Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Eighth Report

2  The Pathfinder Programme

4. Our report on Empty Homes, published in March 2002, called for urgent action to tackle the increasing problems of low housing demand and abandoned homes. It said:

Radical intervention is needed in some inner urban areas where the housing market has collapsed to make them attractive to a broad range of existing and potential residents. The housing market renewal approach needed to achieve this must be on a large, conurbation-wide scale. It will take a long time and so must be started as soon as possible and will require significant additional funding, of the order of hundreds of millions of pounds per annum.[1]

5. Shortly after the report's publication, the Government announced the creation of nine Housing Market Renewal Pathfinders - in Birmingham/Sandwell, East Lancashire, Hull/East Riding, Manchester/Salford, Merseyside, Newcastle/Gateshead, North Staffordshire, Oldham/Rochdale and South Yorkshire.

6. The initiatives aim to restructure housing markets over ten to fifteen years, and to raise property values. All Pathfinder areas straddle more than one local authority (in the case of East Lancashire, five local authorities are involved) reflecting the housing markets in the sub-region. Eight of the Pathfinders have had broad strategic plans ('Prospectuses') approved by ODPM and the decision on the ninth - Hull/East Riding - is imminent. £500 million was initially set aside for the programme between March 2004 and 2006; a further tranche of funding was approved for 2006-8, taking the total allocation up to 2008 to £1.2bn. The ODPM's Five Year Plan for Sustainable Communities extended the Housing Market Renewal Initiative to three other areas - Tees Valley, West Cumbria and West Yorkshire - which have been allocated £65m between 2006 and 2008.[2]

7. Progress across the programme is uneven. Some Pathfinders have begun to implement large-scale projects for refurbishment, demolition, and redevelopment, coupled with plans for neighbourhood management to support those communities undergoing transition. Now that plans are taking shape, concerns have been expressed about the scale of demolition envisaged, the impact on vulnerable communities and the possibility of uncertainty and planning 'blight' across large areas.

The Overall Objectives of the Pathfinder Programme

8. Details of the Housing Market Renewal Initiative were first announced as part of the ODPM's Sustainable Communities Plan in February 2003 . The broad objective for the programme was for Pathfinder strategic plans "to entail radical and sustained action to replace obsolete housing with modern sustainable accommodation, through demolition and new building or refurbishment. This will mean a better mix of homes, and sometimes fewer homes".[3]

9. The overall objective were made a little more explicit in the ODPM's five year housing plan published in January 2005 which said that the aim of the programme was "to close the gap between those areas worst hit by low demand and the rest by one third by 2010; and eradicate the problems caused by low demand housing by 2020. Our vision is that, through market renewal, places once suffering from low demand housing will be transformed into places of real distinction, where diverse people choose to live, work, visit, and invest." [4]

10. The ODPM has allowed the Pathfinders considerable freedom to develop their own programmes, which address the varying market contexts in which they are operating. It has devised a list of general performance measures and provided us with an extensive paper called 'success criteria'. The status and importance of the ODPM 'success criteria' in the Programme are not clear and the manageability of the data required is open to question. To assess the programme as a whole, comparable data is required from each initiative. At present a whole raft of different indicators are in use, at different levels of geographical disaggregation and over different time frames.

11. Professor Ian Cole and Brendan Nevin, who carried out an assessment of the Pathfinder programme for the Joseph Rowntree Foundation, highlighted the importance of a set of clear indicators by which it can be assessed.

To be able to justify the continued long-term investment in the Market Renewal Process, central government should build up the evidence base to identify how the process of housing market renewal can be tracked...the contribution of Pathfinders to bringing a better balance to demand and supply could be measured through its impact upon surplus property, obsolescence and unpopular neighbourhoods; and all of these aspects are measurable.

