Examination of Witnesses (Questions 20-39)
MR KIERAN
WALSH, MR
TONY RUDDY
AND MR
JOHN PERRY
24 MARCH 2004
Q20 Reverend Smyth: I take it that the
social housing provision see the public sector and rents have
been applied back in maintenance grants, improvements, repairs
and so on or has that also been siphoned off?
Mr Walsh: No. The Housing Executive
have to put forward their own business plans of what their budget
requirement is on maintenance and repairs and other revenue costs.
On capital costs, they actually need to pull down moneys from
the allocation that they get from the department and from Treasury
and therefore the Housing Executive's overall spending plan, both
revenue and capital, is supplemented by the income from rents
but also from, on the capital side, the capital receipts from
house sales and the sale of other properties and land that go
to supplement that. There is an assumption on the number of properties
that are going to be sold by the Housing Executive in any one
year that will be ploughed back into the Treasury. Any moneys
that are gained over and above that figure are ploughed back into
the Central Treasury. That figure last year amounted to £35
million, over the last number of years, has amounted to over £150
million pounds.
Q21 Reverend Smyth: Would I be right
inferring that you would argue that there is a case for ring-fencing
capital and rent to maintain a vibrant social sector?
Mr Walsh: The Housing Executive,
unlike many of the local authorities in England during the same
period of time, were able to benefit from ring-fencing their capital
receipts. If we were able to return to that, and I do not believe
that there is a will within the Treasury within Northern Ireland
to allow that money that has now been used for other areas of
social provision like hospitals, education etc, would be lost.
The Government would not want to lose that windfall that helped
supplement other areas of need and I cannot believe that the Department
of Social Development would win that argument with Finance.
Q22 Reverend Smyth: I understand that
answer but that was not the question that I asked!
Mr Walsh: I think there are some
things that are worth fighting for with the likelihood of winning,
but I cannot see that we would win that, no matter how much we
would like to be able to say that all capital receipts should
be ring-fenced. I think realistically, in the climate we are operating
in, that money would simply not be ring-fenced for housing alone.
The argument has already been lost in England where many of the
local authorities where maybe there was not a housing demand,
they were not able to simply hold on to their capital receipts
but it had to be returned for redistribution. I cannot imagine
that the situation in Northern Ireland would be allowed to be
different when that windfall from house sales can help supplement
other areas of need.
Mr Perry: There is an argument
in England for doing what is done with capital receipts because
you are robbing Peter to pay Paul. You are redistributing whereas
the big advantage in Northern Ireland is that decision-making
is centralised. It is a disadvantage in some respects but, in
this respect, it is an advantage. I think what we would advocate
is at least transparency, so that if a certain level of receipts
is coming in that is being used for other purposes, then that
is an explicit decision rather than just something that is fudged,
which is the case both across the other side of the sea and on
this side of the sea.
Q23 Reverend Smyth: I am thinking of
one particular contract going on at the moment, or at least I
hope will be going on at the moment, and, in that contract, they
refer to 20% for social housing. In the light of your understanding,
is that something that the Housing Executive has had placed upon
them because they were building on land owned originally by the
Housing Executive or is it window dressing for the good in the
knowledge that, in the end, the properties are going to be developed?
Mr Walsh: I do not know the specific
scheme but I would have to say that it would be incumbent on the
Housing Executive to try and make best use of the assets that
they have. For example, if they had land in an area where they
did not necessarily have an unmet social housing demand but there
was a private developer who was able and willing to come on to
develop, for example, owner-occupied properties for sale and there
was some sort of planning gain in that, as part of that development,
20% of the number of properties could be allocated to social housing.
By doing that, that would not affect the capital funding from
the department to the associations to deliver new social housing.
If this is packaged in such a way, I would have thought it would
be good practice for the Housing Executive to make best use of
their land where they could in fact do so by looking at mixed
tenure, mixed community and maybe mixed household types.
Q24 Reverend Smyth: Of course, you did
use the qualification if there was no social need. The issue of
course, as your long-term experience would know, is that you do
not have housing waiting lists because there is no availability
of housing and there is no point in people putting themselves
on that waiting list when they know there is no housing.
