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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 709-vi House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENTAL AUDIT COMMITTEE
Housing: Building a sustainable future?
Wednesday 27 October 2004 SIR JOHN EGAN Evidence heard in Public Questions 581 - 700
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environmental Audit Committee on Wednesday 27 October 2004 Members present Mr Peter Ainsworth, in the Chair Mr Colin Challen Mr David Chaytor Sue Doughty Paul Flynn Mr Mark Francois Joan Walley ________________ Witnesses: Sir John Egan, Chairman, The Egan Review of Skills Task Force, examined. Q581 Chairman: Welcome, Sir John, and I am sorry that we have kept you waiting. We may be interrupted by a further vote in due course but we hope to make some progress before then. Thank you also for your memorandum. As you know, we are looking at the whole question of housing policy particularly in the light of the Sustainable Communities Plan and the Barker Review and we were very interested therefore in the findings of your report. Can you just tell us by way of introduction why your review and its report were thought to be necessary. Sir John Egan: I think there was a general feeling within the construction and house building community that there were not enough skills to allow the agenda to be delivered. The general view was that it was lack of town planners and things like this. We came to the conclusion that it was not lack of town planners which had created the appalling mess of the last 40 years, it was more to do with not town planning skills but general management skills of achieving some kind of objective. If the end point of the planning system had been just to create wealthy lawyers, then that is what it did, but nobody set out to do that. The planning system was there for another reason and that other reason was never made very clear. Q582 Chairman: To what extent did you set out your own remit and to what extent was it defined by the Office of the Deputy Prime Minister? Sir John Egan: This is the second report I have done for the Government and I have usually found it better to look around the problem and then choose, in a way, my own objectives. What I find is that you have to have a very clear goal if you are going to achieve anything at all and I wanted to make sure that the Government's goal in sustainable communities was correct. I wanted to know who should be trying to carry it out. I wanted to know what processes existed for carrying out the goal. Then I wanted to know what skills therefore were needed. So, I thought that if I just went straight to the skills part, I would not know what the context for the skills agenda was going to be. Therefore, I looked at it in a sort of process way of goal, who was involved, what the processes were and thus what skills were required. Q583 Chairman: So you delivered your own remit, so to speak. It was not one that was set out for you. Sir John Egan: I developed a wider remit. I think the only interesting thing for us is, as I said the first time I made a public speech on the issue, that it is not often that governments have any good ideas and it is not often that they have any very big ideas, but here they have both a very big and a very good idea in sustainable communities and we discovered that our evidence very clearly demonstrated that the Government were on the right track with their sustainable communities agenda and it was more or less the kind of community that people wanted for themselves. Q584 Chairman: Although you kind of invented your own definition of sustainable community. Sir John Egan: No, we did not. We used the Government's definition and tried to make it more operational. If you are trying to create a goal that a number of people are going to achieve, then you have to be very clear about what it is and there were too many headings and too many trails. We reduced it to about seven major areas of concern. We would have preferred if we had had more time to reduce it to about five. It is difficult to remember seven and if you were to ask me right now what the magnificent seven were, I could probably only remember six. Q585 Chairman: We have a list. Sir John Egan: I would have preferred to get it down to about five. I think this goal concept is very, very important for good management. One of the critical skills I think is the skill of central government to delegate authority to local authorities and I do not think they are satisfactorily doing it today and I do not think any Government have over recent years. If you are going to delegate authority, you need to have a very clear remit and that clear remit is to achieve the goal of sustainable communities. That is why it is very important to operationalise it in order that that is what local government is actually asked to achieve. Q586 Chairman: One of the things that this Committee has come up against time and time again is the balance within the term "sustainable development" between economic and ecological values. We have said in the past and I suspect will say in the future that when there needs to be a trade-off between these two things, almost invariably economic values take priority. Is this something that you wrestled with? Sir John Egan: Yes but I would say that it is slightly more complicated than that. It is not just ecological values that are important, it is actually what the people themselves want. What is the way in which they want to live? When, for example, we looked deeply into various communities that we looked at and they were all pretty well the same, they were very clear as to what they wanted. They wanted first of all a place that was safe; secondly, was clean; thirdly, was friendly; fourthly, had open spaces for their children; and then a wide variety of services. Practically every community wanted these things. If you are going to create safe and clean places, the absolutely most important thing is governance. Who is going to make sure that they remain safe and clean? Who is going to give leadership? We often looked at communities of 10,000 or 15,000 people who have been dumped into a field with absolutely no thought given to the future governance of their lives with architecture which did not lead to friendliness and all kinds of things that absolutely spelt the failure of this particular development. So, ecological is not the only thing. We also should put in the needs of the people which are very clearly spelt out when you ask. Q587 Chairman: I have the list of your magnificent seven here and, at least in this version of the list, economic values come send to the bottom. Sir John Egan: They are in a circle. None of them is any more important than the other. Q588 Chairman: That itself is a very important statement. Sir John Egan: Absolutely. Q589 Chairman: Historically, when push comes to shove, economics has always taken priority. Sir John Egan: Well, can I point to another problem and that is the efficiency with which things are done. Our building industry is not particularly efficient. I wrote a report on this about five or six years ago when we basically pointed to the fact that the world cost of something was probably half of what we could achieve with a reasonable project in the UK. My worry is that everything is costing far more than it need do because of the poor planning and management of the whole system. Much of this has been improved in the private sector amongst repeat clients but not much has yet been done, or the same big strides have not been made in the public sector nor have they been made in the housing sector. They have made good strides but not as big strides as the big private clients in the construction industry. So, the economics in a way could be very secondary if we could improve the efficiency with which buildings are put up. Q590 Chairman: You said that none of the seven is more important than any of the others. Sir John Egan: No. Q591 Chairman: But where do you think the greatest challenges lie? In which of the seven is the greatest challenge? Is it governance that you have already mentioned? Sir John Egan: I would have said that really the most important one around which to balance the rest is future prosperity and that is economics. That you should be planning for the long-term prosperity of your community is the, as it were, key idea, but that is only that if you do not have prosperity, you cannot have any of the rest but I would not actually say that any one was particularly more important than the others apart from that. Q592 Chairman: I was not really asking that. I was asking where you thought the biggest challenge lay. Sir John Egan: In the northern cities, that is probably the biggest problem. In the southern cities, possibly environmental challenges might be more difficult. Q593 Chairman: Can I just come back to my first question and ask you about the remit again. You have told us helpfully about the way you took the remit and you developed it and you created an agenda, if you like, of your own, but how did that final agenda marry up to the original remit set by the Office of the Deputy Prime Minister? Sir John Egan: We answered the examination question as put, what skills were required and by whom? Q594 Chairman: Was that the only question you were asked? Sir John Egan: Fundamentally, that was the question I was asked, yes. Q595 Chairman: So, you took what was a very narrow remit really and expanded it to something much larger and I have to say as a result much more useful. Sir John Egan: Yes, I thought it was. I thought that it was very important to establish that the Government were right in their sustainable community agenda. It was such a big, bold step for them to make that I thought it was very important that we actually supported that and then the whole debate could move on. I also thought it was important for us to say that local authorities were in the driving seat. A number of people thought, for example, that any time you need a big job doing, you should try and create a special vehicle to do it, but my evidence is that every society in the whole of the UK has been badly served for the last 30 or 40 years and every community has to be retrofitted if we are going to create communities for people to live in. Q596 Joan Walley: Can I just press you on that a little and ask you how what you have just said squares with the current - I do not know what the word is - fashion of having partnerships for all kinds of new projects and new initiatives, so that in fact much of what was traditionally championed by the local authorities when they were in the driving seat is now dispersed across a whole plethora of different partnerships and then the position between the regional development agencies, the local authorities and various bodies linked to the housing renewal programme. How does that fashion square with what you have said about local authorities in your opinion having to be in the driving seat? Sir John Egan: I think that the local authority has to, as it were, chair the cabinet of interest of national service givers. They, after all, have a remit from the people; they are actually voted into their position. Secondly, they have to give planning permission; it is in their hands. I think they should chair a cabinet of national service givers: obviously health, education, police, highways and so on should also take a common cause. That is why the goal of sustainable community is so important that everybody buys into the common goal of what they are trying to do. Q597 Joan Walley: What about special delivery vehicles that are being put forward as solutions to various problems? Sir John Egan: They are a shortcut. It is all right having big powers but I have noticed that, the bigger the power, the less people listen. What you really do need and I think the most important thing about this planning system is that we learn to engage with the population. We learn how to ask them what they require and we learn to deliver solutions that answer those requirements. If you mention planning or expanding any community to any community in the country, there is immediately a moment of horror as though whatever is going to happen will be not in their interests. We have to learn to listen to communities and find out what it is they want. Very often, those things can be developed through the planning system. For example, most communities of, say, 3,000, 4,000 or 5,000 people think they are very happy and maybe they are. On the other hand, they have a lot of teenage crime, they have a lot of missing services and so on and so on and, if we wanted to give those people the services they required, we would probably have to expand their neighbourhood but, right now, I do not think anybody living in a small village would really want to see their community expanded because they would assume that it would be done badly. Looking at what we have done for the last 30 or 40 years, I would have to agree with them. Q598 Mr Francois: You talked about the principle of asking people in local communities what they want and then trying to respond to that within the planning system and I think all of us around this table would have some sympathy with that. In order for that to be valid and to be real, do you not also need the power for local people to be able to say "no" if they are offered something that they definitely do not want? Sir John Egan: Saying "no" is sometimes something that we cannot accept. There are national reasons sometimes why only "yes" is possible. So, there are national things that will overwhelm that. In the main, I would agree with you that no should mean no, but no should only mean if the issues have been properly described and the people have been listened to and a proper solution has been offered to them. Then, perhaps "no" is a reasonable word. If the national interest overcomes that, my only point then is, let us recompense them for the nuisance that they suffer. The problem with the British system is that it goes into the law, the right thing is done, as it were, according to the law and loser takes all as a general rule. You get the nuisance and, generally speaking, you have to pay for it as well. So that really is a pretty sore wound. That is one of the reasons why people really are frightened of the planning system. Q599 Chairman: Can I explore another angle of this. You said just a while back that economic prosperity was really the key thing and, when you ask people what they want, one of the things they clearly want is more economic prosperity and yet, at the Johannesburg Summit, we signed up to an agenda to do with sustainable consumption. To what extent do you factor sustainable consumption ideas into your thinking about the sustainable communities? Sir John Egan: If we can look at consumption in terms of CO2 emissions, then it is easier for us to grasp, as it were, what we consider. It is relatively easy to create a low CO2 emission community. From the engineering point of view, the issues are not so incredibly difficult, they are really relatively straightforward. The problem is that, to deliver such a community, we have to build the new buildings for that community. The supply chains that exist in the UK could not deliver; they could only deliver bricks and mortar, cement and things that are not, as it were, the sustainable products for the future community. We thought that, within eight years they could, and so what we should do with the environmental standards for buildings is slowly tighten the screw to the point where, in eight years' time, only sustainable components would be allowed into the building. For example, I do not know if you know that to make a ton of cement takes a ton-and-a-half of oil to create it. So, in using cement in your building, you are going to be consuming huge amounts of oil. If you are wasting half of it because most of what we build is only built at half the world levels of construction, then you are not sustainable to start with. So, what you have to do is be immensely more efficient and allow the supply chain to slowly get itself up to, say within eight years, achieving those sustainable standards. The Government have set up a sustainable buildings taskforce and we asked them if they could design the standards that would eventually lead to a low emission community. By the way, all kinds of other things are involved of course. We have tended to zone things in the UK, we have tended to put business parks in one place, we have tended to put houses in another, schools and hospitals we have often tended to put in the green belt and so on and so forth and the only thing that connects them all up, apart from London, is cars, so people drive around them all and it has become a nightmare in many small towns to find that you can only get from one part of this community by car. That is not sustainable either nor is it very friendly. These are points that are really very important and, if we are going to create sustainable communities, they will have to be mixed developments; they will have to be mixed in terms of socio-economic groups but they are also going to have to be mixed in terms of office blocks, shops and so on. When I said that we have to retrofit the communities, we have to start putting houses around retail centres and we have to actually start asking retailers to become leaders of their community and start turning their shops inside out and making them far more part of the community and not just hiding behind barbed wire fences. Q600 Sue Doughty: In your memorandum to us you say it would be possible to build 125,000 houses a year within the Government's sustainable development policies and you also say that the sustainable communities agenda is reversed, but then you went on to qualify that. You emphasised the need to improve planning, house building standards, leadership and a lot more. It is very difficult to see how this is possible under those terms. How realistic is this target of 125,000 houses being built? Sir John Egan: I think it is feasible. If we look at the Thames Gateway, I would see it as a £15 billion project and I would plan it in a certain way. If you were to ask me, "Could we do that?" the answer is, "Yes" and I am actually helping the Deputy Prime Minister on the Thames Gateway. So, the answer is, "Yes, it could be done" but a number of things would have to happen. I cannot say at this point that it cannot be done because we have not got too far into the project yet. I would not say it was impossible. I would say it is difficult but that certainly it can be done. Look at, for example, what has been done in, say, Birmingham or Manchester or Leeds or Coventry. People of great leadership have gone into the job, they have got cracking and they have done a magnificent job on their city centres, absolutely terrific. If we only had to say, "If we had that get-up-and-go in the Thames Gateway and we learned to coordinate all those local authorities together and we all accepted the sustainable community agenda, could we do it?" the answer is, "Yes, we could", but an awful lot of things would have to happen to make that possible. Q601 Sue Doughty: You went on to say that there needed to be enormous improvements in the planning system, building performance and the development industry and you raised a large question in our minds about juggling from what could be done to actually delivering the processes. What do you think is actually needed in these areas? Sir John Egan: For example, going back to what I did earlier on construction, the question I was asked was, how do we improve the performance of the construction industry? The question I actually answered was, how to achieve world-class standards in the UK construction industry and therefore I could set a goal as to what we were trying to achieve. The very good clients like, for example, Tesco, Sainsbury's, Whitbread and BAA, the company I was then running, are achieving the standards that we set and indeed are capable of building world-class buildings today. So, it has been done. Whereas, the Government have not got very far down their own agenda; they have not left lowest-cost tendering in as quick a way as I would have wanted. So, they have not achieved it. On the other hand, it is achievable and companies are doing it. So, I can say what is to be done but I am not quite sure how quickly people will pick up what is very obvious as a plan of action. Q602 Sue Doughty: We are really trying to do these within the short to medium term and you have set out quite a few challenges there and they are very real challenges. So, we are back to the reality of whether or not these targets can be met. Sir John Egan: Can I just say that I do not know how quickly you think it has to be done. It has to be done very quickly. London