The determination of success criteria for the HMR programme is a useful development in programme-wide thinking, and the links between these attributes and the array of renewal interventions at the disposal of Pathfinders needs further elaboration and evaluation, with a clearing house for information which can be used by practitioners established and maintained by ODPM.[5]

12. There are concerns that some of the projects funded up to now by the Pathfinders are poorly focused and do not necessarily relate to their overall objectives, and that they are not based on a good understanding of the housing market problems. The Audit Commission, which has been commissioned by the ODPM to act as critical friend to the Pathfinders and to monitor their progress, told us:

The lack of an in-depth understanding of the evidence about the true nature of the housing market problems, combined with the time pressure to achieve results, means that some early projects have been approved that have no clear link with the housing market problems. Pathfinders have distributed some early funding according to various other criteria, such as sharing funding between different local authorities or areas, so that it is seen to be allocated fairly.[6]

13. The ODPM has now set out clearer bidding guidelines for the next tranche of funds to run from April 2006 to March 2008 which emphasise the importance of a clear view of the outcomes sought and a 15-year strategy to achieve them. The invitation to Pathfinders to bid for additional funds said:

Schemes are expected to define the outcomes Pathfinders expect to achieve and their ten to fifteen year strategy for achieving those outcomes. Based on an analysis of the state of the sub-regional housing market, they also incorporate projected programmes of interventions, and arrangements for monitoring performance and evaluating progress…Increasingly it will be important to demonstrate how individual elements of Pathfinders' programmes will contribute over time to creating places of distinction.[7]

Later in this report we highlight the need for improvements in local facilities and community support in many of the areas with low demand to create attractive areas and sustainable communities.

14. The target set in the ODPM's five year housing plan to reduce the gap between those areas with low demand and the rest by a third by 2010, and to eradicate the problems by 2020 is welcome. However, the programme requires a more detailed set of objectives and an endview by which progress can be measured.

15. Each Pathfinder initiative is developing its own strategy to meet the distinctive problems of its area. To assess the overall impact of the Housing Market Renewal Initiative, and whether the targets have been achieved, comparable data are required from each Pathfinder.

16. Pathfinder initiatives need to develop solid and comparable housing market data so that progress can be measured. At present they are using a range of different indicators, at different geographical levels and over different time frames. The Pathfinder programmes need a realistic view of the future market structure that should specify the range of property types and values envisaged to achieve sustainable neighbourhoods in healthy and thriving housing markets. All the Pathfinders need to develop robust indicators to measure changing levels of resident satisfaction with their area and the quality of services provided to assess whether more sustainable communities are being created.

LONG-TERM FUNDING

17. The Government has been clear that turning round failing housing markets requires a long-term effort, and the Pathfinders are expected to develop 15 year programmes. However, many submissions argue that as yet the Government has not made a long-term funding commitment to the initiatives. Elevate East Lancashire point out

Long term support is required from Government if we are to secure transformational change. Although we appreciate the Government's commitment to this issue, no explicit financial commitment has been entered into for the long term. This uncertainty poses difficulties for Pathfinders in framing their long term strategies, and moves to put this on a firmer footing would be welcome.[8]

Later in this Report we highlight the time taken to process Compulsory Purchase Orders and suggest that the Pathfinders initiatives need to be set up on a long term basis to implement the orders which they are initiating.

18. Lord Rooker, the Minister for Regeneration and Regional Development, suggested that the Treasury would not approve a funding commitment beyond three years. However, there are precedents for this in the New Deal for Communities Programme, which received a ten year funding commitment, whilst the earlier City Challenge initiative got five year funding.

19. The Government acknowledges that it will take up to 15 years to tackle failing housing markets or undertake market restructuring and many of the mechanisms such as compulsory purchase orders have a long lead-in time before taking effect. The Government should make long term funding commitments to the Housing Market Renewal Initiatives to give them and their partners the confidence that they can enter into long-term agreements.

Development Priorities

20. The Chairs of the Pathfinder Initiatives argued that a significant number of homes would have to be demolished. They suggested that there were four reasons why demolition was necessary:

Many of the houses proposed for demolition have been the subject of improvement works in the past, especially in the 1980's. It was accepted then that improvement would only provide those houses with a limited life (usually fifteen to twenty years) and many are now time expired.

It does not provide good value to improve a house which is structurally of poor quality and will cost a considerable amount to refurbish, often providing only a limited extended life.

There is still a need to demolish unhealthy or poor quality dwellings but the desire to provide, through demolition, sites on which high quality modern housing of all tenures and prices can be constructed ....

In a limited number of cases demolition might be needed to rectify a problem of excess supply and the land can be put to leisure or other uses.[9]

Between 2004 and 2006, the Pathfinders expect to demolish about 10,000 homes and refurbish about 24,000. Over 20 years up to 200,000 homes could be demolished.