Mr Walsh: Yes.
Reverend Smyth: We have been in this
world for a long time and we know the issue. Can I press you a
little further. What opportunities exist for private finance to
contribute to addressing the demand for social and affordable
housing in Northern Ireland? I take, for example, my own constituency
where some of the housing costs have gone up tremendously and
young professionals find it difficult to even get on the first
rung. What do you think might be done to help through private
finance?
Chairman: Mr Walsh, we are going to leave
you to ponder that answer!
The Committee suspended from 4.16 pm to 4.37
pm for a division in the House
Q25 Chairman: Mr Walsh, when we were
rudely interrupted, the Reverend Martin Smyth had just asked you
what opportunities existed for private finance to contribute to
the demands for social and affordable housing in Northern Ireland.
Mr Walsh: I think the Reverend
Martin Smyth was referring to the escalating property values within
his own constituency in South Belfast that is putting those properties
outside of the normal mortgage and mortgageability of young people
to get a first step on the home ownership ladder. It still remains
the preferred option and aspiration for most people to become
a home owner. There has been a scheme in Northern Ireland that
has been in operation for some 25 years now that has aided some
18,000 people to gain a first step on the road to owner occupation
through the co-ownership scheme. As I have said, they have helped
18,000 people. Bearing in mind that 38 housing associations have
a total stock of just over 23,000, one housing association, the
Northern Ireland Co-ownership Housing Association, has in fact
helped an additional 18,000 people who otherwise would have no
other recourse but to apply to the Housing Executive for social
housing accommodation. It works as a part-buy/part-rent scheme.
There are maximum property values and, within Belfast for example,
the maximum property value is £102,000 for three bed accommodation.
The average purchase price throughout Northern Ireland is now
peaking at over £100,000 for the first time and, in your
constituency area, Reverend Smyth, many of the properties are
much, much higher than that. There needs to be an opportunity
to amend those property values to more accurately reflect local
markets and not just the wider council area markets. For example,
if there are hotspots within particular councils, like in areas
of South Belfast, there could in fact be a point at £140,000,
for example, where flexibility would allow some of the people
in your particular area to have access to accommodation through
Co-ownership to remain within the community in which they are
currently based. The Co-ownership scheme can be made more strategic.
I think it is one way that will allow people to get access to
owner occupation who otherwise will add to the pressure on our
waiting list.
Q26 Mr Hepburn: Is 100% of the capital
received reusable?
Mr Walsh: No, up to a particular
level. I am sorry, are you talking about co-ownership?
Q27 Mr Hepburn: No, I am talking about
the money received from the sale of social housing. Is 100% of
that capital received reusable?
Mr Walsh: In the past it was but,
over the last number of years, the Department has put down a marker
of how much they would hope to achieve through house sales and
anything over that which is a capital gain above that particular
target is actually ploughed back in for use by other departments.
Q28 Mr Hepburn: Is it 100% of the sale
of the property? The council sell social housing and an individual
house is worth £50,000. If they sell that, does that £50,000
get used immediately, all 100% of it?
Mr Walsh: Yes, up to the cap that
they have. If £50,000 is the discounted value of the property
that has in fact been sold. This is dependent on whatever discount
the tenant has been entitled to because the discount in Northern
Ireland is £34,000, which was only capped from two years
ago and, prior to that it was 60%. There have been occasions where
properties have been sold by the Housing Executive to sitting
tenants that were valued at over £300,000 because of the
land around the particular property and the development potential
but people were entitled to up to 60% discount. All that money
is ploughed back into the capital allocation up to a certain cap.
So, if it is anticipated that there will be 4,000 house sales
that will generate £30 million, then that £30 million
is deemed to be part of the allocation that is going to the Housing
Executive for that year. Anything above that cap is the capital
gain, so if more than 4,000 properties have been sold, and last
year there were nearly 6,200 properties sold—that excess
money from capital receipts actually goes back to be redistributed.
