Examination of Witnesses (Questions 100-114)
MR RICHARD
KEMP, MR
DAVID THOMPSON
AND MR
DEREK MARTIN
15 MARCH 2004
Q100 Chris Mole: You mentioned innovation
in investment, what approach should the Corporation take to encourage
longer term thinking in investment?
Mr Kemp: I think in many cases
it is working with the big associations who are big because they
have been innovative. I think there is a real problem—certainly
so far as we are concerned—with some of the small associations
who are very good at the day to day management but do not fit
into the strategic framework which a council needs if it is to
do its business in stress areas. There are two things it could
do. The first, as I said before, is not just find out good practice
but really drive that home. That would be part of the Audit Commission's
regime. There is a new framework coming out which will look at
how people are taking on the community leadership role across
all sectors so I think that would be important and the Housing
Corporation could help. However, there is then the question, do
we have too many small associations who we will not bring up to
that level. That comes back to one of the roles that I think the
Housing Corporation should be playing.
Q101 Chris Mole: Mr Martin, you talked
about the problems with the TCIs. Does that imply that some kind
of gap funding is required to plug the gap between the social
housing and the commercial development?
Mr Martin: I think you need to
look at the totality of the funding over a longer period. If we
are producing mixed tenure estates—I do not agree with mixed
landlord estates, I think that is a different thing altogether—where
you can work with the private developers to build homes and have
a flexible approach with the Housing Corporation putting the funding
in to allow the communities to access those homes, it may need
a lot of funding for some of the homes in the beginning. It could
even take the form of an equity stake rather than a straight forward
grant, which could then be recycled further down the line. TCI's
are to be used as indicators, but not a rigid rule that you cannot
go over. They should put out an indication of what you think the
housing should roughly cost to change that community or rehouse
that community. It may end up a lot more in some cases to meet
the individual requirements of the community that is being displaced.
I also have another smaller problem about big is good and small
is bad. Some of our most successful housing associations which
are putting things back into the community and working them are
small, locally based housing associations. Some of the ones that
have caused urban decay in Manchester are some of the larger ones.
Q102 Andrew Bennett: Mr Kemp, can I take
you back to this point about the diversity within housing associations,
that they have these different roles, is there not a danger that
the chief executive—often the driving force in the housing
association—gets more involved in some of these new activities
because there is a novelty value and that means that some of the
older and more traditional things that they ought to be doing
are not done as well.
Mr Kemp: That has always been
true in a way because housing associations have always judged
themselves by two things: the amount of development money they
get—because that is the up-front, sexy end of housing—and
the number of stock they have (because size seems to matter particularly
to chief executives of housing associations). So there is a danger
but the point that we are making is that as we try to deal with
any deprived area there are no one-off solutions. You cannot solve
them just by putting in social housing or just by putting in private
housing or just dealing with the roads. You have to have people
capable of doing it and it seems to us that there are all sorts
of advantages of scale in a proper combination of a public and
private sector housing activity, either in one body (ie in one
housing association) or in appropriate long term partnership between
a public sector developer and a private sector developer. Somehow
we have to merge those two or we are going to have horrible estates—as
you have heard before—where the cheap stuff round the back
is theirs and the nice stuff at the front is ours. We have to
develop these skills.
Q103 Andrew Bennett: Moving on to low
demand areas, is the Housing Corporation sorting out the funding
for areas other than the Manchester Pathfinder? The Manchester
Pathfinder appears to be way out in front. Would you say the Housing
Corporation is doing as well elsewhere?
Mr Kemp: Certainly so far as the
Liverpool experience is concerned we have full support form the
ODPM.
Q104 Andrew Bennett: But not the Housing
Corporation?
Mr Kemp: I was going on to say,
and the way the ADP is distributed on Merseyside. I think it is
a bit more problematical in the other two North West Pathfinders
because perhaps they are a little further behind us on developing
big strategies that are required. I would not criticise anyone
for a lack of coherence in that context.
Q105 Andrew Bennett: Are you sure that
is not because Manchester and Liverpool are basically very buoyant
places now and therefore there is a very good chance of finding
enough people to fill those houses in the end, whereas, as you
move further north, the market weakens because there is a lack
of people?