21. There are serious concerns that this programme could become dominated by demolition, rather than refurbishment, and that social and environmental problems and heritage issues could be neglected. Many witnesses suggested that the Pathfinders were not considering all the refurbishment options when approving demolition. The Merseyside Civic Society commented:

We are concerned that, in these circumstances, there seems to be no objective assessment of the qualities of, and opportunities to improve, the properties that have been left empty or even those that remain in proud occupation - and that the whole process lacks the scrutiny to which even the slum clearances of the 1950's and 1960's were subjected, over which independent inspectors had the opportunity to adjudicate.[10]

Peter Brown from Merseyside Civic Society told us:

Reference has been made to the way in which lessons have been learned from the clearance programmes in the sixties. As I understand it, it is the case that at that time, in order for a house to be cleared, it had to be demonstrated to be unfit - not a condition which is required in the current regime, where simply drawing a line on the map and declaring the property unfit seems to be adequate. On a property-by-property basis, if that form of survey can be undertaken, that would provide a more reasonable basis on which to make that ultimate judgment.[11]

The community group, Home Environments at Redearth Triangle, suggested that insufficient survey work had been carried out before the East Lancashire Pathfinder, Elevate, had decided to demolish 150 homes in Darwen because of their physical condition:

The council is stating that the houses are unfit for human habitation based on a ten-minute survey…The council has not given us a list of repairs which they say is wrong with the properties. Residents were not given a fair chance to rectify any fitness problems. The council has failed to justify why it should be cheaper to demolish our homes instead of allowing owners to fix whatever it is the council has a problem with.[12]

Other witnesses questioned whether many of the homes were "obsolescent." SAVE Britain's Heritage said:

The assumption that a primary cause of market failure is an 'obsolete' housing form, specifically the pre 1919 terraced house, has little evidential basis and collapses at the slightest scrutiny. We strongly question the concept of obsolescence in this context - a term widely used during the 1960s and 70s to justify clearance of hundreds of Georgian streets and squares that would now be popular.[13]

22. Many heritage organisations pointed out the danger that many areas could lose their distinctive historic character, something which should be seen as a positive benefit rather than a source of blight to be removed. English Heritage accepted that there were considerable problems. It argued that "the emerging strategies [should] recognise the positive benefits that the historic environment can offer in the creation of sustainable communities in locally distinctive settings. In the past, programmes of large-scale intervention have often cut across earlier settlement patterns, causing dislocation and a loss of community cohesion".[14]

The key to unlocking the potential of the historic environment in the successful regeneration of these areas is by understanding their character. This understanding is best achieved by undertaking an assessment of the historic environment to inform the decision-making process. The assessment should consider the local community's aspirations for the historic environment in the planning and regeneration of their area, and involve the local authority historic buildings officer, archaeological officer and English Heritage.[15]

23. Many submissions pointed to the differential levels of VAT charged on refurbishment and new-build housing projects acting as a deterrent to projects which reused existing homes and made demolition more commercially attractive. While new-build projects are zero-rated, the maintenance, repair and rehabilitation of the existing building stock attracts 17.5% VAT. In our report on the Role of Historic Buildings in Urban Regeneration, we recommended that the VAT levels for refurbishment and new-build schemes should be harmonised".[16]

24. Some demolition is required but there is a risk that this initiative will be seen as a major demolition programme, which will repeat the mistakes of previous clearance programmes that destroyed the heritage of areas and failed to replace it with neighbourhoods of lasting value. The Government needs to set out clear procedures for the Pathfinders to follow when deciding which housing should be demolished and how the various options for refurbishment and redevelopment should be considered. The potential heritage value of the housing and its contribution to regenerating neighbourhoods should be considered an important part of any appraisal but houses should not be preserved for the sake of heritage if there is not the demand for them. The differential level of VAT on new-build housing and refurbishment schemes makes demolition more commercially attractive. The ODPM should put pressure on the Treasury to harmonise VAT on new-build and refurbishment housing schemes.

COMPULSORY PURCHASE ORDERS (CPO)

25. Most of the Pathfinder Initiatives need to use compulsory purchase orders (CPOs) to acquire the private housing which they are planning to refurbish or demolish. The CPO procedure is long and complex and can take up to six years. The Government made it easier for local authorities to identify the owners of properties and to prepare a CPO in the Planning and Compulsory Purchase Act 2004. However, there is currently a lack of staff with experience of the CPO process. The problem is likely to get worse as the Pathfinders start processing more CPOs.

