Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 600 - 619)



  Q600  Sue Doughty: In your memorandum to us you say it would be possible to build 125,000 houses a year within the Government's sustainable development policies and you also say that the sustainable communities agenda is reversed, but then you went on to qualify that. You emphasised the need to improve planning, house building standards, leadership and a lot more. It is very difficult to see how this is possible under those terms. How realistic is this target of 125,000 houses being built?

  Sir John Egan: I think it is feasible. If we look at the Thames Gateway, I would see it as a £15 billion project and I would plan it in a certain way. If you were to ask me, "Could we do that?" the answer is, "Yes" and I am actually helping the Deputy Prime Minister on the Thames Gateway. So, the answer is, "Yes, it could be done" but a number of things would have to happen. I cannot say at this point that it cannot be done because we have not got too far into the project yet. I would not say it was impossible. I would say it is difficult but that certainly it can be done. Look at, for example, what has been done in, say, Birmingham or Manchester or Leeds or Coventry. People of great leadership have gone into the job, they have got cracking and they have done a magnificent job on their city centres, absolutely terrific. If we only had to say, "If we had that get-up-and-go in the Thames Gateway and we learned to coordinate all those local authorities together and we all accepted the sustainable community agenda, could we do it?" the answer is, "Yes, we could", but an awful lot of things would have to happen to make that possible.

  Q601  Sue Doughty: You went on to say that there needed to be enormous improvements in the planning system, building performance and the development industry and you raised a large question in our minds about juggling from what could be done to actually delivering the processes. What do you think is actually needed in these areas?

  Sir John Egan: For example, going back to what I did earlier on construction, the question I was asked was, how do we improve the performance of the construction industry? The question I actually answered was, how to achieve world-class standards in the UK construction industry and therefore I could set a goal as to what we were trying to achieve. The very good clients like, for example, Tesco, Sainsbury's, Whitbread and BAA, the company I was then running, are achieving the standards that we set and indeed are capable of building world-class buildings today. So, it has been done. Whereas, the Government have not got very far down their own agenda; they have not left lowest-cost tendering in as quick a way as I would have wanted. So, they have not achieved it. On the other hand, it is achievable and companies are doing it. So, I can say what is to be done but I am not quite sure how quickly people will pick up what is very obvious as a plan of action.

  Q602  Sue Doughty: We are really trying to do these within the short to medium term and you have set out quite a few challenges there and they are very real challenges. So, we are back to the reality of whether or not these targets can be met.

  Sir John Egan: Can I just say that I do not know how quickly you think it has to be done. It has to be done very quickly. London and the south east is now the most wealthy community in Europe and whether people thought one million people were going to come here by the year 2010 a few years ago, I think many of them are already here. What we do not appreciate is that we have to build or else people will find somewhere to live and they will come. They are on the way. I would have said that this has to be very urgently tackled if we are going to do it well. I sit with the government committee and I can see that joined-up government is occurring at that level. On the other hand, we need joined-up government at local level as well. We also need to be able to have regional planning in order that we do not try to build the same resource in two different places when one will do. We have to have regional planning. We have to have very good urban coding in order that developers will know when they have designed something that will get planning permission. It is very inefficient today; they keep offering plans and they have no idea which ones will work until finally the bell seems to ring and it has worked. We have to be very specific. In the Thames Gateway, the most urgent thing is to get the transport systems established in order that we know which new communities can be developed. You can develop communities very rapidly in the Thames Gateway if you have railway transport. I had asked for that to be completed by midway through this year and we are not there yet. I have to say that if we are going to do this huge project and do it well, we should not be slipping on timetables, we should get them right. We do not know yet which communities we can develop versus which ones we cannot. We have been promised that it will be done towards the end of the year, but that is not the same thing as getting it done in June—I would say that it is six months late already.

  Q603  Mr Chaytor: Your comment on transport interested me because it linked in with something in your report that caught my eye. Do you consider the purpose of developing sustainable communities in the south east is to provide more housing for more people to work in Central London and ease the pressures on accommodation in Central London or do you see the purpose as developing stronger more autonomous centres of economic activity on the periphery throughout the region? From what you have said, the implication is that you envisage more and more people commuting in through better transport links with London but more and more people commuting in longer and longer distances and I would be interested to hear what you think about that.