Mr Kemp: I think you are absolutely
right to say that, but that is why you must make intelligent and
rational investment decisions. In the case of Liverpool and Manchester
we both want to grow our cities. That will actually help the green
belt immediately round us. That is where you put your money, where
people want to be. I think other places are going to have to make
hard decisions about what is sustainable because not everything
that is there is sustainable with the amount of people who want
to live there.
Q106 Andrew Bennett: Is it not more important
to put up some money to make it possible to reduce the stock levels
in those areas?
Mr Thompson: The members of the
LGA have been saying that as each prospectus in the Pathfinder
areas are signed off they have no difficulty with the Housing
Corporation signing up to their contribution. Some local authorities
have developed implementation vehicles for private sector renewal,
low demand where you need new kinds of intervention and new kinds
of cross-subsidy far faster than other areas with different types
of intervention and different types of solution. What we are finding
in the LGA is that that is what is coming back from members rather
than the Corporation's role, the need to find a solution for each
Pathfinder prospectus.
Q107 Andrew Bennett: So if you do not
see the Housing Corporation as the problem, who do you see as
the problem?
Mr Kemp: I do not think I am saying
that there is anyone who is a particular problem. The solutions
are perhaps more obvious in places that are buoyant and less obvious
in places that are not.
Q108 Andrew Bennett: So it is the difficulty
in finding a solution rather than the cooperation to achieve that
solution?
Mr Kemp: In the particular case
we were talking about yes, I believe that is the case.
Q109 Christine Russell: Can I take you
back to what you started saying at the beginning about this plethora
of agencies and how there is a lack of clarity between their relationship
with each other and their relationship with the Housing Corporation.
Do you think there are too many agencies and, if there are, which
ones would you get rid of?
Mr Kemp: I would get rid of anything
that was a quango if I possibly could because I believe in democracy.
That is a slightly flippant comment, but actually I believe it
is very true. In many areas now the local authorities are really
taking on the role that the Government has asked them too being
strategic housing authorities, linking housing with all the other
activities. We are then told—and we have been told by Keith
Hill at a meeting only today—that if we, as a strategic
authority, think that stock retention is an option, well that
is tough because that is not going to get any money so we cannot
be strategic if somebody else is going to make our funding decisions.
We are told in the Liverpool case that we have to have a Pathfinder
Board. That Pathfinder Board actually has to have LSP members
on it. We are then dealing with things across three councils;
on Merseyside we are actually planning houses across six councils
but only three of them are on the Housing Market Renewal Board.
We then have the Regional Housing Board; we have intervention
from English Partnership which actually has a pretty poor track
record in dealing with people issues, so that worries me. I do
not know which I would necessarily leave out, but I would certainly
think that you need to say in each case who is the lead agency?
In some cases perhaps all those people should be there, but it
is whose lead they follow because in a partnership you do not
all have to be equal partners, but you have to know who is saying
which way you are going. To my mind, in the North West case, that
quite clearly is the local authority—provided they are doing
it—and will be the regional government if the vote gets
taken through, but otherwise there is a strong role for the Regional
Assembly. In our case there is the Regional Housing Executive
where all the councils have signed up to one common housing strategy
so I would tend to put the democratic organisations first, but
you would probably expect me to say that.
Q110 Christine Russell: What you are
really saying is that it is totally unrealistic to expect that
the Housing Corporation can have a meaningful working relationship
with all these different agencies, elected or otherwise?
Mr Kemp: Not necessarily providing
someone defines what their job is. There may be too many. The
number does not concern me too much as long as people are making
the appropriate intervention. For example, whilst I would criticise
English Partnership for a particular range of activities, they
are excellent at civil engineering activities and we are talking
about some quite big civil engineering jobs. If that is what their
role is, that is great. If they have the special expertise, let
us use it. The question is who is constructing the strategy and
who has the right to construct that strategy that is important.
People then use their individual skills and specialisms to make
sure those strategies are supported.
Q111 Christine Russell: What about the
new investment regime? Do you think it is going to deliver more
affordable houses?
Mr Martin: I am actually quite
a fan of joint commissioning because I think that was a way where
the local authority could work with the local housing associations
and identify a medium and long term strategy for investment in
those areas. The idea of parachuting developers or housing associations
into some of our most difficult areas without building the links
with the community that are necessary, I think that is quite a
difficult thing to do. I know you can talk about it's who is going
to manage it properly which is a completely different thing, but
the actual development process is big for the community and needs
to be consulted properly on that. I think we have a big job to
do in terms of getting the partners right in investment into the
City in a sensitive way.