26. The Chartered Institute of Housing highlighted the need for better good practice guidance: "Many Pathfinders have had to embrace the previously discredited tool of stock clearance. Whilst staff in these areas are becoming more knowledgeable about the use of Compulsory Purchase Orders, other local authorities still lack confidence and expertise in this area. The ODPM guidance on CPOs is very long and technical, and a good practice guide …could be very useful to local authority officers".[17]

27. Jo Boaden from the Newcastle Gateshead Pathfinder suggested that local authorities and the Planning Inspectorate would need to prepare for the number of CPOs which the Pathfinders would be processing: "I think, in terms of speeding up that process we would look, certainly for the planning inspectorate, to gear up for ongoing CPO activity so that there is not a delay there".[18]

28. With CPOs taking several years, the process has to be incorporated into Pathfinders' long-term plans. The Manchester Salford Partnership suggested that the Pathfinders needed to be long-term agencies with appropriate funding commitments, over a much longer period.

Local authorities, in making CPOs, are entering into long term and irrevocable commitments. It has become clear to the Manchester Salford Partnership (MSP) that, as its CPO/Clearance programme increases, so does the extent of legally binding forward commitments, which are far in excess of any guaranteed future funding (at present the MSP has forward commitments which extend over a 5 - 6 year period, whilst HMR funding is only presently in place until March 2008). It is essential that Government addresses this issue and instils adequate confidence in the HMR programme by formal commitment to meet, at least, all forward CPO commitments which arise as a result of Pathfinder programmes.[19]

29. CPOs take a long time to process notwithstanding the recent Government reforms. Local authorities and the Planning Inspectorate need to prepare for the volume of CPOs, which the Pathfinders are preparing. There is currently a shortage of staff with experience of CPOs in local authorities. At the very least the ODPM should prepare basic good practice guidance, which is simpler than its current technical manual.

30. With CPOs taking several years to process, Pathfinders need to be established on a long-term basis with funding commitments to implement the orders when they have been confirmed. Current three-year funding allocations are insufficient. We recommend that the Government make indicative allocations to Pathfinders for at least six years.

THE HOUSING MARKETS

31. Housing markets are prone to change in unexpected ways. We received conflicting information on changes in the housing markets in low demand areas which could affect the Pathfinder programmes. The ODPM said:

While the generally buoyant housing market over the last few years has clearly helped efforts to deal with low demand and empty homes, there have been some encouraging early signs that the tide is turning. There has been a small but steady decrease for each of the last five years in the total number of homes in England vacant for more than six months. And the number of homes reported as being in low demand in the North and Midlands has fallen from almost a million in 2002 to around 850,000 in 2004.[20]

32. The Audit Commission said:

The low demand and long-term vacancy rate between 2001 and 2004 reduced, nationally, by 6.3%. However, the equivalent figure for the Pathfinder local authority areas increased by 9.2%. Within this was an increase of almost a third in low demand in the private sector that was partially offset by a reduction in the social rented sector.[21]

33. Many local organisations argued that the housing market was actually taking off in their areas. The Burnley Wood Community Action Group said:

In December 2003 the housing market in Burnley had totally collapsed, the price of terraced houses had fallen as low as £5.000, houses were withdrawn from sale with no interest from buyers. After the publication of the Burnley Neighbourhood Action Plan in that year (2003) the price of a shell terraced house (one that had been "gutted", everything removed including heating systems and even internal doors and floors) has now risen at the end of 2004 to £25,000 with a corresponding rise in surrounding properties from £35,000 to a local price of between £65,000 - £80,000…

As a result of this speculation we are now experiencing an acute shortage of houses available for habitation in Burnley, in the last six months we have had 55 houses cleared in this area, 28 were compulsorily purchased even though there were certified as "Good and fit for use", we understand that it is necessary to remove some good houses to create a new build site that will be attractive to builders but we are having problems housing the owners and tenants from these cleared proprieties. Some tenants have been re-housed by private property owners in properties that are in a worst condition than the house they have moved from.[22]

As a result of the price increases in these areas, some of our witnesses raised concerns that house purchase is becoming unaffordable, particularly for first-time buyers. The Committee's report on homelessness raised concern that where homes are being demolished as part of the Government's Pathfinder initiative, "the effect on house prices and availability of affordable homes must be carefully monitored and a programme of provision of low cost housing to rent must be included".[23] The market upturn may also suggest that in some areas, public intervention is less essential than before, as the market might be renewing itself.