So, it is 100% up to that level that is taken to be the capital
receipt. If, for example, next year there were only 3,000 but
it was anticipated that there was going to be 4,000, it would
be interesting to see whether or not the DSD would be able to
give additional funding to allow them to enhance the level of
funding because of the shortfall.
Q29 Mr Luke: Just to pick up on some
of the issues which Stephen has raised, one area of housing that
is controversial on both sides of the water is the whole issue
of the house sales scheme. I understand that the Executive has
sold more houses than are being built and you have mentioned the
figure of 6,000, so a housing area district every year has been
sold off. You have made 11 recommendations to the Committee about
changes relating to the reform of the house sales scheme. Is there
any evidence that the changes you are proposing will have a significant
effect on addressing this lack of social housing or the real need
and the growing need for social housing that there is in Northern
Ireland?
Mr Walsh: I think the obvious
answer to that is "yes". If you are losing 6,000 units
of accommodation each year at a time when you are only building
1,000 units, the net loss is 5,000 units. It is not rocket science
to then recognise that if the Housing Executive has an asset base
of 95,000, if they continue to lose 5,000 units a year, in 10
years, their stock level is 45,000 units. We cannot continue to
run a scheme whereby there is a net loss to the social housing
provision at a time of escalating waiting list. We have been arguing
that the House Sales Scheme needs to become much more strategic.
It could be used as a way to develop mixed tenure, it is used
as a way to retain particular types of accommodation that are
in short supply in areas of high demand and to encourage people
who want to exercise their right to buy to maybe move out and
buy another property in the private sector, but leave the social
rented house, leave the Housing Executive or housing association
house, for allocation to someone in need, someone who is in a
hotel or in some other temporary accommodation who are homeless.
I think that if we continue to simply argue that it is equitable
to give all tenants a right to buy, the consequence of that policy
is that we will no longer have sufficient stock to actually meet
those needs. The home ownership taskforce that was established
by the Office of the Deputy Prime Minister under the chairmanship
of Baroness Dean recognised the shortcomings that there were in
relation to house sales schemes, the issue of demand, how it needs
to be linked better in to the Right to Acquire that is available
to housing associations and how they need to look at other ways
of trying to develop areas of mixed tenure. For example, equity
loans. One final point I would make is that the Institute in its
presentation to the Social Development Committee made recommendations
into the changes and the review of the house sales scheme that
would be required in Northern Ireland. In the Inquiry report from
the DSD Committee, they commented that a review should be undertaken
in line with the recommendations made by the CIH. In the second
reading of the Housing Bill in July 2002, the then minister, Mr
Dodds, actually again made reference to the recommendations that
the Institute had made to the Committee contained as part of that
report for the requirement for a review of the house sales scheme.
While we have heard that this review is due, we do not know when
it is likely to happen, what the brief is going to be and who
else is going to be involved in it, but we welcome a strategic
look at how house sales will impact on future demand.
Q30 Mr Luke: Is it your belief that this
policy of promoting home ownership has been done at the expense
of ruining the social housing in the Province?
Mr Perry: The difficulty is really
this blanket approach, whether it is this side of the Irish Sea
or your side of the Irish Sea as it were, and what we are advocating
is a much more selective approach. There is nothing wrong with
selling houses to sitting tenants but you need to do that in a
more strategic way, decide which areas would benefit from mixed
tenure and which areas would be under such intense pressure for
social housing that there ought to be an embargo on further sales.
There is also the argument from supporters of right to buy that
the people who are buying would stay in those properties anyway,
so they would not really become available for letting to the Executive,
but the fact is that some people would buy elsewhere and those
that would stay would eventually move. So, if you are pursuing
a right to buy policy over a long period of time, you do lose
real potential re-lets and now, as it were, the chickens are coming
homes to roost.
