Examination of Witnesses (Questions 384-399)
RT HON
JOHN SPELLAR
MP, MR DAVID
CROTHERS AND
MR JEROME
BURNS
30 JUNE 2004
Q384 Chairman: You are welcome, as always.
Thank you for taking time to be with us.
Mr Spellar: I did not realise
that it was optional!
Q385 Chairman: We would like you to think
that there is an option! You will know that we are coming to the
end of our inquiry into housing in Northern Ireland, and that
we have interviewed a broad section of the community. This session
allows us to put some questions to you that have accumulated throughout
those sessions. I wondered if I could start with a topical question,
given the question that was raised with the Prime Minister this
morning in respect of social housing policy and choice. During
our inquiry, people have said to us that the social housing sector,
particularly because of right-to-buy, can be seen to be in decline;
that it can continue to decline in size and develop almost as
a residual sector, or it can be reinvented into a high-quality
sector of choice. It is very clear that a policy shift would be
needed to ensure the latter. Is social housing in Northern Ireland
viewed by the Government as a residual sector? If not, what vision
does the department have for changing that view?
Mr Spellar: I am not sure that,
in terms of the policy options, it is exactly as black and white
or as stark a contrast as you are describing the views put by
some—but I recognise that there is a spectrum within that.
Partly within that spectrum is an increasing percentage of owner
occupation. We are, as you are aware, under some considerable
pressure to increase housing allocations on the planning side,
via strategic planning responsibilities, 25 out of 26 local authorities
in Northern Ireland have requested an uplift, reflecting demand
for private sector owner occupation, and that is also reflected
in house prices. That is therefore one side of the equation, and
a considerable number of tenants have exercised their right to
buy. On the other side of the equation there are still something
like 100,000 social housing units in Northern Ireland. When the
term "residual" is used, it can sometimes be said almost
as though these are the less desirable properties. Obviously there
has been take-up of some of the more desirable properties, but—and
that will probably come out during the course of other questions—still
some very good-quality stock, and a lot of that good-quality stock
still within Housing Executive ownership. At the same time we
have hit, in the first couple of years, our targets for housing
from housing associations, and just marginally missed it in the
last year. So in fact we are replacing some of that stock but
there is—as there is across the UK—a steady shift.
I do not think, therefore—getting back after a long explanation
of my position—it is as stark a choice between two alternatives.
Rather, it is a part of where we are on the spectrum.
Q386 Chairman: There are properties that
are easy to sell under right-to-buy and there are properties in
areas and estates which are very difficult to sell on. Is there
a fear that, at a time when we are moving towards most planning
policy being pointed towards mixed tenure, we are creating social
housing areas that prevent that promise and that advantage of
mixed tenure?
Mr Spellar: I do not know. For
example, if I went to south Belfast—and I am not exactly
sure whether it is in Mr Smyth's constituency—one of the
complaints of tenants is that some of the land adjacent to their
estate is so attractive to private development that areas they
think should be going for municipal housing are going for private
housing. So you would be having Housing Executive tenants and
private occupation cheek by jowl. You are absolutely right that
we have some estates that are less desirable, but in some of those
cases less desirable also for renting. Sometimes that is not entirely
due to quality of housing, but due to location and consequential
problems associated, for example, with being close to an interface.
While there might be a broad truth in what you are saying, I think
that there are a greater number of complexities within this in
Northern Ireland than there are in England and Wales.
Q387 Chairman: The DSD has three key
housing policy areas—new build, co-ownership, and house
sales. Could you inform us of the high-level targets that the
DSD has set to measure the combined effect of those housing policies?
Mr Spellar: There are a number
of areas there. On the question of new build, the high-level target
of our best estimate of the number of properties needed is 1,500
a year, although there is discussion taking place with the Housing
Executive regarding that. While in broad terms 1,500 would be
the correct figure, there is an argument that says you really
need to top that by about another 250 in order to deal with areas
of higher demand compared with areas of lower demand—some
of that relates to the matters I referred to in my last answer.
It is also fair to say—and no doubt we will explore it a
little more in detail—that our current funding, although
we are bidding in for supplementary funding, is for 1,300. Perhaps
I could just park that—and obviously we will want to return
to it—and turn to co-ownership. Co-ownership has worked
well and has been a success. Again, it plays a part, but I think
it probably fair to say a moderate part—although it has
helped several thousand people. We are then talking about the
role of the private sector, owner-occupied housing. The private
rented sector is another issue, which we may come on to. In terms
of private sector, owner-occupied housing, with the strategic
plan there have been allocations to local authorities right across
Northern Ireland. Within that, as I identified, something like
25 out of 26 local authorities have asked for an increase in allocation.
I am in the slightly paradoxical position that, compared with
my colleagues in ODPM—where a host of authorities are queuing
up to demand reductions in their housing allocation—I have
nearly every authority queuing up to ask for an increase. That
is partly within numbers but also, as colleagues are probably
aware, I have recently put out a consultation paper about single-unit
developments in rural areas, which is a subject of particular
interest in the west of Northern Ireland. There are some very
strong views on both sides of the argument: some wanting to repopulate
rural areas and also, particularly, keeping family units living
close to each other; but there is also concern about the provision
of services and also about the impact on landscape. That is another
aspect of how we are going to meet housing need. Clearly, within
private owner-occupied there is substantial housing need, as is
evidenced by the very substantial increase in house prices over
recent years.