34. The factors driving up house prices in the Pathfinder areas are diverse, including speculation following the establishment of the market renewal initiatives, property market cycles and the demand spreading out from the lively housing markets in nearby large cities. It is difficult to judge whether this is a short-term effect or part of a longer-term trend that will reduce price differentials in sub-regional housing markets.

35. There has been an overall drop in the number of empty homes in some of the areas which may be significant. The reasons are not clear and the scale and duration of the market upturn are not yet known. It is important that the Pathfinder programmes secure good housing market data and an understanding of the factors driving the market. Regional bodies and local authorities also need to have in place effective, accessible and up-to-date systems of monitoring market trends, so that changes in demand and in market 'hot spots' and 'cold spots' can be readily identified and programmes adjusted.

36. If there is strong evidence that the rise in housing demand is sustained and not just the result of an artificial boost to the market due to speculative activity, the Pathfinders should review their demolition programmes as a matter of urgency and concentrate on neighbourhood management and housing refurbishment. Housing markets are dynamic, and the ODPM should allow the Pathfinders considerable flexibility to review their programmes as demand changes.

37. Pathfinders need to ensure that there is a ready supply of affordable housing. The programme of demolition and redevelopment needs to be carefully planned to ensure that there are no interim shortages of affordable housing to the disadvantage of existing and incoming households.

CREATING SUSTAINABLE COMMUNITIES

38. There are concerns that the Pathfinder initiative may be reduced to a 'numbers exercise' about relative increases or decreases in the housing stock. SAVE Britain's Heritage warned, "the approach to change and demolition appears to be based on crude top down statistical view of neighbourhoods - voids, turnover, ownership, value etc. This fails to see beyond the problems that may have little to do with the houses themselves. It also fails to obtain active community input until consultation exercises are carried out late in the day".[24]

39. Peter Brown from the Merseyside Civic Society questioned the commitment of some of the Pathfinders to achieving the Government's objective of creating sustainable communities:

The sustainable community agenda sounds very empty to communities which are affected directly by the circumstances in which this presumption holds… They want to see support for the improvement of properties in which they live, but also the provision of the services on which they depend within that community.[25]

40. The Pathfinders are engaging with their communities, with varying levels of success. English Heritage said that the way the schemes are being presented and the way the Pathfinders engage with the public could be improved: "Current practice suggests local residents are unclear about some of the terminology, options and possible outcomes that are being put forward by the Pathfinder partnerships."[26] It highlighted the need for generic guidance on how communities should be consulted and engaged in each stage of the process.

41. Some are using innovative methods to develop schemes in collaboration with communities. Other evidence underlined the importance of involving communities early on in the development process before decisions about demolition have been taken. Many organisations cited the Enquiry by Design exercise in Whitefield in East Lancashire as a successful means of consultation with all the main stakeholders in the town working together on a joint regeneration strategy. English Heritage said:

A week long Enquiry by Design, carried out by the Prince's Foundation on behalf of the key stakeholders, resulted in the agreement of all parties to a regeneration strategy and marks a significant turning point in the fortunes of Whitefield, where for many years there was no consensus of the best way to regenerate the area. Although an intensive and expensive process, it is a methodology that has much to commend it in places where it would otherwise be difficult to achieve an agreed approach to regeneration.[27]

42. The Government has included the Pathfinder programme as part of its Sustainable Communities Plan. To demonstrate its commitment to creating sustainable communities, we recommend that the Government issue new guidance setting out how Pathfinder initiatives should consult with local communities to enable input at the earliest stages before any decisions are taken to demolish housing. Many of the areas need to increase their populations to make them viable. Pathfinders should consider how this is planned to ensure sustainable communities. Demolition and refurbishment plans should be part of an integrated regeneration strategy for an area agreed as widely as possible. The Enquiry by Design process used in Whitefield, Lancashire offers one model which could be widely replicated.

