Examination of Witnesses (Questions 400-419)
RT HON
JOHN SPELLAR
MP, MR DAVID
CROTHERS AND
MR JEROME
BURNS
30 JUNE 2004
Q400 Mr Pound: The oversight of the whole
new build programme.
Mr Spellar: I think that there
needs to be very strong engagement between the Housing Executive
and the housing associations, not least because there are certain
strategic issues which historically the Housing Executive has
been well placed to undertake. The great advantage the housing
associations bring is in being able to lever in that additional
private sector finance. There is also some very good work being
done in terms of housing management by those associations. So
that is fine. However, there is undoubtedly a difficulty regarding
land assembly, which is also the situation with private sector
housebuilders. A key issue for them is their future land bank
and their ability therefore to plan and balance their work. As
a result of that, we have been undertaking some work to make sure
that those housing associations are able to have a sensible forward
programme.
Q401 Mr Pound: But, overall, you are
confident in the capacity of the housing association movement
to deliver against the targets?
Mr Spellar: As I said, last year
they were very close to target. They seem to be moving well this
year. We do want the Housing Executive to be engaged, but at the
same time we also need the department to be engaged. There is
a potential difficulty with housing associations as to whether
they perceive the Housing Executive as having a degree of conflict
of interest in this, because of course they are still very much,
overwhelmingly and dominantly, the major social landlord in Northern
Ireland. That is a dynamic tension, but we should recognise that
it is there and we need to make sure that all sides feel that
they are being treated fairly.
Q402 Mr Pound: It has been suggested
by your officials that any shortfalls in the new build programme
will be due to the problems of the programme rather than the funding.
Do you share this view?
Mr Spellar: I am not entirely
sure. In a moment I will invite the officials to come in to defend
or to explain what they said on that. I did point out one or two
physical difficulties, which I think that we have overcome. I
did also say that currently we were funded to the tune of about
1,300 and that is part of further negotiations. I am not sure
whether you are implying by gestures that Mr Crothers was the
official, who may wish to clarify.
Q403 Mr Pound: Indeed so, Minister.
Mr Crothers: If I recall correctly,
I think what I said was that any problems would be funding-related
as opposed to programme-related; that the difficulty would be
that we simply would not have sufficient funds to enable us to
meet our target of 1,500—as indeed is the case this year.
I said that simply because we have now put in place, as the Minister
has said, a whole raft of measures to address problems of delivery,
including the advance purchase of land—a facility whereby
housing associations can acquire land in advance, and that thereby
facilitates the programme as and when it comes on stream. That
has been a major difficulty and one of the major obstacles that
housing associations have encountered to date. Could I just backtrack
slightly and say that, whilst the Housing Executive has a major
role to play, there are other partners involved here. There is
the department and housing associations, and it is a marriage
of all three. I would have to say that all three work very closely
together. It is not as if the Housing Executive are acting independently.
They are an NDPB; they are responsible, through the department,
to the Minister. We do work very closely, with the sole objective
of trying to achieve our targets and to deliver social housing
in Northern Ireland.
Mr Spellar: I hope that Mr Crothers
meant that it was a partnership of three. Marriages of three persons
might be indicating a dramatic departure in government policy!
Q404 Mr Pound: Probably illegal in most
parts of the UK but compulsory in Utah, I believe! Paddy McIntyre,
when he was giving evidence, referred to the issue of land identification,
which you have touched on, and was suggesting that the Housing
Executive should have a greater role in relation to land identification.
Has any consideration been given to this?
Mr Spellar: We have created a
new facility to allow housing associations to acquire land in
advance. To an extent, we are also over-programming on that, in
the expectation that one or two of those will not, for one reason
or another, come to fruition. If they all did, of course, we would
then have to look at slowing down parts of that programme. I think
that we are reasonably confident that this is starting to deal
with what I fully acknowledge was a difficulty that the housing
associations were running into. I think that we would like to
see that bed in a bit.
Q405 Mr Pound: You talked about land
banking. I cannot remember what the German word is for when you
actually assemble packages of land. There is a word which is in
quite common usage for land assembly for future development. Who
would have oversight of that, or would it be co-operation between
RSLs or HAs?
Mr Burns: In that situation, if
it was an area where it was difficult to put land together, it
would be the role of the Housing Executive to identify land particularly
in areas where there is a housing need and difficulty in obtaining
sites. The Housing Executive, using its expertise in specific
areas—and it has a good in-depth knowledge of the situation
on the ground in a lot of areas—would identify potential
sites and then build up parcels of land that would be suitable
for development. There are areas where it has land of its own
and there is no need for social housing. In areas like that, it
can sometimes package land together under a developer's brief
and then encourage private developers to come in and provide private
housing on it. Indeed, in some situations they would get commercial
developers to provide commercial development, if there were more
of a pressing need for that. In Newry, for instance, there were
a number of blocks of flats where there was no demand for them
any more and no need for social housing in that particular area.
The Housing Executive demolished the flats. They have now parcelled
together that land under a commercial developer's brief, and they
will then sell that to the commercial sector.
