Examination of Witnesses (Questions 381-399)
RT HON
KEITH HILL
MP, MR NEIL
MCDONALD
AND MR
PETER RUBACK
17 MAY 2004
Q381 Chairman: Minister, welcome once
again to our Committee. For the sake of our records could you
introduce yourself and your officials, please.
Keith Hill: Thanks, Chairman.
My name is Keith Hill and I am the Minister for Housing and Planning.
Perhaps before I make an introductory set of remarks I could introduce
the two officials from the Office of the Deputy Prime Minister
who will be supporting me this afternoon: Neil McDonald, Director
of Housing, and Peter Ruback, who is our Head of Affordable Housing
Division. Shall I say a few words, if I may, very briefly?
Q382 Chairman: Yes.
Keith Hill: The Sustainable Communities
Plan marked a step change in our approach to the provision of
affordable housing. Total housing capital investment has tripled,
with capital allocations rising to £5 billion in 2005-06
compared with £1.6 billion in 1997-98. We have also reformed
the way in which decisions about affordable housing investment
are made, taking account of regional knowledge and expertise.
We are clear that the Housing Corporation will continue to play
a crucial role at the heart of this new approach. The Housing
Corporation have an excellent track record in delivering the affordable
housing programme, consistently hitting challenging targets for
completions. They have also been an effective regulator of the
RSL sector. RSLs enjoy interest rates up to 1% less than other
corporate borrowers, reaping huge savings in the long run. This
is a testament to the success of the regulatory regime and lenders'
confidence in the Housing Corporation as the lead regulator. The
end-to-end review highlighted areas for improvement. We are working
with the Housing Corporation to address these, so that we can
continue to make great strides in addressing the country's need
for more affordable housing. The Corporation have already responded
to the efficiency agenda by introducing a new partnership approach
to investment. Efficiency gains of up to 8% in new social housing
provision have been estimated, and the ability of its partners
to continue to deliver savings in subsequent years will be an
important factor in retaining their status.
Q383 Chairman: Thank you. Without going
into detail of the end-to-end review, which one of my colleagues
will come on to in a second, could you give us an idea of when
it is likely to be finished and publicised.
Keith Hill: We expect to publish
it by the end of next month, June.
Chairman: John. Mr Cummings.
Q384 Mr Cummings: Minister, in your supplementary
evidence you tend to suggest that the end-to-end review is basically
concerned with clarifying relationships rather than proposing
any radical changes. If we can turn the clock forward a year,
how do you believe the Housing Corporation will have changed as
a result of this review?
Keith Hill: I think there will
be changes on both sides, as it were, but let us be clear that
the purpose of the end-to-end review was to secure more efficient
and more effective delivery of Government housing policies. We
have worked very carefully, as you know, with the Corporation
and other key stakeholders in the end-to-end review, and we have
looked critically both at the performance of the Corporation itself
but also at the Department's engagement with the Housing Corporation,
so we think that the result of the end-to-end review will be a
more integrated relationship in terms of policy development leading
through to delivery and implementation on the part of both the
Corporation and of the Office of the Deputy Prime Minister.
Q385 Mr Cummings: So therefore you are
very confident that the Housing Corporation will rise to meet
this challenge?
Keith Hill: Yes, I think so. Let
us be clear that already in terms of the delivery programme that
we have identified over the two years from March of this year
to 2006, that we are seeing significant savings—I identified
them in my opening remarks—and of course we shall see very
significant new levels of delivery. I draw the attention of the
Committee to the fact that in the two years up to March of this
year, housing delivery, affordable housing by the Housing Corporation
and the RSLs, stood at a total of 43,500. Over the next two years
we expect that delivery to be increased to 62,000.
Q386 Mr Cummings: The reason I ask the
question, Minister, is because it looks as if most of the people
involved in the review seem to have a vested interest in maintaining
the status quo. Do you believe that could be the reason why the
end-to-end review has come up with few concrete recommendations
for change?
Keith Hill: I will say this, Mr
Cummings. I would not say that the end-to-end review has been
an exercise in complacency or of self-congratulation; far from
it. I think that when we publish the conclusions of the end-to-end
review and the action plan which will be associated with that,
next month, it will be evident that we have been far from uncritical
in our approach to these matters. At the same time I am clear
that this is absolutely not the moment for major re-structuring
in the way that we in the public sector deliver on affordable
housing. As I am sure you will agree, housing has risen to the
top of the political agenda. I think it is up there with health,
education, the fight against crime. We have major new investments
going into social and affordable housing in the current spending
plan period. It goes without saying that we hope very much that
those levels of investment will be sustained into the future.