and the south east is now the most wealthy community in Europe and whether people thought one million people were going to come here by the year 2010 a few years ago, I think many of them are already here. What we do not appreciate is that we have to build or else people will find somewhere to live and they will come. They are on the way. I would have said that this has to be very urgently tackled if we are going to do it well. I sit with the government committee and I can see that joined-up government is occurring at that level. On the other hand, we need joined-up government at local level as well. We also need to be able to have regional planning in order that we do not try to build the same resource in two different places when one will do. We have to have regional planning. We have to have very good urban coding in order that developers will know when they have designed something that will get planning permission. It is very inefficient today; they keep offering plans and they have no idea which ones will work until finally the bell seems to ring and it has worked. We have to be very specific. In the Thames Gateway, the most urgent thing is to get the transport systems established in order that we know which new communities can be developed. You can develop communities very rapidly in the Thames Gateway if you have railway transport. I had asked for that to be completed by midway through this year and we are not there yet. I have to say that if we are going to do this huge project and do it well, we should not be slipping on timetables, we should get them right. We do not know yet which communities we can develop versus which ones we cannot. We have been promised that it will be done towards the end of the year, but that is not the same thing as getting it done in June - I would say that it is six months late already. Q603 Mr Chaytor: Your comment on transport interested me because it linked in with something in your report that caught my eye. Do you consider the purpose of developing sustainable communities in the south east is to provide more housing for more people to work in Central London and ease the pressures on accommodation in Central London or do you see the purpose as developing stronger more autonomous centres of economic activity on the periphery throughout the region? From what you have said, the implication is that you envisage more and more people commuting in through better transport links with London but more and more people commuting in longer and longer distances and I would be interested to hear what you think about that. Sir John Egan: Let me first of all make two practical points. The first practical point is that the people are on the way, those one million people are coming and many of them are here already. They are not coming to Saffron Waldon, they are actually coming to London. That is where the huge wealth is being created. Incidentally, these are not the poor people of the world who are coming here. These are people with the world-class skills that are needed in things like the financial services industry. They are coming here because they think they can earn far more money here than they can earn anywhere else in the world and that is why they want to come and they are on their way. So, there is a certain speed attached to it. If you start doing your planning for people who are not going to satisfy that need, that need is still there, so I think we have to be very, very practical about that. The second thing we have to be practical about is, if you have rapid transport into Central London, you can develop the community very, very quickly. You do not need to search for jobs. The jobs are there. Fifty per cent of the people can get jobs by getting on to a train. So, you develop the community very well indeed. The third thing I have to point out is that these commuter communities are extremely well liked by the people in them. If you look at the places that got the highest marks for liveability in the south east, they were in the main commuter places. So, it is all very well building up a brilliant place in Saffron Waldon or somewhere, but that is not going to fulfil the immediate need we have which is one million people coming into London. Is it a better or worse product than something which is autonomous locally? I do not know. I do not think it makes all that much difference. On the other hand, we have an urgent need to find housing of high quality for some of the best people in the world who want to come here. So, I think we have to create very high quality communities and we have to do it relatively rapidly. Q604 Mr Chaytor: Do you see the priority of the sustainable communities programme as providing high quality housing for the most highly skilled people? Sir John Egan: Yes. Q605 Mr Chaytor: That is not the way the Government sell it. The Government sell it as providing more affordable housing for people working in the public services who are going to be priced out of the market in Central London. Sir John Egan: I am only making the obvious point that we have to cater for these people who are on their way. By the way, a number of the waiters in restaurants are also coming as well. In fact, I went on a night out recently and I said to my wife, "I wonder if we will meet anybody anywhere who is actually English" and we did not. Apart from the taxi driver who took us home, we did not meet one person. I said that a number of wealthy people are coming and a number of poorer people are coming as well, but that is not quite the point. It is outrageous to me that an average person on an average wage cannot buy a house in the south east because it is too expensive for them and I think we should set the challenge - and in fact I am discussing this one with the Deputy Prime Minister - to the building industry to start coming up with homes that are affordable, to cut out the waste and to cut out the inefficiencies in the building programme and actually start building houses that can be afforded. I think it is extremely important that communities are balanced and that everyone who needs to work in that community can get a house in that community and can afford to do so. I think the point is a very important point and one upon which we have to focus. I would like to see the £80,000 or £90,000 house sale value actually on offer in order that people with normal salaries can afford it and it is not impossible, I am quite sure that it can be done. Q606 Mr Francois: Can I ask what may be a very appropriate and practical question. You talked about the importance of public transport - I declare an interest: my constituency is Rayleigh and I am right on the northern fringe of the Thames Gateway in South Essex - and, in particular, rail transport and, in principle, I would agree with you. However, in the Gateway, we are coming into two termini in Central London: Fenchurch Street and Liverpool Street. They both have narrow necks. You cannot get any more lines in and out; you can barely get any more trains in and out. A number of the platforms were extended to take 12-carriage trains as opposed to eight-carriage trains to increase capacity and then recently a number of those trains were taken away from the area and given to other train operators in the Midlands because those operators now come under the aegis of bigger companies with larger franchises. So, I am really at a loss to understand what on earth is sustainable about any of that. You are nearly at capacity in terms of community in the peak as it is. I will be fascinated to know how you are going to seriously increase rail capacity into Central London given all of those constraints. Sir John Egan: Obviously I think that some very important projects like Crossrail will be required to make London work. By the way, for London to work as a world-class city, there should be an anywhere to anywhere capability in order that couples can live somewhere and both of them can get the jobs they are looking for, which increasingly will be in places like Canary Wharf, the City or in the West End. So, you need to be able to live anywhere and the pair can work anywhere. That is going to be very, very important. I agree with you, there are bottlenecks. Running Stansted Airport as I was, I was quite clear that Liverpool Street and the lines going into it did not have enough capacity and we need more capacity. Q607 Mr Francois: I take your point about Crossrail. Other than Crossrail, how are you going to provide that additional capacity? Sir John Egan: I was not asked to design the railway network for the south east, I was asked to design some principles that would answer the job. I have no immediate answer as to how to overcome the bottlenecks at Liverpool Street. Q608 Mr Francois: If you sit on the Committee and have some influence in these matters, could you possibly suggest - and I am trying to be serious - to those on the Committee that this is a problem that really needs to be looked at. Aspiration will not cut it because people cannot get on aspirations, they need to get on trains. Sir John Egan: You are absolutely right. We have to look at the capacity of these lines moving into Central London if we are going to fuel the requirements of Central London with people to fill the jobs. You are absolutely right. I cannot disagree with you. Q609 Chairman: That was very interesting. That was the first time that I have heard from anyone close to this huge project that the whole Sustainable Communities Plan is designed to house investment bankers rather than meet the needs of the indigenous housing demand. Sir John Egan: I think you have put too many words into my mouth there! I said that we have a very successful series of industries in Central London. Merchant banking is one of them but the whole financial services industry is a vast industry with a huge balance of payments deposited and it does employ a huge number of people and, as such, probably is employing more value added in salaries than any other industry in the UK. Chairman: I think that is beyond dispute. Q610 Sue Doughty: Fascinating as that line is, I think I had better go back to the Barker Report. You did have a dialogue with Kate Barker as your work was developing. Do you see you work overlapping in any way and, if so, in which areas? Sir John Egan: I think she and I were both clear that, if we were going to be able to build another 100,000 houses a year, we