Mr Walsh: This was also an important
issue for the Scottish Parliament in that the house sales policy
was a particularly emotive issue in Scotland. It ended with a
capping at a level that was not seen to be a capital gain at around
£12,000 and exempting geographical areas on the basis of
a line on the map and therefore looking at how to roll-out the
scheme strategically, to encourage it in areas where you are looking
to increase mixed tenure but to prevent it happening in areas
where particular properties are in short supply. In Northern Ireland,
they are planning to extend, as part of the Housing (NI) Order
2003, the right to buy for housing associations tenants on the
basis of equity that, if you are a social housing tenant, you
should have the same rights. It is interesting that, under the
existing scheme, properties that have been built or allocated
exclusively to elderly people are exempt from the scheme. So,
it is difficult to argue that it is going to be equal for everybody
but not elderly people. You need to actually have a fundamental
look at all the issues before deciding on which scheme is most
applicable. We also have to recognise the sensitivities that there
might be in the operation of a selective house sales policy in
Northern Ireland because, in areas of higher demand, it could
in fact be Catholic or Protestant areas, you may in fact be developing
a policy that might be seen to give undue bias towards one section
of the community over another. So, the equality issue has to be
very much to the fore whichever scheme is actually brought forward.
Sometimes it is easier to be seen to fair to everybody rather
than have something that is strategic that is going to be in the
long-term good for all of us, particularly for those having to
wait for years for suitable accommodation.
Q31 Mr Luke: On the point you made about
the actual resale, it is my understanding that 25% of the social
housing has been sold on and that has an impact on what can be
seen as affordable housing stock.
Mr Walsh: Yes, that is right because
of the resale of properties that have already been bought. It
does impact on affordability in certain areas because of the resale
value but there are ways of actually looking at other models that
would allow that to happen through transferable discount to enable
a person to actually move out in order that you retain the particular
social housing property for allocation. It cannot be one simple
policy, it has to be strategic on the basis of how that would
benefit our whole community rather than just some areas and some
tenants.
Q32 Mr Hepburn: I will ask you these
questions en bloc because I am conscious that there could
be a vote at 5.15. As far as the Northern Ireland Housing Executive
is concerned and the sale of properties which is obviously causing
some concern, what implications does it have on the role of the
management in general of social housing and what effect on the
role does it have on the Northern Ireland Housing Executive? Also,
traditionally, I believe that the Northern Ireland Housing Executive
had a role in community development in tackling anti-social behaviour;
how has it affected that particular situation? Of course, like
everywhere, I am sure that a greater number of houses have been
purchased rather than flats; what sort of effect has that had
on rehousing of families?
Mr Walsh: My understanding of
the impact in losing that stock so that they are no longer within
the control of the Housing Executive in overall terms of community
development and anti-social behaviour within those communities.
However, the Housing Executive as the strategic regional housing
authority for Northern Ireland still retains that responsibility
beyond simply the management of single units of stock, so it has
a much more wide-ranging role and responsibility than simply a
housing management function. As part of that, the Housing Executive
has a very serious role in both community development, producing
balanced communities and responding to local need. It also now
has the responsibility through its cross-tenure role on strategic
responsibility for the private rental sector. So, for example,
in the 2003 Housing Order, there is a mandatory licensing scheme
for housing in multiple occupation. It falls to the Housing Executive
to run out this mandatory scheme which is there to improve fitness
levels and management standards within that particular sector
and it will be rolled out by the middle of this year. From the
Institute's perspective, the Housing Executive's proposals for
the licensing of the HMO element of the private rental sector
are somewhat passive in that we feel there is an opportunity in
Northern Ireland for regulation of the whole sector through licensing
for the whole controlled and uncontrolled private rental sector,
rather than targeting HMOs about their level of fitness and, more
importantly, management standards. What is the difference between
a two-storey house with three people sharing and an elderly person
who is living next door but is not getting the same level of fitness
or repair and improvement work carried out or management standards
yet has the same landlord? Licensing is going to be applied to
one and not the other. I think within Northern Ireland we have
an opportunity because of the size of the sector to look at mandatory
licensing for the whole private rental sector that will be a kite
mark of quality for the people who are letting those properties
who want to provide a quality product of fit accommodation, a
decent home and it will properly manage that property. Part of
that property management is that they accept responsibility for
the behaviour of their tenants. The issues of anti-social behaviour
that impact on the community that are outside of the actual landlord
responsibility that the Executive would have but could be controlled
by the removal of a licence to say, "We will no longer kite
mark the services you provide and indeed we will no longer pay
housing benefit for your continued occupation of certain tenants
in that particular property because of the problems that they
cause." One final thing I would add is that, again the 2003
Housing Order introduced some new measures in tackling anti-social
behaviour but they fell short of what the CIH and others were
calling for because the debate on anti-social behaviour had moved
on in England and elsewhere from 1996 from the housing policy
review that the member referred to earlier on. What we actually
have in Northern Ireland were the changes that were being introduced
in England in 1996. So, Anti-Social Behaviour Orders and, I believe
more importantly, Acceptable Behaviour Contracts which are not
about exclusion but about trying to give responsibility to young
people to give an undertaking not repeat the unacceptable behaviour,
are not available in Northern Ireland. I think that extending
those to Northern Ireland will increase the range of options that
the Housing Executive, councils and others would have to tackle
the very serious issue of youths causing annoyance and antisocial
behaviour.
