House of Commons - Northern Ireland Affairs

Select Committee on Northern Ireland Affairs Sixth Report

4 NEW BUILD PROGRAMME

50. Only five of the 39 registered Northern Ireland housing associations have more than 1,500 units while 30 associations have fewer than 500 units.[79] Not all associations participate in the social housing programme and there are currently 25 associations in the general development programme while the remaining 14 retain their original, specialist focus to provide housing for particular groups such as older people and people with disabilities.[80] NIHE stressed the crucial importance of the social new build programme in reducing housing need and indicated its own commitment to continue and enhance its support role to housing associations.[81]

51. As noted earlier, following the transfer of responsibility from NIHE to housing associations in April 1998 the target for new builds has not been met. This has been one of the most serious issues brought to our attention and we heard evidence of the serious tensions it has caused between the associations, NIHE and government. [82]

52. According to evidence from the Chartered Institute of Housing (CIH), the switch of responsibility for new build was prompted not by a belief that the associations could do a better job than the NIHE, but because they had access to private sector money unavailable to the NIHE and because their borrowing was not a charge on central government.[83] The CIH considered that changes to the NIHE structure could be made to allow it flexibility to meet investment needs,[84] that expertise in the NIHE was not being utilised, and that "only a handful" of the associations had the capacity to "undertake new development".[85]

53. The DSD and the Northern Ireland Federation of Housing Associations argued that, from a financial perspective, the change of policy had been a success because the housing associations had attracted around £200 million of private loans over a 10-year period to address social housing needs.[86] However, only a proportion of this private funding can be attributed to the change of policy. Prior to the change housing associations borrowed significant levels of private finance mainly to provide specialist housing and this role has continued. For example, in the two years before 1998 when they took over full responsibility for general social housing, they borrowed an average of £16.5 million of private finance.

54. When we questioned a range of witnesses on whether housing associations were capable of achieving the new build targets there was a reluctance to apportion blame and respondents were full of praise for the record of housing associations in providing specialist type accommodation. However, while the commitment to meet their new responsibility to provide general needs housing was not questioned, there was clear concern about the failure to meet the targets.[87]

Departmental Review

55. Following mounting criticism about the failure to meet new build targets,[88] DSD carried out a review to examine the difficulties faced by housing associations in delivering the new build programme. As a result, a number of measures were taken including the establishment of a tri-partite working group involving DSD, NIHE and the housing associations; and a planning liaison group was set up specifically to address planning delay issues.

56. DSD stated that land availability and acquisition were the principal difficulties faced by housing associations in developing schemes.[89] The NIHE had a 'land bank' that it was able to draw on for many of its new build schemes when it was responsible. This was not available to the associations who were not funded to acquire land in advance of an approved scheme. Any purchase of land in advance carries expense and risk for an association. Housing associations were also penalised through the Housing Association Grant as the level of funding was determined by the date of acquisition rather than the date of approval of the scheme. DSD pointed out that:

"…Housing Associations have been expected to purchase land, secure planning permission, appoint a contractor and start on site, all in the 15 month period from issue of the new build programme to [the] end of [the] financial year."[90]

Recent "massive" increases in the cost of land for residential development, which has quadrupled since 1995,[91] also pose a difficulty for the housing associations.

57. The length of time taken to secure planning permission for housing development was highlighted by many witnesses, including the Northern Ireland Federation of Housing Associations,[92] as a further, major cause for the failure to meet the new build programme targets. The view of the Construction Employers Federation is that the planning system is overburdened, and it pointed out that "it is not unusual for a planning application to take anything up to two years to complete."[93]

58. As noted earlier, planning functions in Northern Ireland are divided between the Department for Regional Development (DRD) with responsibility for strategic planning, and the Department of the Environment (DOE) which is responsible for operational planning, including development plans and planning applications. Officials explained the measures being taken to address planning delays through, for example, the Planning Liaison Group noted earlier,[94] and work with the Northern Ireland Local Government Association to streamline the consultation process with District Councils.[95]

59. The Construction Employers Federation also considered that the lack of suitable land for development contributed to the failure to meet the new build targets.[96] DOE's view was that there was no general land supply problem but that social housing providers were struggling to compete with the private sector to acquire land.[97]