are going to have to find places to put those houses and that was not going to be easy. My solution is that the people learn to trust the planning system better because it is delivering benefits to them and that we can go and retrofit many of the communities that have been badly served by the zoning of the past and actually build the houses around the mistakes that we have made in the past. Q611 Sue Doughty: Does that agree with what she would say? Sir John Egan: I am not quite sure which method she had for gaining planning permission for these houses. The Treasury of course normally seem to be able to command everything, so maybe they can snap their fingers and they will get the housing space. I was trying to devise a housing system that would be supported by the people. I think it is utterly essential that any changes to the planning system are supported by the people. Q612 Sue Doughty: Some people said that the Barker Report has let off the building industry in its final conclusions concluding that, to improve prices, all you needed to do was have a significant increase in the housing supply, full stop. In your memorandum, you have made it clear that, for housing construction to be compatible with sustainable development, supply systems and building methods would have to change substantially. Sir John Egan: Yes. Q613 Sue Doughty: Is that going to happen given this push to build? Sir John Egan: I think the Government will have to take a special action to make sure that houses that can be afforded by the average wage earner are created. I do not think the marketplace is going to fix that for them. They are going to have to do it. Luckily, they do have a lot of houses that they subsidise and I would like to see the subsidy effect used to create much lower cost houses which will enable the factories to create the prefabricated parts ... By the way, we are now using the words that are quite emotive. Mention "prefabricated parts" to a British person and they immediately think of prefabs of 50 years ago and they were not pleasant houses. If we are going to establish much cheaper and much better quality houses, we are going to have to prefabricate much of the buildings in factories and I would like to see the Government taking a lead on this. I do not think that the housing industry will get there rapidly enough on its own. Q614 Sue Doughty: As you say, the housing industry is not very responsive to innovation. Do you think that pressure from the Government, if we were able to get the Government to apply the pressure, particularly at the lower end of the housing market, is going to be the catalyst that is needed to really bring these things in? Is that a realistic aspiration? Sir John Egan: I would like to introduce more builders into the building market. The house builders as a group are into their comfort zone. They find it difficult to get planning permission. They have economic cycles where their product is difficult is sell and we are just moving into one of those probably, according to one or two of the bigger house builders. The ones that have survived have pared themselves down to a relatively comfortable life, but that is not the way in which you stimulate innovation. These are comfortable people doing a comfortable job. If we are going to create a much higher quality lower cost product, we have to invite different people into the industry. One or two of the construction companies that have achieved very big improvements in productivity with the key clients like BAA, Tesco and so on, should be invited into the housing industry. I would like to see them cracking into this and actually starting to do the job very well and very efficiently. So, I think that some kind of initiative is needed from the Government and we have to bring new players into the market if we are going to get these much lower costs. Q615 Sue Doughty: This is good stuff but what worries me is, in Rethinking Construction six years ago, we set a target for the construction industry that productivity would be increased by 10 per cent per annum and we would reduce waste by 10 per cent per annum and defects would be reduced by 20 per cent per annum and yet, from what you are saying, it does not sound as if we are getting it yet. Sir John Egan: The clients who have insisted on this are achieving it. So, yes, people like BAA, Tesco and so on are achieving it. They are capable of building these houses but they are not in the house building industry. Q616 Sue Doughty: Unfortunately, the house building industry is not doing so well. CABE looked into this and only 17 per cent of the schemes that they looked at were judged as good or very good. It is not really very encouraging at the moment, is it? Sir John Egan: When I wrote the report, most government reports get thrown into the dustbin as far as I can see, so I was not expecting a great deal. Actually, a lot has been done and the fact that 17 per cent are doing well I am quite pleased with. There was nobody doing it very well five or six years ago, so I am quite pleased that we have got thus far. I think you will find that probably 30 or 40 per cent of construction projects that are carried out by the major clients are being run very, very efficiently and very well and I would like to turn that kind of energy and expertise into the house building industry. I think they would be able to do a much better job than the current house builders. Q617 Sue Doughty: Do you think that is a realistic aspiration with the house building industry to really bump up this efficiency and deliver much better projects? Sir John Egan: I hope so. That is an initiative that I have been discussing with the Deputy Prime Minister and I am hoping we can do something. Q618 Chairman: How is it going to happen? Sir John Egan: I think we have to try to make sure that some of the large housing associations can procure their products through a specially created pair of companies, let us say, who were specifically tasked to achieve these very high quality and very low cost standards that we have in mind. They can do it with other kinds of buildings; I really see no reason why they could not do it on houses. Q619 Joan Walley: I really want to press you a little more on that because I am really excited by the opportunities there are to do all of these things. My fear is that whatever CABE may be saying by way of 17 per cent improvements in good quality houses, that does not necessarily make a difference on the ground where we have regeneration going on, for example, in my constituency in Stoke-on-Trent. What I really want to press you on is, when the Committee went to visit Aberdeen, we saw some really wonderful examples of state of the art architectural design new house building which was looking at efficiency and, when you talk about getting these improvements for good quality low cost housing, I am wondering how much you are integrating into that the standards that you are wanting to see embedded in building regulations within the next eight years. One of the other things that was impressed upon us when we went to Aberdeen was that there were a number of newer houses built by many of the housing companies to which you have presumably just referred but actually the standards of housing efficiency and of energy efficiency in those houses, even though they might be new houses and expensive houses, were just not fit for purpose and the real worry in Aberdeen was that we were going to be facing a bigger problem with these newer houses which related again to lack of follow-up on building control when enforcing on not enforcing these new regulations and I just think that is a whole area which no one really has any control over and it has been left to be implemented on the ground without it actually being done on the ground. Sir John Egan: I would like to see the BRE standards which are currently in place; I would like to see those as a minimum standard for all house building. So, I am on the side of control here and I would have put that into the urban coding. Q620 Joan Walley: Into what? Sir John Egan: The urban design coding that you specify to your developers about what you will or will not give planning permission to; that is one of the real keys that you should have and absolutely insist that they achieve the BRE standards in order that at least we have a standard system in place. Q621 Joan Walley: How would that be enforced? Would it be enforced through self-certification? Sir John Egan: You would not get planning permission until you did and that answer is "yes". Q622 Joan Walley: It certainly seemed to be a problem in Aberdeen. Sir John Egan: The answer is that you would have to have some way of policing it and I am sure that there is a way but that is a service you would have to buy from BRE. Q623 Joan Walley: So, you think that the companies you would bring in to do it would be better at doing that than the existing housing companies? Sir John Egan: I have to say that I am very disappointed that these very sensible BRE standards have not been adopted by all the housing industry. I am very disappointed and I am disappointed that, when I suggested that that be put into my report, everybody moaned and whined at me that it was not possible. So, I was disappointed. Q624 Joan Walley: What has the ODPM's response to that been? Sir John Egan: We passed our report on to the taskforce dealing with this and hoped that they would set the standards. On the other hand, there is no point setting the standards unless somebody is there making sure that they have them and the key is not to give planning permission until those standards are at least detected. Q625 Joan Walley: The fear is on the ground when you have local authorities really wanting to see a brownfield site developed, often they are just glad to have anybody rather than to stick out for the better design standards. Sir John Egan: I know, it is a shame and I think we should be sticking out for those higher standards. By the way, they are not difficult. These are not in the slightest bit difficult. Q626 Chairman: I think I am right in saying that if local authorities wanted to make these sorts of standards of requirements, they are quite at liberty to do so. Woking, for example, has. Sir John Egan: Yes, they can. It is perfectly within the local authorities' remit to do it. I have to make it clear - and I have made it clear in the report - that the key