Q406 Mr Pound: Is this predominantly
an urban phenomenon, in terms of this bundling together?
Mr Burns: Yes.
Q407 Mr Pound: My final question is this.
What about if there was a consortium of housing associations?
Could they operate semi-independently, or would it still be very
much with the overview of the Executive?
Mr Spellar: I think that they
would do it in co-operation because, as I was saying earlier,
what you need is visibility of the various parties' operations.
However, if a group of housing associations felt that they could
put a package together, that would be utilising their skills and
getting to the critical mass that would be able to undertake such
a measure.
Q408 Mr Luke: I have one or two questions
to do with the Housing Executive, but you asked for clarification
from the previous questioner, Minister, on what he meant by oversight
of the new build programme. Given that there has been a shortfall
on targets and that some comments made in evidence to this Committee
indicate that the housing associations in Northern Ireland are
too small effectively to hit the targets that you set them, are
you now ruling out that any of them will turn over new build programmes
to the Housing Executive?
Mr Spellar: What exactly do you
mean by "too small" in that context?
Q409 Mr Luke: Points have been made about
a consortium and examples were taken from some of the organisations
involved with housing associations. The Northern Ireland housing
associations seem to fall more into the category of Scottish housing
associations, which are primarily based on a co-operative basis
and are very small. What we are seeing in Scotland is that many
of them are now being taken over by larger English housing associations—to
name two, Home and Sanctuary. Some of the evidence we have taken
in Northern Ireland seems to indicate that the targets which have
been set have been ambitious and the housing associations involved
do not have the ability to deliver.
Mr Spellar: I think that it depends.
In some cases there are niche housing associations that serve
a particular need and provide a local service. In other cases
I think that the housing associations themselves have recognised
this and a number of them have amalgamated. I am scratching my
head to remember the name of the office I opened. I think that
it was down in Reverend Smyth's constituency. It was the Belfast
Community Housing Association, where a number of housing associations
had gravitated. You might therefore be able to argue that it had
reached a critical mass in terms of reaching a wider area. If
you then come on to the question of the role that they play in
new build as opposed to housing management, and the relationship
that has to the Housing Executive, to some extent we inherited
a policy on new build. Back in 1996, the housing policy review
suggested that the Housing Executive would take over responsibility,
the oversight, for the new build programme. However, the then
Minister for Social Development in that devolved administration
took a decision not to pursue that recommendation because of concerns
about potential conflicts of interest—as I was indicating,
namely one, indeed the major social housing landlord, effectively
having oversight and control over the others. Notwithstanding
that, equally I do not think that we should underestimate the
co-operation that exists between them. A further factor that would
come in with regard to new build is, as I was saying earlier,
the ratio of private sector money levered in by housing associations.
The greater the role of the Housing Executive in new build—and
there are some advantages, as I was outlining, particularly in
developing a rolling programme—at the same time that would
clearly be falling on to public sector borrowing.
Q410 Mr Luke: Could we turn briefly,
moving from new build and the Northern Ireland Housing Executive,
to the management of social housing in Northern Ireland? Your
officials have responded to the recent HACAS Chapman Hendy report
by saying that they do not see a move from the status quo in the
actual management of social housing to deal with the Northern
Ireland housing stock. That seems to fly in the face of what is
happening both north and south of the border, where there have
been major transfers to other organisations. What are the main
conclusions—and this may be a question to your officials—that
we can draw at this early stage from the HACAS Chapman Hendy report?
Mr Spellar: We have received the
report. We are involved in discussions with other departments
on that report. Once we are through that, I will be quite happy
to make that available. I hesitate to say "published",
because I think that what we will probably do is put it on to
the website; but certainly to put that into the public domain.
As you rightly identified, there are a range of options. We, as
the government department, have not yet decided on our preference
within those options. That is why we are discussing with other
departments. It would be a little premature of me to indicate
a preference, but equally I want to give the Committee the assurance
that we will put the report into the public domain and we will
also be making public our response and our conclusions.
Q411 Chairman: Forgive me, Minister,
for asking the obvious question. Could you put any dates to both
your publication of the report and your decision-making?
Mr Spellar: No, not immediately,
but equally I do not want to hang about with it either.
Mr Burns: Needless to say, there
will also be a read-across to the Review of Public Administration.
If there are any suggestions of change to the Housing Executive,
it would be premature if our department were to recommend something
like that, as that could be seen to be influencing or indeed pre-empting
the outcome of the Review of Public Administration. So we need
to take account of that as well.
Mr Spellar: As I said, I am engaged
in discussion with other departments, but I am slightly constrained
in announcing a timescale on it, because we are not entirely in
control of that.
Q412 Chairman: One of the themes of this
inquiry has been that there have been several reports, studies
and planning guidance that have not been delivered within the
timescale that was suggested or promised. We just reiterate the
need, if possible, for that to be as soon as possible.
Mr Spellar: I take that point
on board, Chairman.
Q413 Reverend Smyth: Can we look at the
House Sales Scheme. There has recently been a date announced for
that proposal, so that we can at least deal with something that
is before us. What policy objectives are the revisions designed
to achieve?