Mr Beggs: For the record, the minister
did give his assurance that these orders would be applied by the
end of the summer in Northern Ireland.
Q33 Chairman: Not a day too soon!
Mr Walsh: The one comment I would
make is that because of the procedures that now operate in Northern
Ireland because we do not have devolution, such measures would
have to be brought forward as an order in council. This means
that having been brought forward as an order in council, until
we actually see the detail, we either have to accept the whole
package or nothing. While we can be assured that the minister
has in fact made this commitment to actually introduce these measures,
really unless we are in a position to scrutinise how in fact that
is going to work, I think we are placed in a situation of jumping
quickly without looking at the detail.
Q34 Reverend Smyth: You will have had
the opportunity to study the low cost housing survey which was
published in November. Which, if any, of the options there might
actually help provide social housing in Northern Ireland.
Mr Walsh: Is this the Baroness
Dean's home ownership taskforce?
Chairman: The Barker review.
Reverend Smyth: The Barker review is
later.
Q35 Chairman: Yes, it was Baroness Dean's.
Mr Walsh: Yes, we have had an
opportunity and in fact our Director of Policy at the Institute
was a member of the taskforce and we are very pleased to be involved
at the centre of rolling that out. There are a number of the recommendations
within the Report that we believe should be Northern Ireland proofed
and should be looked at as to how applicable they could be in
Northern Ireland. For example, Co-ownership is the most successful
shared ownership scheme in the UK. We have one national organisation
responsible for running out the scheme. The deficiencies that
were recognised by Baroness Dean and that taskforce showed that
there was not a critical capacity/critical mass in many of the
smaller shared ownership schemes that were operated by associations
in the UK because it was peripheral to their overall business
which was managing units of social housing to deal with people
in need and shared ownership schemes tend to be an add on. In
Northern Ireland for the last 25 years, we have had one organisation
dealing directly with lenders, legal profession etc that have
simplified that. The difficulty is that there are other shared
ownership options that we do not currently have available in Northern
Ireland that could be looked at. Also Co-ownership needs to become
more strategic in that, rather than it being a demand-led product
because somebody who wants to apply for co-ownership actually
comes in through the front door, it could in fact be made to try
and tackle the housing need of people who are currently on the
waiting list or transfer list and to look at areas of affordability
hotspots etc. They also need to look at the application of the
Homebuy scheme and other products that may in fact be of benefit
if applied in Northern Ireland. The strength is that we have one
organisation doing shared ownership and we do not have a plethora
of different organisations and there is a strength in asking that
organisation to evaluate how these products could be applicable
in Northern Ireland.
Q36 Reverend Smyth: Reference has been
made to the Barker review which was published last week; have
you had an opportunity to look at it at all?
Mr Perry: The main strength we
drew from the Barker review was the prominence which Kate Barker
gave to the need for more investment in affordable housing and
she was talking in the English context because part of her review
was just concerned with England but some of it with the whole
of the UK but, as we have been discussing, a similar review applied
to Northern Ireland would reveal an extra need for affordable
housing there too. The problem was that Kate Barker found that
she could not cope with dealing with the whole of the UK even
though it was her original remit, so she focused very much on
dealing with England and the demand area that was part of England.