to doing this is leadership of the local authority. If they really want to do these things, they can. They can bend the rules, they can bend the guidelines, they can do all things to achieve these standards and I think those great cities up in the north have demonstrated how to do it and we really have to make sure that this great growth that we have to get going in the south east happens and we get leaders like those in the north to actually get up and do it and get on with it. Q627 Mr Challen: You have chosen 50 indicators of sustainable communities; how did you choose those 50 out of the 400-or-so that were available? Sir John Egan: We looked at the magnificent seven and then we looked at what we would have to add in key performance indicators to achieve each one. We obviously were a limited time taskforce. We felt as though we had done the best we could within a limited period of time and our hope is that the national centre that we have asked to be created will take our work and make it more operational, but these key performance indicators are not necessarily the whole story. What we also have to do is to get the local authority audited on the key performance indicators as a group, so that, when they are audited, you do not have one department of Central Government auditing one lot and another department another lot. The whole lot have to be audited as a sweep in order that we can see progress over time collectively and not paying off Peter to pay Paul. Q628 Mr Challen: But the whole 50 would have to be audited? Sir John Egan: Yes. Q629 Mr Challen: For every local authority? Sir John Egan: Yes. It is 400 or 500 right now, so at least it is cutting down to 50, so it would be less work. Q630 Mr Challen: You have said that you would have a well-balanced menu. Would all authorities have to go by the 50 or would they actually be able to pick and choose year on year? Sir John Egan: No. This is where I am not sure that I saw eye to eye with the Government. I think that you cannot pick and choose them, they have to be core ones and they have to be the ones that everybody uses. I think there was a general view that, okay, we can pick and choose for a little while, but, after we settle down, you would have to have the whole lot. Q631 Mr Challen: Do you think it makes sense to have subjective indicators and objective indicators also mixed into this listing? Sir John Egan: Sometimes you cannot get at it very easily with absolutely objective measures. Sometimes you can only have the subjective measures that you have asked people. Q632 Mr Challen: You can look at the environmental indicators that you put in the list and, out of the 50, there are nine environmental ones, seven out of which are objective. If you compare that to the social and cultural ones, seven indicators of which six are subjective. I just put an example to you perhaps that sometimes these things are going to be clearly in conflict. If you look at connectivity in a broad sense, about 75 per cent of us have mobile phones but, as we MPs sitting around this table all know, mobile phone masts are not very popular in local residential areas. So, you have two things pitted against each other: a desire for something, what you describe as finding out what people want, and then local authorities, through the planning system, having to deliver it and these things are pitted against each other. So, the indicators do not always lead to a very clear conclusion, do they? Sir John Egan: I did not say life was easy, did I? You have to make compromises. Q633 Mr Challen: To have meaningful indicators, you want them to be understood. Sir John Egan: Yes. We are always going to have compromises and we have to have people who are big enough to understand the compromises they are going to make in order to make their community work. Q634 Mr Challen: If we want to convey that complex equation to people in order that they can cope with stress and strains --- Sir John Egan: Fifty key performance indicators is not all that complex. To run a car company, you need far more than that. It is not all that complicated. Q635 Mr Challen: I am not sure that that is true, speaking as an elected representative. I think it is enormously complicated because people want the kind of things that you have described. You have said that one of the basic components of your thinking is to achieve - and maybe I have written this down slightly wrongly - that people can live anywhere and to work anywhere. Sir John Egan: No, I said in London. Q636 Mr Challen: Just in London? Sir John Egan: Yes. For London to be a world-class city, I said that had to be achieved. I did not mean that, for Britain to be a world-class place, you should be able to live anywhere and work anywhere, no. For London to be a world-class city, I think that we have to have huge ability to get people from A to B. Q637 Mr Challen: So, the massive increases in mobility which, as Mr Francois has suggested, will lead to massive dissatisfaction with commuter services and the inevitable lateness of delivery of transport and congestion. Sir John Egan: I suggest you are being overcomplicated. I think we have to make many improvements and I think that people are pragmatic enough to understand when, in the round, improvements are being made. It is absolutely for the points you are raising that I say you have to audit the whole 50 of them in order that we understand how a local authority is moving the whole shift of what it is doing and is not just picking and choosing the easiest ones for it to do. Q638 Chairman: Sir John, one of the difficulties here is that running the Government is not the same as running a car company, to state the obvious. The moment the public sector touches anything, it automatically becomes much more complicated than you can possibly imagine. Sir John Egan: I think not to listen to the people at all and to shove planning down their throats in the way we have been doing over the last 30 or 40 years is a preposterous way to behave and what we have been doing is mostly uncomplicated. We have been doing the most awful things. I suggest that we listen to the people and I think it is not so complicated. People are much less complicated than you think. When we looked at the evidence that we had as to what the people wanted, they were absolutely as clear as crystal as to what they were looking for and that is absolutely what we were not providing them with and absolutely what we were not doing. Q639 Mr Chaytor: If I could come back on to a point you were discussing a moment ago in respect of this total mobility within the heart of the capital city, what are the models elsewhere in the world? Which are the best cities in the world that already have this total mobility and what should London be aspiring to? Sir John Egan: I think this is a tough one. I think that London is probably the most successful city in the world anyway. It has all kinds of imperfections but, all in all, in the round, it probably is the best city in the world. Q640 Mr Chaytor: The thrust of your report and your evidence today is that London, if it is to be a world-class city, has to have this total inter-connectivity but if you are saying that it is the leading city in terms of quality of life and --- Sir John Egan: In terms of wealth creation, it probably is already. How is it going to maintain that and how is it going to house another million people over the next ten years? That is the kind of thing we have to think about. How can it maintain this position? I think that London is absolutely vital for the rest of the country. I think it is the reason why Britain is prosperous. So, the fact that London works and works well is utterly essential to the well being of the nation as a whole. Q641 Mr Chaytor: Are there no parked models elsewhere of cities that London should be learning from? Sir John Egan: I do not think it was in my remit to be doing that and we did not do that. We looked at particular communities overseas in terms of how to build friendly housing of high quality and low cost with low CO2 emissions, for example, but we did not look at how Paris or New York ran. Q642 Chairman: Forgive me for not knowing this but are you still Chairman of London First? Sir John Egan: No. I was a vice-chairman of London First for many years. I think I might be a vice-president still but they are not very important! Q643 Chairman: London First is not very important? Sir John Egan: No, the vice-president is not very important. Vice-chairmen are far more important than vice-presidents and I think I am one or the other but I am the least important one! Q644 Mr Challen: Can I just clear up that you are saying that all bodies should use the relevant indicators and do not have any choice about that? Sir John Egan: Yes, I believe that is the case but do not think my word is law here. I am just saying that personally that is the view. We have asked, however, for the national centre for sustainable communities to basically operationalise our goal as quickly as possible in order that it can be used operationally for some of the very reasons you were raising. We were not sure that, in the time we had available, we had done a good enough job. We felt that a better job could have been done. Q645 Mr Challen: I am just wondering how this might have worked in practice. London is a huge travel to work area covering many, many authorities and some of these will have conflicting priorities. Some will want to minimise transport infrastructure and others, perhaps in the city, will want to get more employees in and may not be so concerned about the impact on the environment beyond their immediate boundaries. How would you see these people complying with these indicators? How will they actually be able to do that on a practical level? The probable spatial level under transport connectivity is just at a district level and that is not adequate to --- Sir John Egan: No, I think I said that transport is probably going to have to be done at a regional level. Q646 Mr Challen: I am just looking at the ones in the 50 that you have chosen and it is numbers 34 to 37 and they are all at district level. Sir John Egan: They will be more to do with the connectivity within the place and also to outward levels where there is more prosperity. Q647 Mr Challen: Do you want to comment on that particular question about how these different bodies ...? It is okay to say that