In other words, the liner is cruising ahead full steam, not in
the remotest danger of being sunk by an iceberg, and this is absolutely
the last moment at which one would want to start rearranging the
deckchairs.
Q387 Mr Cummings: It would appear that
the Treasury and indeed the Number 10 Delivery Unit seem to be
taking an increased interest in what the Corporation does. Is
there a danger of the Treasury now running the Government's housing
policy?
Keith Hill: The Treasury, of course,
in my humble observation and experience, has a significant role
in all Government departments which have significant spending
capacities, and that is right and proper. The Treasury is both
a source of creativity but also a useful check on the performance
and the efficiency of other Government departments. We welcome
that engagement; it is inevitable; but let me assure you and the
Committee there is no question of the Treasury taking over the
housing function from the Office of the Deputy Prime Minister.
Q388 Mr Cummings: To take that a bit
further, Minister, the Chancellor said in his Budget statement
that the Government accepted many of the recommendations made
in the Kate Barker study. Can you tell the Committee how these
proposals are being taken forward, and do you have a timetable?
Keith Hill: There were, you will
recall, a large number of recommendations and proposals made by
Kate Barker in her final report, and we have different timetables
for different aspects of that work. I know one issue which is
of particular interest to the Committee is the proposal for a
merged function between regional planning boards and regional
housing boards.
Q389 Mr Cummings: What is the timetable
for that?
Keith Hill: I am going to tell
you. The Government accepts, of course, the need for reform, and
we intend to open consultations on that proposal with the intention
of coming forward with proposals for a merged function towards
the second half of 2005.
Q390 Andrew Bennett: Very quick that,
is it not?
Keith Hill: We are a very dynamic
department, spurred on by the Treasury, of course.
Q391 Mr Clelland: We mentioned Kate Barker's
report, as we are bound to do, of course. One of the suggestions
she made in order to meet demands and bring prices down was to
increase significantly the number of private sector homes built
each year. Is the Government revising its house-building targets
in the light of the report?
Keith Hill: We welcome Kate Barker's
report. We welcome the contribution it has made towards securing
greater stability in the housing market, and also the ways in
which it has identified the way in which we can secure greater
provision of affordable housing. Kate Barker herself set out a
range of housing outcomes. Her base-line was actually the target
that the Government of course set out in the communities plan
of last year, which for London and the wider south-east is the
930,000 set out in RPG-9, plus the 200,000 that we expect to deliver
through the growth areas. So we were pleased to see that we were
within the kind of parameters identified by Kate Barker. She,
of course, is in favour of larger figures in order to achieve
those wider econometric goals. But of course her figures are national
figures, and one of the key things that we will have to look at
is how these higher targets are to be achieved at the regional
level. So I think all partners accept that a good deal of analysis
and a good deal of work need to go on in order to respond to the
agenda that she has set.
Q392 Mr Clelland: But in terms of private
homes, which of the targets that Kate Barker has put forward is
the Government likely to be adopting?
Keith Hill: We cannot say at this
stage. That is exactly why we want to reflect and consult on these
proposals and their achievability. We welcome the commitment that
she sets out to increased numbers; it is a matter of implementation.
One thing that we totally concur with Kate Barker on, of course,
is our belief that the private sector needs to up its gain. The
truth is that the private sector has been operating at steady
state really for about 15 years, 160,000. The truth is that it
has not been responsive to changes in the housing market, and
we are engaging at a number of levels with both the house builders
and developers, but also, critically, with the local authorities
and with the planning structures, to create a situation in which
higher housing growth can be achieved.
Q393 Mr Clelland: But we cannot quantify
it yet? Kate Barker suggested, for instance, anything between
70,000 and 120,000 additional private houses each year.
Keith Hill: We are certainly not
in a position to commit to any of those numbers at this stage.
It is a challenging agenda, and I am sure you would agree with
me that it would be almost facile for the Government to accept
a number without really thinking very hard about the resource
implications of delivering higher numbers.
Q394 Mr Clelland: OK, can I turn to social
housing. You mentioned earlier there is a major investment that
the Government is putting in in this area. What increase are you
hoping for in this July's comprehensive spending review?
Keith Hill: That absolutely is
a matter for the Treasury, and I think you know, Mr Clelland,
that it would be worth more than my humble job is worth for me
to attempt any precision on that particular subject.
