Examination of Witnesses (Questions 140-159)
9 DECEMBER 2003
ANNE KIRKHAM,
MR NEIL
MCDONALD
AND MR
JEFF HOLLINGWORTH
Q140 Mr Betts: But they concluded in
the end that it was not good value for money.
Mr McDonald: No, I think that
is a misunderstanding of their conclusions.
Q141 Mr Betts: It was not as good value
for money.
Mr McDonald: No, I do not think
that is what they concluded.
Q142 Mr Betts: You will produce some
more evidence for us, will you? The other point you have made
is about extra benefits in the future. Could you just elaborate
on that?
Mr McDonald: I am sorry?
Q143 Mr Betts: You were saying that the
extra benefits in the future from transfers were another reason
why they were better.
Mr McDonald: The appraisal can
only take into account certain factors. In any judgment of this
sort, you do the arithmetic, look at the numbers and then ask:
What is not taken into account in the numbers?
Q144 Mr Betts: You are really saying
that RSLs can borrow more in the future to do even more improvements
and local authorities cannot.
Mr McDonald: Any surpluses that
RSLs generate are reinvested by the RSL in those properties to
deliver greater benefits to tenants. We are not talking about
a situation where you have surpluses distributed to shareholders
or anything of that sort.
Q145 Mr Betts: Local authorities do not
distribute surpluses to shareholders.
Mr McDonald: No. I am sorry, I
am not sure of the point you are making.
Q146 Mr Betts: Let's go on and ask about
the issue of "dowry funding" for partial estate transfers.
I think you have accepted there may be a problem in some deprived
communities. In the past we have had things like the Estates Renewal
Challenge Fund. Are we going to see the introduction of dowry
funds to replace that challenge funding?
Mr McDonald: Following the PSA
Plus Review, the Government has accepted that in certain
circumstances it would be prepared to see some sort of dowry funding.
Q147 Mr Betts: We do not have a scheme
as yet, though.
Mr McDonald: There are various
potential ways of doing this.
Q148 Mr Betts: What is likely to be the
outcome?
Mr McDonald: One possibility is
that the regional housing board uses some of its funding to fund
dowries.
Q149 Mr Betts: Yes, but in terms of special
funding pots for PFI and ALMOs, they have been introduced, have
they not? Do we have a different way from treating transfers there
to PFI /ALMO support?
Mr McDonald: You are quite right,
there are separate ring-fenced pots for PFI and ALMOs. In that
sense, transfer is less well provided for.
Q150 Mr Betts: That is just an acceptance
that there is going to be, again, a difference in the playing
field. It is about these kinks in the playing field.
Mr McDonald: We have said that
this is an issue that regional housing boards should consider
in looking at the overall housing strategy for their region in
working out -—
Q151 Mr Betts: That is another yes, I
think.
Mr McDonald: —how resources
should be used.
Q152 Mr Betts: Let's go to PFI funding.
What role does PFI funding play in the wider strategy? Are you
really, therefore, looking at PFI funding in terms of actually
getting responsibility for the houses out of the local authority,
as opposed to giving local authorities an additional means of
raising funding to improve the stock that they continue to own?
Mr McDonald: With the PFI route,
the stock remains owned by the local authority.
Q153 Mr Betts: There are slightly different
PFI funding routes, are there not? You can also look at the PFI
funding to provide new or refurbished up through an RSL as well
as through the local authority route. Are you seeing PFI strategically
being a major input into funding local authority improvements
to their stock as opposed to building new homes or RSLs with their
stock?
Mr McDonald: We do see it as a
significant contributor. Hitherto it has been significantly smaller
than ALMO or transfer.
Q154 Mr Betts: Can you name any schemes
where it has been significant so far?
Mr McDonald: There are 18 local
authority PFI schemes. The total stock involved is something like
25,000 units.
Q155 Mr Betts: Are those units to be
refurbished, as opposed to those that have been refurbished?
Mr McDonald: Those are units to
be refurbished—
Q156 Mr Betts: How much has been spent
so far?
Mr McDonald: —over the 30
years of the contract.
Q157 Mr Betts: How much has been spent
so far?
Mr McDonald: I do not know how
much individual—
Q158 Mr Betts: Would you let us have
a note on that as well.
Mr McDonald: We will let you know
what we have.
Q159 Mr Betts: Is there some evidence
that the ALMO schemes are actually improving houses to a lower
standard than RSLs, or they are not able to generate the same
amounts of money per property? If so, is that a concern in the
longer term?—when presumably we are trying to see Decent
Homes Standards as only a minimum rather than the absolute end.
Mr McDonald: In the latest guidance
on ALMOs there is a provision for five% to be spent on things
other than just achieving the Decent Homes Standard, so there
is that element of leeway. But it is fair to say that, by and
large, a transfer to an RSL releases greater resources from improvement
of the stock and the surrounding—
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