COMMUNITY SUPPORT

43. Many of the submissions to our inquiry highlighted the need for community support as part of the strategies to improve the Pathfinder areas. Witnesses pointed out that

• The availability of revenue funds for community support by the Pathfinder programmes and through mainstream providers is unclear;
• Communities need support to adapt to the changes to their areas;
• Most of the Pathfinder areas suffer from inadequate services; and
• Funding for local services might be affected as populations are moved around.

44. The Pathfinder funds are primarily for capital investment. According to the Pathfinder initiatives a very limited proportion of their funds can be spent on revenue funding which they find excessively restrictive. The submission by the Chairs of the Pathfinder initiatives called for greater flexibility in the use of funds.

One area of funding where we would like to see greater freedom is in the provision of revenue. The Housing Market Renewal Fund is a capital programme and revenue funding is difficult to provide. However, major housing improvement needs considerable planning, preparation and consultation as well as neighbourhood management. The process can, unless carefully managed, be traumatic for the families in the area. Some of the necessary revenue support is available for the preparation of individual projects but other support, for example for neighbourhood management, is not. We do not want to enter into long term neighbourhood management as that is not our responsibility - but we do believe that revenue support is necessary to ensure the smooth transition from the old to the new.[28]

The Newcastle Gateshead Pathfinder highlighted the need to fund projects which help to stabilise an areas or support it through the transition.

Revenue projects however are still required to support neighbourhoods through difficult periods of transition. This could either be until we can rehouse residents and demolish their homes or, so we can 'stabilise and improve' an area showing signs of market weakness eg. the North Benwell Neighbourhood Management Project has improved and brought more than 100 homes back into use …along with reducing crime by around 30% a month compared to the same period last year.[29]

45. Many of the homes to be compulsorily purchased and demolished are privately owned. The owners need sufficient compensation to buy an equivalent home. Some may have problems securing a new mortgage. The Chartered Institute of Housing pointed out:

Implementation of demolition programmes has shown that owner-occupiers can suffer from lack of information and insufficient financial compensation. In North Staffordshire Pathfinder, owners whose houses are scheduled for demolition are only entitled to relocation compensation if they move to approved 'sustainable' areas where property prices are inevitably higher. For many this can mean leaving behind family and community connections, and not having sufficient resources to purchase a replacement property. Access to mortgages is obviously limited by age and income, which means these problems are worse for older, economically inactive, or low income households. Those who find themselves unable to remain in owner-occupation not only lose the benefits of future property equity but may also find it difficult to access social housing due to long waiting lists. Some households have also complained that they were not able to get information from local councils about areas they could move to in time to make an informed decision. This indicates that processes need to be tightened up and further consideration of varying personal circumstances given.[30]

46. Cole and Nevin suggested that Government should make an adjustment in the allocation of revenue funding to local authorities to support communities in transition: "In terms of service provision, central Government should reconsider how it allocates revenue support to those local authorities experiencing large scale restructuring, to incorporate the costs of community transition as well as the burden of social need".[31]

47. Lord Rooker, the Minister for Regeneration and Regional Development, suggested that it was the local authority's role to support communities in transition. He told us: "If it is a half decent local authority interested in the strategic issue of housing for its citizens it will embrace its role in community support".[32]

48. We recommend that the Government issue guidance on how Pathfinders and local authorities support communities during the period of transition as neighbourhoods are refashioned, including examples of best practice. Many of the homes being compulsorily purchased and demolished are privately owned. Support should be offered in all Pathfinder areas to homeowners whose homes are compulsorily purchased so that they can get a new mortgage.

49. The Pathfinder initiatives' ability to fund revenue projects is very restricted. The Government should allow Pathfinders to use a significant proportion of their funds for community support or provide funding through local authority grant mechanisms explicitly targeted at helping meet the community costs of market renewal.

MAINSTREAM SERVICES

50. Areas with low demand suffer from many social, environmental and physical problems, and there is a clear awareness among the Pathfinder initiatives that other service providers are required to address the non-housing needs. There are concerns that the agencies responsible for non-housing issues such as education, community safety and crime and transport should contribute towards turning round those neighbourhoods. The Riverside Housing Group in Liverpool called for a fundamental review of all the non-housing services in low demand areas.