  Sir John Egan: Let me first of all make two practical points. The first practical point is that the people are on the way, those one million people are coming and many of them are here already. They are not coming to Saffron Waldon, they are actually coming to London. That is where the huge wealth is being created. Incidentally, these are not the poor people of the world who are coming here. These are people with the world-class skills that are needed in things like the financial services industry. They are coming here because they think they can earn far more money here than they can earn anywhere else in the world and that is why they want to come and they are on their way. So, there is a certain speed attached to it. If you start doing your planning for people who are not going to satisfy that need, that need is still there, so I think we have to be very, very practical about that. The second thing we have to be practical about is, if you have rapid transport into Central London, you can develop the community very, very quickly. You do not need to search for jobs. The jobs are there. Fifty per cent of the people can get jobs by getting on to a train. So, you develop the community very well indeed. The third thing I have to point out is that these commuter communities are extremely well liked by the people in them. If you look at the places that got the highest marks for liveability in the south east, they were in the main commuter places. So, it is all very well building up a brilliant place in Saffron Waldon or somewhere, but that is not going to fulfil the immediate need we have which is one million people coming into London. Is it a better or worse product than something which is autonomous locally? I do not know. I do not think it makes all that much difference. On the other hand, we have an urgent need to find housing of high quality for some of the best people in the world who want to come here. So, I think we have to create very high quality communities and we have to do it relatively rapidly.

  Q604  Mr Chaytor: Do you see the priority of the sustainable communities programme as providing high quality housing for the most highly skilled people?

  Sir John Egan: Yes.[1]

  Q605  Mr Chaytor: That is not the way the Government sell it. The Government sell it as providing more affordable housing for people working in the public services who are going to be priced out of the market in Central London.

  Sir John Egan: I am only making the obvious point that we have to cater for these people who are on their way. By the way, a number of the waiters in restaurants are also coming as well. In fact, I went on a night out recently and I said to my wife, "I wonder if we will meet anybody anywhere who is actually English" and we did not. Apart from the taxi driver who took us home, we did not meet one person. I said that a number of wealthy people are coming and a number of poorer people are coming as well, but that is not quite the point. It is outrageous to me that an average person on an average wage cannot buy a house in the south east because it is too expensive for them and I think we should set the challenge—and in fact I am discussing this one with the Deputy Prime Minister—to the building industry to start coming up with homes that are affordable, to cut out the waste and to cut out the inefficiencies in the building programme and actually start building houses that can be afforded. I think it is extremely important that communities are balanced and that everyone who needs to work in that community can get a house in that community and can afford to do so. I think the point is a very important point and one upon which we have to focus. I would like to see the £80,000 or £90,000 house sale value actually on offer in order that people with normal salaries can afford it and it is not impossible, I am quite sure that it can be done.

  Q606  Mr Francois: Can I ask what may be a very appropriate and practical question. You talked about the importance of public transport—I declare an interest: my constituency is Rayleigh and I am right on the northern fringe of the Thames Gateway in South Essex—and, in particular, rail transport and, in principle, I would agree with you. However, in the Gateway, we are coming into two termini in Central London: Fenchurch Street and Liverpool Street. They both have narrow necks. You cannot get any more lines in and out; you can barely get any more trains in and out. A number of the platforms were extended to take 12-carriage trains as opposed to eight-carriage trains to increase capacity and then recently a number of those trains were taken away from the area and given to other train operators in the Midlands because those operators now come under the aegis of bigger companies with larger franchises. So, I am really at a loss to understand what on earth is sustainable about any of that. You are nearly at capacity in terms of community in the peak as it is. I will be fascinated to know how you are going to seriously increase rail capacity into Central London given all of those constraints.