Q112 Chairman: There has been quite a
bit of discussion today about the new role of the Audit Commission
and taking over inspection, but at the same time regulation rests
with the Housing Corporation. Perhaps you would like to say something
about that. At the same time the LGA are saying that there needs
to be one lead body on these issues but Manchester is saying that
when it comes to regulation we should not simply be looking at
ticking a box in terms of how the association applies good governance,
but it should be looking at what it delivers in terms of quality
neighbourhoods. So you have there the issue of regulation being
expanded, but on the other hand there are some concerns that regulation
and inspection have been divorced and are not being coordinated
in a proper way. Would you like to make some comments on that?
Mr Martin: The feedback we have
from the RSL's that work in the City, is that the regulation they
get from the Housing Corporation is just about right in terms
of the business they do and they are monitored on that. We think
it should be more than that. How can a housing association affect
and change a neighbourhood, make a neighbourhood a nice place
to live purely by renting out a few houses? It is their contribution
to the whole regeneration of the area which they should be monitored
on as well and not just how do they collect the rent. How do they
stop crime in the area? How do they work in terms of the ward
coordination that we have in Manchester? Do they contribute to
that? What is the wider range of things that they can influence
as part of their being in the city?
Mr Kemp: I do not think there
is too much difference between us at all. The question is, who
has the skills to regulate this massive task that we have to do?
To give you an example, I chair a subsidiary of a housing association
which is an Industrial and Providence Society which owns no stock
but is the neighbourhood management vehicle for part of Liverpool
8 not only for the council but for a range of other public sector
organisations. I have 72 staff reporting to the Board which I
chair of which we pay four, all the rest are the other agencies
working together. What we have been able to find is that by tending
to the neighbourhood we are able to deal with a lot of housing
issues, for example spending housing money on knocking down derelict
pubs because there was nothing the matter with the housing, but
who wants to live at the back of a pub which has been derelict
for three years. When you say to the Housing Corporation—or
for that matter the Housing Inspectorate—how are you going
to regulate neighbourhood management, of course neither of them
have the skills, which is where you come back to the wider remit
of the Audit Commission doing CPAs and looking at the way visioning
takes place and people do react corporately to these things. Having
said that, I would not like there not to be someone who would
still look at the specific housing elements because we do not
want that to get lost as we go in and do the other things. Someone
has to make sure that the rent is being collected, that someone
is not running off with the money. It is a question of the competence
of the organisations to take on the new agendas.
Q113 Chairman: Are you suggesting the
Audit Commission can do the inspection, but then the Audit Commission
through its CPA role might be able to do this wider regulatory
function in terms of what is actually being delivered in terms
of better communities, et cetera. The Housing Corporation is stuck
in the middle doing the sort of good governance regulation, is
that not even more messy?
Mr Kemp: Not necessarily, no,
provided it is properly defined. I do not think they just deal
with the governance things, there is a whole series of things
which just relate to the running of a business and these are very
big businesses. I am conscious that the board of which I am a
member with a £20 million turnover is a lot bigger in terms
of turnover of staff and expertise than a district council in
Cheshire that I am advising. There is a need to look at the nuts
and bolts of those organisations which I think is a job which
very clearly could be performed by the Housing Corporation.
Mr Thompson: One precise response
to your question is that there is no automatic read-across on
the best value performance indicators used to measure the performance
of RSLs and local authorities. We are finding our LGA members
are saying that in a local authority area you need read-across
so that people making choices about where they should live and
who should manage their homes and how well they manage have similar
benchmarks. That is a response in some way to having some outcome
from this effort which people can see and make choices about.
The price we are paying for the separateness are two types of
assessment that do not automatically compare.
Q114 Chairman: So you are saying that
it is not necessarily wrong for the Audit Commission to have this
role, but there has to be some better link up with being regulatory
and inspectorate as well?
Mr Kemp: Yes, indeed. At the moment
they are sometimes trying to look at the same things. As long
as they do different things but are complementary and join up,
then perhaps they will have relevant strengths for those individual
purposes.
Chairman: We have no more questions.
Thank you very much for the detail of your answers and also for
the speed at which you have given them to us.
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