The Riverside Group believes that the scope of the intervention so far has been too narrow, and that much more work remains to be done on directing mainstream service provision and investment to support the objectives of housing market renewal. Work on non-housing issues, like the rationalisation of schools, will help in taking a holistic approach to the needs of neighbourhoods. Without it there is a danger of HMRI becoming another housing regeneration funding stream (albeit a very significant one) rather than a framework for transformational change.[33]

51. Several of the Pathfinders are drawing up neighbourhood strategies and masterplans outlining the public services required from different agencies. Oldham Rochdale set out its approach.

The intention is to make those neighbourhoods identified as vulnerable to decline places where people choose to live and stay whatever their background or housing needs. This will be achieved through the development of comprehensive Neighbourhood Plans based on Neighbourhood Profiles and other research and consultation. Housing Market Renewal funding will complement other activity and funding within these neighbourhoods.

In establishing the joint vision for the future of the two Boroughs it became apparent that there was a need to set a framework for the physical developments that will complement the respective community strategies. Consequently, a Master planning process of the built and natural environment was commissioned both jointly and at individual Borough level. Although this master plan is still in development, it is envisaged that it will nest within regional, local and neighbourhood based strategic plans.[34]

52. Our evidence highlighted how local authorities are represented on the Pathfinder boards and how the Pathfinders are talking to the various agencies about the needs of areas including the Police, education departments and social services. However, it will depend on the various departments within the council and in central Government to ensure that the funds are available and the needs of low demand areas are prioritised.

53. Lord Rooker, Minister for Regeneration and Regional Development, accepted that additional funds may be needed for facilities. He told us: "If you are going to put a new community there you want to start the school as early as possible. People are more encouraged to go to an area if a school is open than if it is promised".[35] He did not confirm how these schools would be funded.

54. Low demand affects many areas but part of the solution lies in creating sustainable neighbourhoods with high quality services. The problems in many of the neighbourhoods are caused by the poor quality of the environment and failing public services as much as the condition of the housing and economic collapse. As neighbourhoods are redeveloped, there will be variations in the level of population which could, due to the funding formula, affect the grants available. Rather than cutting funds to areas, additional transitional support is required in some areas to improve facilities and thereby create a more attractive and sustainable neighbourhood as an incentive for new residents to move in.

55. The ODPM needs to secure commitments from the Departments for Education and Skills, and Health, and the Home Office that the level of funding can be sustained as housing is redeveloped and population declines for a temporary period. Commitments are required to provide funds for facilities in advance of new populations moving in to the neighbourhoods.

COORDINATION WITH REGIONAL STRATEGIES AND AGENCIES

56. Close coordination between the Pathfinders' programmes, sub-regional and regional strategies will be key to concentrating activity in areas with low demand within regions and also to providing wider support for the Pathfinder's work. The priorities of the different strategies often appear confusing, and, in some cases, fail to reflect the needs of low demand areas.

57. Lancashire County Council highlighted the need to coordinate a range of strategies emerging at a regional level to ensure market renewal is achieved.

There is clearly a need to harmonise and integrate strategies and planning processes at a sub-regional and regional level if we are to have a coherent and comprehensive response to the broad issues associated with housing market renewal and transforming the economic, environmental and social future of East Lancashire. There are significant challenges for all Lancashire Partners in trying to prepare coherent responses to a range of current strategic issues (Regional Spatial Strategy, Regional Economic Strategy, Northern Way) all of which have different drivers and often incompatible timescales and deadlines.[36]

58. The Pathfinder Chairs highlighted the need for regional plans to address housing supply issues:

A greater challenge is ensuring that regional plans take proper account of the supply and demand for housing. As the Communities Plan pointed out, low demand and abandonment occurred because, in contrast to the south of England, housing supply in the north and in parts of the Midlands exceeded demand. Because of journeys to work this balance cannot be dealt with at a local or even at a sub-regional level. It is incumbent on the new Regional Spatial Strategies, as emphasised by the Barker report, to ensure that supply and demand are in balance... if overall demand is not increasing, new build can only be sensible if it is matched, over the long term by the demolition of poor quality and unwanted stock.[37]

The Chairs urged the Government and its Regional Offices to ensure that the emerging Regional Spatial Strategies support market renewal: "Current work by Regional Assemblies in developing Regional Spatial Strategies to replace the Regional Planning Guidance provides a unique opportunity for the alignment of land use and spatial strategies. Support by Central Government and the Government Offices will be necessary to ensure that these and other opportunities are grasped".[38]