  Sir John Egan: Obviously I think that some very important projects like Crossrail will be required to make London work. By the way, for London to work as a world-class city, there should be an anywhere to anywhere capability in order that couples can live somewhere and both of them can get the jobs they are looking for, which increasingly will be in places like Canary Wharf, the City or in the West End. So, you need to be able to live anywhere and the pair can work anywhere. That is going to be very, very important. I agree with you, there are bottlenecks. Running Stansted Airport as I was, I was quite clear that Liverpool Street and the lines going into it did not have enough capacity and we need more capacity.

  Q607  Mr Francois: I take your point about Crossrail. Other than Crossrail, how are you going to provide that additional capacity?

  Sir John Egan: I was not asked to design the railway network for the south east, I was asked to design some principles that would answer the job. I have no immediate answer as to how to overcome the bottlenecks at Liverpool Street.

  Q608  Mr Francois: If you sit on the Committee and have some influence in these matters, could you possibly suggest—and I am trying to be serious—to those on the Committee that this is a problem that really needs to be looked at. Aspiration will not cut it because people cannot get on aspirations, they need to get on trains.

  Sir John Egan: You are absolutely right. We have to look at the capacity of these lines moving into Central London if we are going to fuel the requirements of Central London with people to fill the jobs. You are absolutely right. I cannot disagree with you.

  Q609  Chairman: That was very interesting. That was the first time that I have heard from anyone close to this huge project that the whole Sustainable Communities Plan is designed to house investment bankers rather than meet the needs of the indigenous housing demand.

  Sir John Egan: I think you have put too many words into my mouth there! I said that we have a very successful series of industries in Central London. Merchant banking is one of them but the whole financial services industry is a vast industry with a huge balance of payments deposited and it does employ a huge number of people and, as such, probably is employing more value added in salaries than any other industry in the UK.

  Chairman: I think that is beyond dispute.

  Q610  Sue Doughty: Fascinating as that line is, I think I had better go back to the Barker Report. You did have a dialogue with Kate Barker as your work was developing. Do you see you work overlapping in any way and, if so, in which areas?

  Sir John Egan: I think she and I were both clear that, if we were going to be able to build another 100,000 houses a year, we are going to have to find places to put those houses and that was not going to be easy. My solution is that the people learn to trust the planning system better because it is delivering benefits to them and that we can go and retrofit many of the communities that have been badly served by the zoning of the past and actually build the houses around the mistakes that we have made in the past.

  Q611  Sue Doughty: Does that agree with what she would say?

  Sir John Egan: I am not quite sure which method she had for gaining planning permission for these houses. The Treasury of course normally seem to be able to command everything, so maybe they can snap their fingers and they will get the housing space. I was trying to devise a housing system that would be supported by the people. I think it is utterly essential that any changes to the planning system are supported by the people.

  Q612  Sue Doughty: Some people said that the Barker Report has let off the building industry in its final conclusions concluding that, to improve prices, all you needed to do was have a significant increase in the housing supply, full stop. In your memorandum, you have made it clear that, for housing construction to be compatible with sustainable development, supply systems and building methods would have to change substantially.

  Sir John Egan: Yes.

  Q613  Sue Doughty: Is that going to happen given this push to build?

  Sir John Egan: I think the Government will have to take a special action to make sure that houses that can be afforded by the average wage earner are created. I do not think the marketplace is going to fix that for them. They are going to have to do it. Luckily, they do have a lot of houses that they subsidise and I would like to see the subsidy effect used to create much lower cost houses which will enable the factories to create the prefabricated parts . . . By the way, we are now using the words that are quite emotive. Mention "prefabricated parts" to a British person and they immediately think of prefabs of 50 years ago and they were not pleasant houses. If we are going to establish much cheaper and much better quality houses, we are going to have to prefabricate much of the buildings in factories and I would like to see the Government taking a lead on this. I do not think that the housing industry will get there rapidly enough on its own.

  Q614  Sue Doughty: As you say, the housing industry is not very responsive to innovation. Do you think that pressure from the Government, if we were able to get the Government to apply the pressure, particularly at the lower end of the housing market, is going to be the catalyst that is needed to really bring these things in? Is that a realistic aspiration?