Q395 Andrew Bennett: At least you could
tell us what you are asking for.
Keith Hill: These are matters
for negotiation within Government, Mr Bennett. I am all for transparency,
but there are limits.
Q396 Chairman: Some other things have
come out of the inquiry. I feel a slight unease that the Government
is indicating that there is going to be a step change in investment
in housing; indeed there has been, there is going to continue
to be, and the organisation which served us well when we were
ticking along or even slightly backwards, as happened to some
extent in the eighties and nineties, do we need a bit of a shot
in the arm? There needs to be a reform so that the organisation
or framework generally can deliver this greater amount of investment?
I am not quite sure, in a sense, that is going to happen, somehow.
Keith Hill: We think we are doing
that with the major agency we use to deliver our investment in
social housing, and that is the subject of your inquiry. I hope
I have already begun to explain some of the ways in which we see
the Housing Corporation and the RSLs stepping up their performance.
When we speak to developers, of course, their main complaint lies
in the planning system, and you will know—and I am sure
rejoice with me—that last week we finally saw the enactment
of the Planning Bill first introduced into this House in December
2002. I am told that it has had the longest parliamentary journey
of any piece of legislation ever, but it was the first major bill
to carry over, of course. We do believe that the new planning
mechanisms that we set out in the Planning Compulsory Purchase
Act will go a long way to creating a planning system at the local
level which is fairer, more flexible, more participatory, but
also faster as well. We think that is important. You will be aware,
of course, that through our growth areas programme we are injecting
huge investments into the infrastructure in the growth areas—I
have particular responsibility for the Thames Gateway—but
that total programme from ODPM amounts to something in the order
of £660 million, which is about new transport, new education,
new health, land remediation, new housing investments in those
areas. The Department for Transport of course again in the broader
growth areas terrain made announcements as a result of the completion
of multi-modal studies of something like £2.1 billion worth
of investment in new transport infrastructure. That is very helpful.
We have a new and dynamic English Partnerships, which is very
actively engaged in land assembly, and as an aspect of that I
am sure that you were very pleased to see the announcement we
made about a month ago on the deal that we have arrived at with
the Department of Health in terms of the 101 NHS sites which we
think can also contribute to significant new housing growth; and
we are engaging constantly with developers and the private sector
to encourage them to improve their own performance across a range
of issues. We are certainly, we believe, creating a broad framework
in which there are much bigger opportunities for investment and
development by house builders than heretofore.
Q397 Mr Clelland: The key point that
came out of the end-to-end review of course—and this is
the one emphasised by the Treasury—is the need to improve
the efficiency of housing associations. Can housing associations
become more efficient without driving down quality?
Keith Hill: I am not entirely
sure what you are getting at there. I would be grateful if you
could perhaps just explain a little more what you think the choice
is.
Q398 Mr Clelland: You remember what happened
to local authorities, for instance. Local authorities were a big
driving force for providing new housing after the war, and a terrific
job they did—I am not sure why they are not allowed to do
it any more, but however—housing associations now are seen
to be getting into the same position, where Government at the
centre is trying to drive down costs and what they call "improve
efficiency", which led to a lot of the sixties' development,
for instance, that local authorities got into so much trouble
over. Is there not a danger of this happening again? If efficiency
is going to be the aim of the Treasury, they have got to be looking
at efficiency all the time, are they going to be compromising
on quality, particularly when it comes to new developments?
Keith Hill: The answer is no,
they are not. Thank you very much indeed for that explanation.
The answer is no, they are not going to be compromising on quality.
I have it in mind that there is something called the quality design
implementation scheme, whereby we expect the Housing Corporation
to monitor very carefully the quality of the products of the housing
associations. But I think rather more to the point, as you will
be very well aware, we have worked with the Housing Corporation
to identify a fairly small group of partners for the implementation
of the greater part of housing investment coming forward from
the Housing Corporation—about 70 of them in total. These
are housing associations with proven records of efficient and
high quality production of new housing. We are confident that
they will be producing not only bigger numbers, more cost-effectively,
but also it is absolutely fundamental that the quality of the
product should be high. The truth is, of course, that we recognise
that absolutely central to our commitment to housing growth, but
also of course to primary investment on brown-field rather than
green-field, that we need to drive up the densities; and absolutely
critical to denser housing is higher quality of design, so there
is a virtual circle here.
Q399 Mr Clelland: Is that not exactly
what was said in the sixties—higher densities, more adventurous
designs?
Keith Hill: But it was not cheap,
was it?
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