Q388 Chairman: So our targets for new
build are quite clear and easy to see—1,500, 1,300?
Mr Spellar: For the social housing
sector, yes.
Q389 Chairman: In co-ownership we are
saying that we could do a bit more, but there is no real target
set as to how much more we could do with.
Mr Spellar: Yes. Since its inception,
co-ownership has supported about 18,000 participants to enter
the property market and over 13,000 of those have moved into full
home ownership. It is therefore not an insignificant factor. I
will pass the ball briefly along the table to one or other of
my colleagues, who can give me the current figure.
Mr Burns: First of all, just to
reiterate what the Minister has said. As regards co-ownership,
and indeed house sales, it can be quite difficult to assess targets
for those, because they are very much demand-led and therefore
subject to quite a degree of fluctuation, depending on issues
such as interest rates. So, whilst we make an annual provision
to facilitate co-ownership based on previous years' activity levels,
we have flexibility to react to change as and when this takes
place. In recent times, we have found ourselves bidding in-year
for additional money to meet demand for co-ownership, but that
is a relatively new phenomenon. In the past, we have found that
the targets set for co-ownership based on previous activity levels
have been reasonably accurate.
Q390 Mr Luke: Over the last two years
there seems to have been a drop-off in the funding available for
co-ownership. It has dropped from something like £12.9 to
£7.9 million, despite the fact that it is a very popular
option. Is there any reason behind that?
Mr Burns: The reason that the
department's allocation to co-ownership has dropped is that we
have been encouraging co-ownership to recycle its receipts on
a more proactive basis. Up until about 1998 or so, co-ownership
largely operated on the basis of housing association grant, and
it was building up a huge amount of reserves, which were just
sitting there and not being used for anything. Since 1998, we
reduced the funding for co-ownership to encourage them to use
their own receipts. We are now starting to see that the use of
those receipts means that—with regard to the participants
who were facilitated by the use of co-ownership receipt money—all
the receipts they get when that participant moves out goes back
to co-ownership. Therefore, we are now finding that while our
funding is reduced, it is using more and more of its own money
to supplement its development.
Mr Crothers: I think that it is
also worth making the point that, to date, co-ownership has not
had to turn anyone away from their door. It is demand-led and,
so far, they have been able to meet that demand.
Chairman: We do share the concerns of
those involved in co-ownership though: that the demand is far
greater than the support they are able to give. They have asked
why support is decreasing rather than increasing at a time of
demand. However, we do take the answer you give, Mr Burns.
Q391 Reverend Smyth: On the question
of demand-led, both in social housing and co-ownership, is it
not true that the demand can be dowsed, if I may use that word,
because the availability is not there? People would like to go
to certain areas, but there is no point putting their name down
for it because there is no availability of housing in those areas
and, if the housing is there, there is no demand. Is that not
a problem? Can I first ask you to deal with that one, when you
are dealing with "demand-led"?
Mr Spellar: As I think I indicated
earlier, one of the hidden costs of housing in Northern Ireland,
like some other public services, is that we can have vacant dwellings
in some areas but, because of prevailing local circumstances—either
because of difficulties there or because these are predominantly
of one community or another—there can be some mismatch occurring
within that. We do try to address that, and indeed are still re-housing
a considerable number of people. There is also the expanding housing
association sector, which is also taking on a considerable number
of new tenants.
Q392 Reverend Smyth: We have set targets.
Over the last number of years, the targets have not been met.
Have we actually got into catch-up time, or have we left that
behind and are just trying to meet the new targets?
Mr Spellar: If we are talking
about new build, in the first couple of years the housing associations
exceeded that. Then there was a bit of a dip and, last year, it
was very close—I think within about 50 or so—to target.
However, there is a deeper problem associated there. One of the
reasons why they were successful in the first couple of years
was because of existing plans and, even more importantly, an existing
land bank. Of course it is much easier for the Housing Executive
to assemble and to plan for a land bank than individual housing
associations: not least because they were also constrained by
in-year expenditure, which therefore meant that their difficulty
of assembling sites in advance of construction became more intense.
We are addressing that and are providing both support and funding
for it. I hope that will mean that we are able not only to smooth
out difficulties but also to achieve our targets in terms of construction.
Q393 Chairman: We all like to talk of
joined-up government—
Mr Spellar: We talk of little
else!
Q394 Chairman: Many of the comments that
have been made to us in respect of housing policy point to confusion
sometimes as to where responsibility may or may not lie. Indeed,
Mr Burns, when you gave evidence to us on behalf of DSD, you told
us that " . . . in many respects the issue of housing supply
and what figures there should be is outside of our hands".
We have the DSD, the DoE, the DRD, DFP, the Housing Executive
involved, although they cannot build, and so then you bring in
the housing associations. We also have the Review of Public Administration,
launched in June 2002, which promised us that there would be a
continual review of arrangements for accountability and administration,
and that they would further ideas as to how reform could be achieved.