individual people are simpler beings than authorities, Government and the rest of us but, to have sensible and meaningful indicators, we have to have sensible and meaningful ways of implementing them, interpreting them and getting results out that are useful rather than simply having a tick-box approach where everybody tries to manipulate the results to show that they have done a good job and then you come along and ask other people if they are happy and satisfied and some of these other indicators and they say that they are not, which seems to me to be the history of indicators. Sir John Egan: One of things I was chairman of for a while was the Central London Partnership which sought to get common cause between all of the Central London boroughs. It is quite clear that the Central London boroughs do realise that one of the things they do is create employment. They know they create employment for other places. So, you have a population there but what you are doing has to create wealth for other people as well. For example, one of the most difficult ones is Westminster where not only is it a huge place for people to live but they are also the biggest single tourism product in the whole of the United Kingdom and there is a conflict there. I just simply think that it is the job of people to understand where they are and to understand the nature of the people who depend upon their city and do the best for each one of them and, where compromises have to be made, they are sensible enough to make good compromises on the basis of the people whose services are required from them. Q648 Mr Challen: The Government do not seem to be too impressed with the idea of having these 50 indicators exclusively for sustainable communities and they do not think they should be adopted into the community strategies. Are you satisfied with their response to your suggestion that they ought to be? Sir John Egan: No. This is not the end of the story. We have to operationalise them and make them work and you cannot say that they cannot work until you have tried. Q649 Mr Challen: Would you be happy for local authorities, say, to include many other indicators and perhaps even argue that they are more important than those you have chosen? Where do we get to with this process of having indicators if this is more permissible? Sir John Egan: Have you followed what I am trying to do? The key is delegation of authority from the centre to local authorities. There has been no way of doing that. People have vied with each other and governments have vied with each other to emasculate the authority in local authorities and how are you going to get leaders to actually give leadership to their communities if all the authority has been stripped from them? This is a way of delegating authority to local authorities. It is a way of being able to say, "If you can improve the sustainable of your community, we will delegate authority to you." I have asked that, that is what my report has said and I think they have been less than warm in answering up to that, but I do not think that they are going to make sense of this problem until they take delivery of it. Q650 Joan Walley: And ownership too, presumably? Sir John Egan: Yes. It is a huge point that, if we want to have communities that work, they are not going to be designed from Whitehall. Let us be really realistic with this one. That is what they have to be able to do. Q651 Joan Walley: I think the implications of what you are saying to the Committee are huge, particularly in respect of governance and local democracy and, in a way, need to be reflected in terms of funding arrangements provisionally from central government and it is difficult to see how, with the different partnerships that there are, local authorities can take the lead and ownership of some of these delivery mechanisms because, at the local level, often you will find that the skills or the drive simply are not there because they are under pressure from so many different quarters. Sir John Egan: The debates we were having about these key performance indicators are very important because I want to see all of the national service givers working in common cause with each other and being judged collectively by the same audit process. Then we can see it working. Q652 Mr Francois: You are making an argument for the devolution of power to local authorities. Sir John Egan: Yes. Q653 Mr Francois: To encourage people locally to take ownership of the process. Sir John Egan: I was asked what skills were required and I said that one of the fundamental skills was the skill of delegation from central government to local government. Q654 Mr Francois: In principle, I concur with you on that. You also talked about the importance of carrying local people with you and you made that point in several contexts in the discussion this afternoon, but you have also said that it is very important that there is regional planning. Is there not a contradiction in the middle of all of us in that you want to see authority devolved to the local level, you want to work with local authorities, and actually those local authorities under regional planning have no control over the most important decision which is how many houses they have to accept? Sir John Egan: Let me come to the key point here. I think that two or three things are going to be designed and planned at regional level. Prosperity will be a regional process. Let me give you an example. We had all those race riots up in Burnley and the general notion was that there were not enough jobs in Burnley. Burnley is not going to solve its unemployment problem itself but the place where they can resolve it is in Manchester. There are enough jobs for all the people in Burnley actually in Manchester if you had good enough communications from one to the other so that people can live in Burnley and work in Manchester, the answer is that you could do it. You will not plan the prosperity of Burnley from Burnley. That has to be a regional thing and that will mean regional transport systems are required. That is why I say that there is an absolute key. I think it is important that this relationship between regional and local authorities is restricted to a number of the key things that are best done at regional level and clearly prosperity is one and transport is another. If you are going to choose where the Royal Opera House goes, you have to maybe do it on a national basis. The big things that people require for cultural and other issues will also be planned on a regional basis as well, I am sure. That is the way it is. So, you will just have to have a regional say and then a local say. Q655 Mr Francois: With respect, we are not talking about opera houses, we are talking about thousands of houses with all the infrastructure implications of that. How can you take local authorities with you along the lines exactly that you have been advocating if they do not actually have a say in the most vital question of all which is how many they have to take? Sir John Egan: At every meeting I have had with the Cabinet subcommittee, I have asked them to stop talking about houses. I think they have done themselves no good at all by talking about houses. There was a picture on the front of the Economist when it was announced of a plane, a great big 747, flying over the south east dropping houses. Chairman: It was in the Spectator. Q656 Mr Francois: We know the picture. Sir John Egan: What they should have done was to talk about communities and that we have to expand communities and the only people who will do that well will be the local authorities. Chairman: The division bell has gone and we are going to have to break. We would very much like to come back and get into the whole issue of skills which is really what you are here to talk about in the first place. The Committee suspended from 4.50 pm to 4.55 pm for a division in the House Q657 Mr Chaytor: Can I ask about the recommendations you made about skills, in particular the question of the National Centre of Excellence. Your recommendation in the report was that this should be in place or the board members should be in place for late 2004 with the centre up and running for 2005. Can you tell us where we are at and is that likely to happen? Sir John Egan: As far as I understand, it is possible to happen, yes. Q658 Mr Chaytor: Being "possible to happen" is not the same as "likely to happen". Sir John Egan: I think the timetable is that it will be up and running during 2005. Q659 Mr Chaytor: How will it relate to the other skills problems because, in the skills sector at the moment, there is a huge proliferation of funding bodies and advisory bodies and sector skills councils that are now gradually getting up and running? Is that is not just a question of another quango that is going to muddy the waters? Is there not going to be more inter-agency rivalry between who does what, quite apart from the professional bodies for architects and engineers, planners and so on? Do you not think there is a danger of agency proliferation? Sir John Egan: Let me first of all say that this whole area requires further research and I wanted the centre to be connected to one of our great universities in order that high-quality research could be done. Q660 Mr Chaytor: Will it be? Sir John Egan: I am hoping so, but I am not sure whether it is. It was taken out of my hands and other people are doing it. I would also like it to be a centre for interchange of experience. I would also like it to be expert on one particular area which is how to listen to people and how to sell high quality solutions to them. When it comes to, how do you get all these difficult things done, they are the same world-class skills that you require to run any big difficult organisation. They are the world-class skills of communication, of leadership, of vision, of process improvement, of project management and so on. These are the world-class skills but they will be absolutely homed in on a particular thing which is achieving improvement in sustainable communities and I think there will be a particular expertise and language of its own growing up around this. I think, in a way, the whole agenda of Government's relationship with communities and with local government could be spelt out in this sustainable community agenda. I said right at the beginning when I first spoke about it that it is not often that governments come up