It would be very good if the Barker review could be revisited
to look at how it applies in Northern Ireland and indeed in Wales
and Scotland and see whether the measures advocated would apply
there and, if so, in what particular way they would be of most
value in Northern Ireland.
Mr Walsh: There are a number of
specific proposals and recommendations that have been made about
trying to speed up the overall planning process about the roles
of councils and councillors having made the planning decision,
so that schemes do not have to go back to the revisited. Some
of those issues would be very important in trying to move forward
the planning process and therefore cut the delays and lead-in
times about getting schemes on the ground in a timely fashion.
I think that a number of those recommendations would have implications
for the more speedy delivery of social housing and indeed private
sector housing and low-cost affordable housing in Northern Ireland.
Mr Pound: Is it possible, for the record,
to flag up that fact that John Perry gave us because I think it
is crucially important?
Chairman: The Barker review being balanced
against Northern Ireland.
Mr Pound: I would not say it was balanced
against Northern Ireland, I would say it concentrated almost entirely
on the south east of England but, because of some of the fiscal
mechanisms proposed in there, I think it is something we should
urgently consider in the context of Northern Ireland and I think
that perhaps a note from the Committee is something we should
consider afterwards and I am simply putting up a marker at this
stage. Forgive me for interrupting.
Q37 Chairman: Mr Walsh, you very timely
moved us on to the issues of planning. We have focused so far
on the Executive and on housing associations but the planners
themselves and the planning system can inhibit developments. Are
there any changes that the Institute would like to see made to
the planning system in order to facilitate development of more
social and affordable housing?
Mr Walsh: The important change
we in fact propose is the speedy implementation of Planning Policy
Statement 12. It has been proposed and brought forward as part
of the Regional Planning Strategy with the requirement to look
at housing in settlements rather than looking at housing being
tenure based, tenure driven and number of social housing or whatever.
PPS12 will have significant implications for the development of
mixed tenure in balanced communities in Northern Ireland. It has
been consulted upon. It was expected to be introduced in September
2003; it has still not come out of the machinery of government
which includes the DOE, DSD and the Department of Regional Development.
I know that the DSD have been calling for this because they wanted
the implementation of PPS 12 because they recognised that it will
mainstream some of the issues that, for example, Martin Smyth
has been calling for about targeting low-cost home ownership and
about issues of affordability, rather than these being incidental
to the overall picture of what our housing requirement is. It
mainstreams across tenure what the needs are in particular communities.
My understanding is that there are difficulties as to how PPS
12 would be implemented. The Housing Executive, who will have
some level of responsibility in the production of interim housing
need statements, have moved on this but it is elsewhere, outside
of the DSD and the NIHE, that there are blocks in the formal implementation
of PPS12 and we would strongly recommend that that be introduced
as a matter of urgency.
Q38 Mr Pound: Within GB, virtually every
UDP has now been reconfigured in the context of the new HRH densities.
I appreciate that density is not such an issue for your part of
the world but do you have concerns because this is the key issue
in housing provision in GB at the moment?
Mr Walsh: As regards density issues
in Northern Ireland, we would have concerns on the basis that,
if you looked at the increasing numbers of people on housing waiting
lists, they tend to be singles. Therefore, if you are simply driven
on that narrow focus you would try and provide enough one-bed
flats in a certain area to meet the current short-term need of
an increasing number of single people who want to have their own
properties to set up home at an earlier stage. Density is actually
controlled by the planning authority; they actually determine
the number of properties within a hectare.
Q39 Mr Pound: The Chairman was asking
if you had any views on current planning legislation and whether
you felt that a similar move would be helpful.
Mr Perry: I do not think that
you have the same high-pressure situation that applies. Obviously
in London, that is a very critical issue and in parts of the south
east, but I do not think in England it is that critical an issue
outside the south east, except for some patches of Belfast, that
you would not really have a need to go for very much higher density.
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