Do you believe that there is an opportunity for the RPA to look
at more joined-up structures for policy setting, planning, and
management of housing?
Mr Spellar: Yes, and can I also
say there is another area that we need to look at in terms of
joined-up government? It relates to what I was saying in one of
my earlier replies about estates—by the way, not a phenomenon
unique to Northern Ireland—becoming much harder to let,
because of tenant behaviour or, in the circumstances of Northern
Ireland, the behaviour of paramilitary groups. Therefore, the
engagement of Housing Executive, police, Social Services Boards
in Northern Ireland, and the agencies of justice, becomes quite
a significant factor. That is why, for example, introductory tenancies
have been brought across to Northern Ireland and why the Housing
Executive will be one of the partner agencies in Anti-Social Behaviour
Orders, which we have laid before the House. These can have quite
a significant impact in terms of utilising the stock that we have
and, equally important, ensuring that tenants, and indeed other
residents, who have bought their houses on these estates have
a decent life. It is therefore partly about housing management
and also about quality of life. With regard to the Review of Public
Administration, it is one of the questions that is being answered
by political parties and others. We have not yet come to a view
because, as you know, my colleague Ian Pearson, who is the Minister
responsible for the process of reform of public administration,
is not only receiving evidence from a whole range of organisations
but is also engaging in dialogue with the various political parties.
It would be premature to indicate how we would see the role of
any restructured local authorities within housing—your being
fully aware of the history of all of this. There will certainly
be varied opinions, and I am not even yet sure of where the weight
of opinion will lie in this. You also mentioned the various other
agencies involved, Chairman, two of which I am responsible for:
not only DSD but also DRD. I think that there is a reasonable
degree of visibility between the objectives of these organisations;
but inevitably I accept that there will not always be exact coherence.
Perhaps I may give an example which we touched on earlier, namely
the figure of anticipated social housing build. The Housing Executive
can identify targets in terms of possible need in order to achieve
balance but, as with all departments, and as with here in GB,
we would have to be looking at the finances available. We can
say, "This is our desired target", but, in any particular
year, what are the priorities of government as a whole in terms
of financing between hospitals, schools, and social housing? That,
in many ways, reflects the dilemmas and the processes which we
see here. While there may be some inconsistencies, I am not sure
that it is unique or such a significant problem.
Chairman: You move us along nicely, Minister,
to questions on new build targets.
Q395 Mr Pound: I do not know if you have
anticipated it, but you have certainly answered many of the questions
I was going to ask—which either shows a complete lack of
imagination on my part or great political cunning on yours.
Mr Spellar: You have never been
accused of lack of imagination, Stephen!
Q396 Mr Pound: Can we clarify one issue?
Mr Crothers referred to the Northern Ireland Housing Executive
as being the "sole arbiter of housing need in Northern Ireland".
Why, therefore, the downshifting of the target from 1,750 in the
current year to 1,300?
Mr Spellar: The New Stock Model
indicated an annual requirement of about 1,500 units overall in
Northern Ireland. As I said earlier, there was therefore a feeling
that, in order to deal with some of these imbalances of demand
between areas and estates, a flexibility figure of 250 was required.
What I also said was that—partly affected by the fact that
construction inflation, as everywhere, has been moving ahead of
the general rate of inflation and also driven by the rise in house
prices, and land prices have gone up quite significantly—effectively
we currently only have funding for 1,300. That is precisely why
we may need to look for an additional bid. Those are the three
figures and those are the reasons lying behind what, as I said
earlier, could be seen as a perceived inconsistency, but which
I think is reasonably coherent and also not unrelated to the sorts
of decisions that have to be made elsewhere by local authorities,
or indeed by central government.
Q397 Mr Pound: I can quite understand
the financial imperatives there and I anticipated that was the
answer. It is primarily not a recasting of housing need per
se, but a recasting of the realities of financial life.
Mr Spellar: Yes, but it is absolutely
right that agencies, and indeed departments, that are tasked with
specific roles should focus on those roles and, within those parameters,
within their guidelines, should make their best informed judgment.
That then has to be balanced out across government by an assessment
of priorities.
Q398 Mr Pound: You mentioned the situation
in housing associations, RSLs and new build. Are you confident
in the ability and capacity of the housing association movement
to deliver against the demands that you place on it?
Mr Spellar: Yes, I think that
they have been doing reasonably well on that. I also, I hope,
identified what we saw as one of the constraints on their operations,
which was the need to work within year—particularly the
difficulty of assembling land and then moving on to build, and
therefore the role that the Housing Executive can play with them
in assembling land for a rolling programme. I think that was one
of the constraints they were suffering. I hope that we have addressed
it, but we will obviously have to keep a close watch on it to
see if there are further difficulties and further decisions that
we will need to make.
Q399 Mr Pound: What about the role of
the Northern Ireland Housing Executive in the oversight situation,
particularly following the review? Would you recommend a wider
involvement of NIHE in that area?
Mr Spellar: A wider involvement
in what sense?
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