Mr Spellar: Essentially, we have
looked at that and what we want to do is recognise the desire
of a number of people to move into home ownership, but also to
look at the balance between that and the interests of those who
are on housing waiting lists or who will be on housing waiting
lists in the future—the sort of issue that we were discussing
earlier about the availability of social housing, and the availability
of social housing in areas into which people would want to move.
Therefore we need to get that balance. We have looked at changes
that have taken place in Great Britain. We have put out the consultation
document. The fixed date which we put there was that applications
received after the date of the publication of the document would
be considered in the light of the outcome of the decisions arising
from that consultation. That does not mean that people cannot
apply, but it does mean that, with effect from that date, the
terms under which they will buy will be under whatever is the
future scheme.
Q414 Reverend Smyth: What estimate has
been made of the possible impact of the proposed changes in terms
of house sales and housing finance?
Mr Spellar: In terms of housing
finance we have to assume that there is a possibility that there
could perhaps be a temporary decline in sales. On the other hand,
both from Housing Executive properties and from housing association
properties, there would be a smaller payout from the housing funds
in respect of each property. Quite frankly, we are not able to
give a fine calculation as to how those two forces will balance
out in terms of housing finance, but we recognise that there is
a possible decline on one side and also a possible increase in
income on the other.
Q415 Reverend Smyth: On what basis and
evidence, for example, have the proposals been made to extend
the qualifying period for discount from two to five years and
reduce the maximum discount from £34,000 to £24,000?
Mr Spellar: Which is, of course,
still in advance of that which prevails in England. Essentially
it was, again, to look at the question of getting the balance
right between the interests of existing tenants, or existing tenants
who wished to buy, the interests of those who were on the housing
waiting list, and also looking at the general funding that would
be available to housing. It is equally right to look at the level
and conditions of discount that were available in England compared
with those in Northern Ireland. The indication I have had is that
there has been a fair degree of support for this. I am not saying
that it was universal or unanimous, but a fair degree of support
for these proposals—because I think that people are seeing
that we have tried to strike a fair balance between those various
interests.
Q416 Reverend Smyth: Certainly there
were those of us who felt that you were overgenerous compared
with other issues at that time, but that might have been done
as a carrot to stimulate the market at an earlier stage.
Mr Spellar: But the market is
pretty strong now and we do have to look at the number of people
who are in housing need.
Q417 Reverend Smyth: Can I address the
possible impact of the policy on the development of alternative
schemes which could be directed to those who are likely to be
squeezed out of the revised House Sales Scheme? When there is
a change in policy, it does have an add-on effect. While you said
earlier that you could not actually balance the land and so on,
it reminded me of the warning that you do not actually start building
a tower until you know you have the money to complete it—or
a king does not go to war unless he has the facilities to wage
it successfully. Is it an open-ended commitment? Will it have
an impact upon others in an adverse way?
Mr Spellar: I think that it is
only right that, when one announces a change like this, effectively,
at that particular moment, the changes apply for the future. Not
by direct comparison but certainly by analogy, I am reminded of
a previous Chancellor of the Exchequer who announced a change
to the mortgage tax relief but postponed it until the July of
that year—which led to that huge house price boom at that
time, which then led to substantial periods of decline and also
to very considerable problems of negative equity. I therefore
think that it is fairer all round to make a clean break and say,
"With effect from this date on which we have made the announcement
of policy then, once we have resolved what that policy is, this
will be the policy that will apply". Frankly, I think that
is fairer. Also, it does not encourage people to jump into decisions
which they might, on balance, want to reflect on over a longer
period of time.
Q418 Reverend Smyth: I am not referring
to the folly or otherwise of a previous Chancellor, but he learned
by his mistakes and the country suffered as well.
Mr Spellar: We learned by his
mistakes at the same time!
Q419 Reverend Smyth: If I may deal with
the private sector for a moment, how will the proposals set out
in the recently published strategic framework on renting privately
ensure that the private rented market plays a positive role in
meeting housing need?
Mr Spellar: I think that it has
been playing an increasing role, but at the same time we are also
concerned about the standards, the fitness of property, and also
the management of these properties. It is certainly true to say,
for example, that promoting and supporting the private rented
sector has been successful in the North Belfast Housing Strategy
in raising standards in management and provision. At the same
time we also have to recognise that, from the point of view of
public finance, we have to be looking at the amount of money that
is spent on housing benefit in this sector, and we also have to
look at questions of anti-social behaviour. Up till now, some
of the difficulties that have been experienced have been on properties
that are private rented, whether they were previously privately
owned properties or indeed whether they were previously Housing
Executive properties within estates, where the tenants are causing
a problem on the estates. Again, with the Anti-Social Behaviour
Orders the powers of the Housing Executive, or the engagement
of the Housing Executive, will not be just in its own properties
or indeed those of housing associations, but can also be on their
estates. This can be for the benefit of the community and of other
tenants. There is therefore very definitely a role for private
sector rented housing. We need to be looking at standards, but
we also need to be looking at community safety and good order.
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