates, they have their own ideas about the rural arcadia of Outer Havering or somewhere like that and they fundamentally believe that they should be pepper-potting nasty, little detached houses all over the place. It is very difficult for me to answer that accusation because we do not do it. I think the problem is that when you are aggregating densities, there is still a lot of greenfield development that does take place. By and large, people's perception of their castle is going to be a detached house in its own grounds and that consumes considerably more land than do terraces, townhousing, apartment living and high-rise development, and I think that is dragging down the significant contribution that brownland urban development is already making.
138. So what you are trying to tell us is that it is not the fault of the builders, it is the fault of local authorities, planning authorities succumbing to
(Mr Jewell) No, that is not the point. I think it is the audience you have here who, because we are 95/97 per cent brownfield developers and
139. What you are telling us is that you are perfect again and that is it other builders who are rotten; is that right?
(Mr Jewell) No because, if you look at it in the wider sphere, there is a public demand, as Mr Cobb indicated, that has not yet caught up with, in many cases, an alternative way of living, an urban way of living. There is still the suburban ideal and that has rested long in the public's mind. All of us have to respond to a market. We respond to our own market. The two which you happen to have here today are not in that market.
(Mr Salmon) Berkeley were in that market.
(Mr Jewell) There are others who are working towards that market.