Planning Policy Statement 12

60. DRD prepares Planning Policy Statements (PPS) as part of its guidance in implementing the Regional Strategic Plan. The most significant of these in relation to housing is PPS12, 'Housing in Settlements', which is currently in draft form. DSD described PPS12 as:

"…the whole 'Plan, Monitor and Manage' process to ensure the delivery of the right amount of housing of the right type in the correct location and at the right time. This involves the introduction of housing needs assessment, urban capacity studies, and a phasing approach to development plans which are the main vehicle for the delivery of housing."[98]

61. Those who gave evidence to us on PPS12 considered that it had the potential to be a positive influence on the delivery of social housing and called for it to be introduced as a matter of urgency.[99] NIHE considers it "critical in sustaining the supply of land for affordable housing",[100] and that it " offers a significant role for the Housing Executive in terms of influencing both the assessment of what land is required and the allocation of that land to meet social housing need and affordable housing."[101]

62. The draft Policy and Planning Statement (PPS12) 'Housing in Settlements' has the potential to make a significant impact on the supply of land for social and affordable housing and was issued for a three-month consultation in November 2002. We are extremely concerned that, almost two years later, it has not been finalised. We urge John Spellar, Minister with responsibility for regional development, to explore the reasons for this unacceptable delay, and to ensure that it is finalised and issued without delay.

63. As noted above,[102] we have had evidence to suggest that social housing providers are struggling to compete with the private sector to acquire land. DRD suggested that greater use of Article 40 agreements under the Planning (Northern Ireland) Order 1991 could help to force developers to provide social and affordable housing in private developments. This is similar to Section 106 Agreements under the 1990 Town & Country Planning Act in England and Wales. DRD told us:

"In GB one of the successes has been the very proactive use of Section 106. We have similar Article 40 agreements. They have not been used widely, in our view, in Northern Ireland. Together with DOE, we do envisage some wider use of those in the future. That will assist, to use the words carrot and stick, to force developers to provide social and affordable housing within developments in future. That will come with the policy of PPS12."[103]

64. The recent House of Commons select committee report, Affordable Housing, recognised that Section 106 Agreements "are now increasingly used to secure contributions to affordable housing and community needs". It concluded that while "Contributions towards affordable housing secured through the planning system so far have been modest and the potential is inevitably limited …the major contribution by planning agreements is to promote mixed tenure development".[104]

65. We recognise the potential for the planning system, through Article 40 agreements under the Planning (Northern Ireland) Order 1991, to contribute to the provision of social and affordable housing and to promote mixed tenure developments, and we urge that greater use of such agreements is made by Departments where appropriate.

Role of Area Plans

66. Area Plans, which apply to individual District Council areas or groups of Councils, also play an important role in identifying land for housing. The introduction of the Regional Development Strategy changed the way the likely need for additional housing is assessed, and consequently the Department of the Environment (DOE) has been involved in a programme to update current Area Plans. The original target date to complete all Area Plans using this new approach had been 2005, but the Annual Report 2002/03[105] on progress in implementing the Programme for Government indicated that the target had been "...adjusted to be achieved by end of 2006".

67. NIHE's assessment of need for both social housing and low cost affordable housing informs the preparation of Area Plans and enables DOE to make provision for that level of housing in the Plans.[106] NIHE explained that PPS12 would link closely to the area plans and that this was intended to secure more land for housing development.[107]

68. DOE told us that the draft PPS12 has already influenced the preparation of Area Plans which "are now required to include policies to provide a housing choice by achieving a mix of tenures and house types in order to help create more balanced communities".[108] There was a recognition that the delayed PPS12 would have an impact on land availability for social and low cost housing but that its potential would not be maximised fully until completion of the programme of Area Plans. The Northern Ireland Federation of Housing Associations summed up a general concern of many witnesses: "The production of area plans is way behind the programme and although there are ambitious targets for putting that right it still might take years to get complete coverage and even then we are in for a process of review."[109]

69. Unfortunately, those concerns seem to be well founded. DOE explained that the likelihood of objections leading to public inquiries will result in slippage. Consultation on new legislation aimed at speeding up the process later this year is planned.[110] Though this might help in the longer term, it is unlikely to enable the 2006 target for Area Plans to be met more easily. The DOE told us that the 2006 deadline was in doubt:

"…I would be naïve not to assume that there would be perhaps a higher than expected level of objections over our area plans. It is interesting that planning is on the increase. Environmental awareness is on the increase. Therefore, I cannot say that this will be achieved by 2006. I think there will be slippage there; we will do our best to minimise any slippage but it would be very optimistic to say this will be done by 2006, given the programme that we are involved in, given the likelihood of difficult public inquires, but we will minimise how far we go beyond 2006 as much as we can, but some of it is beyond our control."[111]

70. Public inquiries relating to Area Plans are undertaken by the Planning Appeals Commission but a recent media report on the Ards and Down Area Plan suggested that the major cause of delay was the inability of the Planning Service (an agency of the DOE) to respond to objections in a timely manner .[112] The Planning Service in the Ballymena area is reported to be in crisis as it attempts to process applications and deal with objections to the area plans.[113]

71. We recognise the practical difficulties faced by the Department of the Environment in dealing with large numbers of objections to Area Plans, but are concerned that the 2006 target for completion of all Area Plans (itself a slipped deadline) is unlikely to be met. The establishment of Area Plans is of critical importance in identifying land for social and affordable housing against a background of growing need. We urge the Minister to review the current state of all Area Plans and to take appropriate steps to ensure that the 2006 target is achieved. The prospect of new legislation to speed up the process of public inquiries in the longer term is welcome but will not address the short term difficulty.

Management of Social Housing

72. Local authorities in Great Britain have been required to consider a range of options to improve and modernise their social housing stock.[114] We recognise that a different solution may be appropriate in Northern Ireland given the existence of a single housing authority and its relatively more modern stock of housing. We found that a fundamental study commissioned by DSD and NIHE to examine the available options for the future management of social housing in Northern Ireland was undertaken by HACAS Chapman Hendy in October 2000. In evidence to the Committee for Social Development of the Northern Ireland Assembly in April 2001, the Chartered Institute of Housing requested the publication of the HACAS Chapman Hendy report in order to stimulate wider debate. Three years later the report has still not been published.

73. We asked the Department about the report in March this year and were told that as a result of the prolonged drafting process it had "only been produced within the last couple of months". NIHE explained that "on the advice of the consultants we delayed closure on this particular evaluation until we had greater detail and clarification from the Treasury about newly emerging models in England.^"

74. When pressed about the outcome of the study the Department indicated that "it will be as likely as not the status quo in that the Housing Executive is fulfilling an important role in terms of both its strategic function and its landlord role."[115] We were interested to note that the NIHE appeared to question this "There is no such thing, I suspect, as the status quo in public service these days and the report does not say that. It is a public sector route but there are conditions that the HACAS recommends and we must take action on."[116]

75. We asked the Minister about the government's view of the report's conclusions and when it would be published. The Minister was unable to give a date for publication of the report, or an authoritative view of the report:

"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."[117]

76. We have noted with alarm the systemic failure of housing associations to meet the targets for new build social housing over recent years. The review undertaken by the Department for Social Development of the difficulties faced by housing associations will have a limited impact. It is our conviction that a root and branch review of the management of social housing in Northern Ireland is long overdue and we call on the Minister to initiate one.

77. We believe that there would be merit in giving the Northern Ireland Housing Executive (NIHE) oversight of the new build programme together with a greater role on land identification. We also call for serious consideration to be given to returning some responsibility for the new build programme to NIHE, with appropriate powers to raise private finance.

78. We are deeply disappointed that a major study into the future management of social housing in Northern Ireland, commissioned in October 2000, has been the subject of serious delay and has not yet been published. We call on the Minister to publish the HACAS Chapman Hendy Report as a matter of urgency to encourage wide public debate on the options for the future management of social housing.

79 Housing Association Stock Levels at 31.03.03, DSD website Back

80 HC 493-II QQ127, 131 Ev 73 Back

81 HC 493-II Ev 81 Back

82 HC 493-II Ev 134 Back

83 HC 493-II Ev 2 Back

84 HC 493-II Ev 17 Back

85 HC 493-II Q10 Ev 7 Back

86 HC 493-II Ev 23; Q124 Ev 72 Back

87 For example, HC 493-II Q236 Ev 103; Ev 187 Back

88 HC 493-II Q167 Ev 88 Back

89 HC 493-II Ev 66 Back

90 HC 493-II Ev 66 Back