  Sir John Egan: I would like to introduce more builders into the building market. The house builders as a group are into their comfort zone. They find it difficult to get planning permission. They have economic cycles where their product is difficult is sell and we are just moving into one of those probably, according to one or two of the bigger house builders. The ones that have survived have pared themselves down to a relatively comfortable life, but that is not the way in which you stimulate innovation. These are comfortable people doing a comfortable job. If we are going to create a much higher quality lower cost product, we have to invite different people into the industry. One or two of the construction companies that have achieved very big improvements in productivity with the key clients like BAA, Tesco and so on, should be invited into the housing industry. I would like to see them cracking into this and actually starting to do the job very well and very efficiently. So, I think that some kind of initiative is needed from the Government and we have to bring new players into the market if we are going to get these much lower costs.

  Q615  Sue Doughty: This is good stuff but what worries me is, in Rethinking Construction six years ago, we set a target for the construction industry that productivity would be increased by 10% per annum and we would reduce waste by 10% per annum and defects would be reduced by 20% per annum and yet, from what you are saying, it does not sound as if we are getting it yet.

  Sir John Egan: The clients who have insisted on this are achieving it. So, yes, people like BAA, Tesco and so on are achieving it. They are capable of building these houses but they are not in the house building industry.

  Q616  Sue Doughty: Unfortunately, the house building industry is not doing so well. CABE looked into this and only 17% of the schemes that they looked at were judged as good or very good. It is not really very encouraging at the moment, is it?

  Sir John Egan: When I wrote the report, most government reports get thrown into the dustbin as far as I can see, so I was not expecting a great deal. Actually, a lot has been done and the fact that 17% are doing well I am quite pleased with. There was nobody doing it very well five or six years ago, so I am quite pleased that we have got thus far. I think you will find that probably 30 or 40% of construction projects that are carried out by the major clients are being run very, very efficiently and very well and I would like to turn that kind of energy and expertise into the house building industry. I think they would be able to do a much better job than the current house builders.

  Q617  Sue Doughty: Do you think that is a realistic aspiration with the house building industry to really bump up this efficiency and deliver much better projects?

  Sir John Egan: I hope so. That is an initiative that I have been discussing with the Deputy Prime Minister and I am hoping we can do something.

  Q618  Chairman: How is it going to happen?

  Sir John Egan: I think we have to try to make sure that some of the large housing associations can procure their products through a specially created pair of companies, let us say, who were specifically tasked to achieve these very high quality and very low cost standards that we have in mind. They can do it with other kinds of buildings; I really see no reason why they could not do it on houses.

  Q619  Joan Walley: I really want to press you a little more on that because I am really excited by the opportunities there are to do all of these things. My fear is that whatever CABE may be saying by way of 17% improvements in good quality houses, that does not necessarily make a difference on the ground where we have regeneration going on, for example, in my constituency in Stoke-on-Trent. What I really want to press you on is, when the Committee went to visit Aberdeen, we saw some really wonderful examples of state of the art architectural design new house building which was looking at efficiency and, when you talk about getting these improvements for good quality low cost housing, I am wondering how much you are integrating into that the standards that you are wanting to see embedded in building regulations within the next eight years. One of the other things that was impressed upon us when we went to Aberdeen was that there were a number of newer houses built by many of the housing companies to which you have presumably just referred but actually the standards of housing efficiency and of energy efficiency in those houses, even though they might be new houses and expensive houses, were just not fit for purpose and the real worry in Aberdeen was that we were going to be facing a bigger problem with these newer houses which related again to lack of follow-up on building control when enforcing on not enforcing these new regulations and I just think that is a whole area which no one really has any control over and it has been left to be implemented on the ground without it actually being done on the ground.

  Sir John Egan: I would like to see the BRE standards which are currently in place; I would like to see those as a minimum standard for all house building. So, I am on the side of control here and I would have put that into the urban coding.

1   Note by the witness: For the Thames Gateway-because London is one of the most successful communities in the world, but in reality it must be for all the people. Back

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