with big ideas or with good ideas but this one is rare indeed because it is a big, good idea. Q661 Joan Walley: Can I press you a little further on how it is going to come about. You mentioned that it would be linked to one of the big universities. Sir John Egan: I hope so. Q662 Joan Walley: Which university do you have in mind? Sir John Egan: There are a number that I think could do this very well. I would not like to mention any one in particular but I would like to see a university which is noted for high quality research. Can I just go into this a little deeper. I think that universities should spend far more time working with business and other representatives in their local areas. They should learn how to do research for the good of various kinds of people and there is nothing more important than the local community in which they live and I think they would get a huge sense of belonging to a community if they worked more closely with them and nothing is more important than planning the future prosperity of a community. So, I think it would be very, very important that we see how well it could be done. Q663 Joan Walley: Are you talking about a virtual national centre of excellence? Sir John Egan: Both. I think it should have a physical presence and it also should have a virtual presence as well. Q664 Joan Walley: My fear is that many of the areas where regeneration is most needed would tend to be areas away from the south east and away from where all the emphasis is and, in a way, they are the ones which are least best represented to be part of ongoing developments and perhaps are the ones who have most to gain from going about things in a different way and in an innovative way and in a fresh way. Sir John Egan: I do not think we are talking about one community here and just one university. Every university in the country should be working with its local community to help plan the future prosperity of that community. We should be turning these great big brain boxes actually into use for the local community. It does not really matter where the centre will be as long as it is connected to a very good research university and there are very good research universities in the north of England as well as in the south. Q665 Joan Walley: What about in heart of the country? I am just thinking of the Advantage West Midlands promotion yesterday on connectiveness and really looking at innovation in terms of the rest of the country. Sir John Egan: There is no question in my mind that one of the excellent ones would have been, for example, Warwick University. Q666 Joan Walley: What about North Staffordshire? Sir John Egan: It was not the one that first came to mind! Q667 Joan Walley: No, but it might come second to mind! Can I just ask you now about the lack of skills. How much do you think that the current lack of skills to which you have referred to deliver this whole agenda could be a limiting factor? Plumbers who do not understand about electricity or project managers who simply do not exist or house builders who do things the way they have always done them because they have not realised that the world and the opportunities have changed. Sir John Egan: That is not the key skill. The real key skills are to do with developing vision for an area and a plan of how to get there. That is the key thing that the local authority has to be able to develop. It seems as though some people can effortlessly do this and, when you actually talk to the people who have created the huge changes in places like Manchester and Birmingham, you can see why things have happened. The men in charge did actually have vision, they had drive, they had energy and they got the job done and that is the kind of thing we are looking for, but they got it in by buying in, they got everybody to buy into their vision and these are the world-class skills of leadership and that is more of what we need. Q668 Joan Walley: Much of those skills, as I think you mentioned earlier, have been linked to the city centres, the very high profile regeneration and investment and they have not been about communities where people live and homes where people go to doctors' surgeries and go to schools. They have not been about the places where people live, they have been about where businesses wanted to invest and wanted to be able to get a lot of profit out of what is happening. Sir John Egan: Increasingly, that is happening certainly in Manchester and Birmingham, so I think they have spread. It is interesting. I think the first thing to do is to get the prosperity going, get some growth there and that is what they concentrated on first, but they are into now developing the cities and especially places for people to live as well, but they started on prosperity which I think was the right thing. Q669 Joan Walley: You do not seem to be emphasising at all the day-to-day skills, the construction skills, the awareness that is needed in environmental sustainability in terms of the way construction goes ahead. Sir John Egan: Come on! We did not decide to put the retail centre here and the business centre there and the hospital there and the schools over here and the houses over there. Those were not clever things. They were just very poor thinking of the whole programme. We did not need brilliant architects to make such huge mistakes. Those huge mistakes were the lack of vision of the local authority leaders. They did what was easiest. They zoned it all because it was easier to do it that way. Q670 Joan Walley: Or maybe they just answered to the tune of big business because they were the only --- Sir John Egan: I do not think they were dancing to anybody's tune. They were simply dancing to the tune of whatever came next. Somebody asked for planning permission for a retail centre, so they gave it. Somebody needed to put a hospital somewhere, so they did it. That is not what the sustainable community requires. Q671 Joan Walley: I am getting to the detail of how the new buildings are going to be built; what about the construction skills? Are you saying those are not important? Sir John Egan: They are extremely important and I did spend a lot of time writing a report on how to achieve world standards and it is relatively straightforward. It is not impossible, it is relatively straightforward as long as you have the will to do it. Q672 Joan Walley: Given that there is a will to do it, where are Government falling down? Sir John Egan: Unfortunately, the Government still spend too much of their money on lowest cost tendering which means that you get a random group of people coming together to build a one-off project and some departments cannot be shaken away from this. The PFI projects themselves are also won on a lowest cost tender basis or tendering basis and you cannot build complicated buildings in this way. To know what a building costs, you have to design it before you know how much it is going to cost. You cannot guess at it. So, you have to create your team before you start construction and that is the one thing the Government generally speaking do not do. Q673 Joan Walley: How is that going to change? Are we going to lose this opportunity that we have? Sir John Egan: It is of great annoyance to me and of great sadness to me that we are going through this huge construction programme where we will probably be very little better at building hospitals when we have finished than when we have started because the programme has not been well designed. Q674 Joan Walley: Why has your report not been able to influence that? Sir John Egan: I do not know. It influenced Tesco and it influenced BAA and it influenced all of the private builders because they do it but the Government are only haltingly getting there. Q675 Joan Walley: Is it the ODPM's door that you are knocking on? Sir John Egan: No. There is no point knocking on his door because he does not spend the money. You have to go to the departments which spend the money, which are health and education at the moment. I have spoken to both Secretaries of State and I must say that one of them did actually understand what I was saying. Q676 Joan Walley: Which one? Sir John Egan: Alan Milburn did understand and he did make Procure 21 which is a very large step in the right direction into a national programme. Q677 Joan Walley: Is the NHS not exempt from the Government's policy in respect of procurement? Sir John Egan: No, nobody is. Procure 21 is a sensible step in the right direction and many buildings are being built with that system, but I would like to see all Government departments embracing the Rethinking Construction report and I think they would save a huge amount of money if they did. Q678 Joan Walley: What do we do when half of the chartered civil engineers are expected to retire in the next ten years and looking at the number of people who have been through British universities at the moment? Is that going to lead to the same kind of problems that we have with the recruitment of GPs or other professionals? How are we going to overcome that? Sir John Egan: I can now speak with a career of 40-odd years in business and I have seen so many scare stories about shortages of this, that or the other. I can say two or three things. We always seem to find enough people in the end. Q679 Joan Walley: Was it not your evidence-based review of skills/your report that actually alerted us to this shortage? Sir John Egan: Yes. I am trying to give you an answer. Eventually, we will find ways of recovering the problem but there is no problem right now. Right now, there are enough, as it were, to do the job that is being done today. If we could only do it much more efficiently and stop having developers putting five or ten plans in on the same project because of the infrastructure changes or that they do not know what is going to please the planning committee, then indeed we would not need quite so many people. What we do today is extremely inefficient and much of the time and effort is wasted. Q680 Chairman: I think I am getting this. These one million homes that you are very keen to see built are not only for foreign investment bankers and Australian barmaids, but they are going to be for Bolivian civil engineers. Sir John Egan: And waiters. Bolivians will come too, I am quite sure. By the way, if you are the richest country in Europe, you will find that there is no shortage of any of these things. Everybody will come