59. The Audit Commission raised concerns that in some areas new housing is being proposed in strategic plans, which could compete with plans in the Pathfinder areas. The Commission's Head of Housing Markets, Mike Maunder, raised concerns about housing proposals in Newcastle: "There is too much development outside the Pathfinder area, whether it is on green or brownfield sites, that will compete with what the Pathfinder is trying to achieve in Newcastle/Gateshead".[39]

60. The need for economic development alongside the housing renewal was mentioned in many submissions. The RDA policy towards market renewal areas has yet to develop fully. The Chairs of the Pathfinders suggested that progress was being made in gaining support from the Regional Development Agencies for economic renewal in their areas: "Some RDAs, for example, had difficulties in the early days in taking account of the plans of the Pathfinders. This was largely because of the high level of forward commitment in their programmes. Recent experience has been far more encouraging".[40] The Northern Way, an initiative led by the RDAs, is seeking to spearhead the economic revival of many northern cities including Liverpool, Manchester, Hull and Newcastle. Many areas suffering low housing demand are on the fringes of these city regions and will benefit only marginally from the growth of the main centres.

61. Regional strategies need to be aligned to ensure that efforts to revitalise failing housing markets are maximised rather than hindered by promoting competing developments in other areas. The Government needs to issue guidance to regional planning bodies and the RDAs, emphasising the importance of prioritising the needs of areas with low housing demand.

62. Economic collapse is a major cause of low housing demand which will only improve if links to economic development are stronger than at present. Many of the areas with low demand will benefit only to a limited extent from the Northern Way initiative as they are on the fringes of the city regions where the RDAs are concentrating growth. The RDAs should consider how the needs of areas with low housing demand are addressed outside the core areas, particularly improved transport links to nearby cities.

---

1   Empty Homes Sixth Report, Transport, Local Government and the Regions Committee, March 2002, page 7 Back

2   Sustainable Communities: Homes for All A Five Year Plan from the ODPM, January 2005 Back

3   Sustainable Communities: building for the future, ODPM, February 2003 Back

4   Sustainable Communities: Homes for All A Five Year Plan A Five Year Plan from the ODPM, January 2005 page 49 Back

5   EV 112, HC 295-II, Session 2004-05 Back

6   EV 66, HC 295-II, Session 2004-05 Back

7   Market renewal pathfinders: invitation to submit a scheme update and independent scrutiny framework, Audit Commission/ODPM, 15 February 2005 Back

8   EV 69, HC 295-II, Session 2004-05 Back

9   EV 59, HC 295-II, Session 2004-05 Back

10   EV 31, HC 295-II, Session 2004-05 Back

11   Q48 Back

12   EV 9, HC 295-II, Session 2004-05 Back

13   EV 39, HC 295-II, Session 2004-05 Back

14   EV 49, HC 295-II, Session 2004--05 Back

15   EV 50, HC 295-II, Session 2004-05 Back

16   The Role of Historic Buildings in Urban Regeneration, Eleventh Report of Session 2003-04, HC 47-1 Back

17   EV 33, HC 295-II, Session 2004-05 Back

18   Q31 Back

19   EV 43, HC 295-II, Session 2004-05 Back

20   EV 2, HC 295-II, Session 2004-05 Back

21   EV 65, HC 295-II, Session 2004-05 Back

22   EV 7,HC 295-II, Session 2004-05  Back

23   Homelessness, Third Report of Session 2004-05, HC 61-1, page 47 Back

24   EV 39, HC 295-II, Session 2004-05 Back

25   Q41 Back

26   EV 50, HC 295-II, Session 2004-05 Back

27   EV 50, HC 295-II, Session 2004-05 Back

28   EV 57, HC 295-II, Session 2004-05 Back

29   EV 110, HC 295-II, Session 2004-05 Back

30   EV 34, HC 295-II, Session 2004-05 Back

31   EV 113, HC 295-II, Session 2004-05 Back

32   Q216 Back

33   EV 47, HC 295-II, Session 2004-05 Back

34   EV 27, HC 295-II, Session 2004-05 Back

35   Q214 Back

36   EV 122, HC 295-II, Session 2004-05 Back

37   EV 56, HC 295-II, Session 2004-05 Back

38   EV 58, HC 295-II, Session 2004-05 Back

39   Q143 Back

40   EV 58, HC 295-II, Session 2004-05 Back

---

Prepared 20 April 2005