along. Also, as soon as kids realise that planning leads to being the chief executive of a local authority and that is one of the most exciting jobs you could possibly be doing, everybody will want to be planners. Q681 Joan Walley: Perhaps we could start by having more graduates and apprentices inside local authorities as newly qualified graduates because there are very few of them at the moment. I think there are only one or two local authorities that actually do that. Sir John Egan: Again, let me bring you back to one point. I think that the urgency of what we have to do means that all of these million people will have come by the time we have trained some of these people through universities. We stressed in my report that much of what we are going to have to do is teach people on the job. We are going to have to train people who are in the jobs to do a better job. That is one of the absolute fundaments. Q682 Mr Chaytor: Your report, Sir John, is called Skills for Sustainable Communities but the conclusion you come to is that really the essential shortage of skills are the high level management skills. Sir John Egan: Yes, essentially. We will not know about the shortages of the others until we can straighten out the process that is going to be efficient. Q683 Mr Chaytor: Someone coming to the report to start with might have expected to get a set of numbers of how many plumbers, architects, town planners and electricians were needed and how they were going to be trained in the next five or ten years. Given you are taking the visionary long-term approach and given you are focusing on the National Centre of Excellence, it is going to be years and years and years and years and decades before this cultural change that you argue for has come about, by which time the million people will have come and maybe gone back again? Sir John Egan: They might. They will be here by 2010. Q684 Mr Chaytor: How do you reconcile the urgency of the Government's building programme with the rather relaxed long-term visionary approach to development of management skills in your report? Do you think there is a mismatch in the title? Sir John Egan: No. We are going to have to train the people who are currently doing the work. For example, when I was running BAA, we looked at all of the people working on the sites at Heathrow, all the construction people. There were 6,000 people from various contractors working on various jobs and, of the 6,000 workers doing all this construction, only 2,000 of them were trained to do what they were doing. The other 4,000 were not trained to do what they were doing. So, we put in place a passport for the future system where every single skill that was required in construction was a page in the passport and you did not get your page stamped until you had passed the course to do it and we arranged for all of the contractors to teach their people on the job on our sites. Today, everybody on all the BAA projects is fully trained and that is only five years later. You can do this if you have the will to do it. Q685 Mr Chaytor: But the National Centre of Excellence is not going to be responsible for the on-the-job training of plumbers, electricians and town planners in Thames Gateway, is it? Sir John Egan: I think the town planners will be very much influenced by what is going on in the centre, yes. Q686 Mr Chaytor: What about the other skill shortages? You are not making any recommendations. Sir John Egan: I think they can all be resolved by people simply doing on-the-job training for their people. That is what they have to do and they can do it. Q687 Mr Chaytor: So, you do not think there is an overwhelming problem? Sir John Egan: No. There are overwhelming problems with people in the market doing these things but, if we insisted on them being done, they would be done. Q688 Mr Chaytor: Can I just shift tack a little and ask about the north/south issue. You have quoted some of the successes of the regional cities in the north in terms of their urban regeneration but this has, as Joan Walley said, been very much city centre based in Manchester and Leeds. There is less evidence of success in regenerating the outer urban areas. What do you think about the north/south divide because your focus is that London is the key driver of the United Kingdom, one million people are going to come to London, those who come have to work in the centre of London and the transport network is not geared up to that --- Sir John Egan: No, that was not the focus of the report. Q689 Mr Chaytor: No, but this was the focus of your evidence this afternoon. You are putting a lot of emphasis on this. Sir John Egan: Because I am helping the Deputy Prime Minister with his Thames Gateway project. So, some of the examples I have raised are to do with the Thames Gateway. Q690 Mr Chaytor: Do you think, as a consequence of the Prime Minister's emphasis on Thames Gateway and other parts of the south east, this is going to exacerbate the general economic divisions between north and south? Sir John Egan: No, I do not. Q691 Mr Chaytor: And suck people from the north, particularly the brightest young graduates from the north, into the south east? Sir John Egan: No, they are not going to be sucked. They will want to come because of the wealth and prosperity of the south east. Q692 Joan Walley: Why do we need to suck them away from their own communities? Sir John Egan: We are not going to suck them, they will go of their own volition. They will go wherever the wealth takes them, I imagine, if they are bright and smart. Q693 Mr Chaytor: This is the thrust of my question. Would it not be more sensible, in terms of national policy, to have less emphasis on developing the existing strengths of the south east and more emphasis on dispersing economic growth ---? Sir John Egan: I am longer in the tooth than you are but I do remember governments' wish to try to take work to where people were in the car industry and they put factories in South Wales, Scotland, Liverpool and in many other places. I think there is only one still around. They have all closed down. Q694 Mr Chaytor: Nissan is still in Sunderland and Toyota is still in --- Sir John Egan: Our experience of taking work to the people has not been very good. It killed the British car industry. It actually killed it. One of the many reasons it died was because it spent a whole decade of its investment in places other than where it has normally been successful. You are leading to something and I am not quite sure what it is, but let me put you straight on this. There is no way that we can actually suddenly invent some other purpose for single purpose mill towns or mining towns. There is simply no way of conjuring this out of thin air. Every time you do, you fail. What you can do however is to build on places where you can be successful and put good transport links into those. I think that what the major cities have done is splendid. I would like to see a lot more done by the university towns to also start planning the prosperity of their region and it will not be simple and it will not be by manufacturing special purpose vehicles --- Chairman: It will be even harder if all the talented people have moved into London and the south east! I think there is a moral issue to this as well as a spatial and planning one. Q695 Mr Francois: If I followed your argument, you are saying that we are going to get another one million people in the south east over ten years. Q696 Sir John Egan: The prosperity of the south east will attract one million more people. That is mostly what other people have said and I think it looks pretty sensible that that is going to happen. Q697 Mr Francois: I have some sympathy with my northern colleagues here because we do not want to become overburdened and they do not want to be denuded. If that happens over ten years, presumably those trends will continue into the next ten years and the next. So, where does this stop? There has to be some physical capacity to how much the south east can take. Sir John Egan: I think other world-class things will occur in the United Kingdom and the trouble we have is that, right now, we only have one big world-class thing which is London. We have it and it is very successful and we should rejoice in it. What I would be doing, if I had anything to do with it, is to look for other world-class potential and I would build those up as well. I think one is obvious and that is Cambridge; they have £500 million worth of investment money to invest with business into scientific facilities and that could be another huge world-class activity. There will be others. I think Manchester has every chance of being a world-class city; it has the drive and the urge; it has the world-class university to go with it and I have no doubt that it will be successful, and places like Newcastle will be as well. Do not just assume that because you have some dream that the people will actually stay where they are when the prosperity is elsewhere. I went to a grammar school up in the Pennines and, when I went back to give the prizes at the grammar school, I asked the headmaster, "Does anybody ever come back here?" and he said, "No, nobody ever comes back here, they all go down to London, that is where they go." With respect, you cannot invent a new world. The new world we have is great prosperity here. If you want to do something about it, then what you have to do is make other places very successful as well. Q698 Mr Francois: I can partly understand that argument. You talked about people coming down from the Pennines but it goes far further than that. We have already said anecdotally this afternoon that we are going to have investment bankers coming to the south east and we are going to have Australian barmaids --- Sir John Egan: And from Italy and from Poland and all these places. Q699 Mr Francois: And we are going to have Bolivian chartered surveyors as well! Is there anybody who is not coming to the south east, Sir John? Sir John Egan: As long as the prosperity is something like 50 per cent above the average in the EU, no, it will not stop for a very long time. Q700 Chairman: Thank you. We will end on that note. We are very grateful to you for your time and particularly for the extension of your time and also for your evidence which has been most helpful. Sir John Egan: I have to remind you that this is not my day job; I have to rush off to my day job. |