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

Examination of Witnesses (Questions 160-178)


  Q160 Mr Betts: Have any of them, so far, with that statement, had any impact?

  Mr Clarke: It is very early days. The Northern Way has been around only since February 2004. The ODPM are about to publish a major report in January or early February, the State of the Cities report, and we have started working now, within the Northern Way, on eight city regions which have produced City Region Plans. The strategy is a 25-year strategy. I think, to start with, there are some early signs of things moving in the right direction, but this is a marathon not a sprint.

  Q161 Mr Betts: What do you mean by "the right direction"?

  Mr Clarke: Within the North East, for instance, there is significant investment going into assigned city development within the Tyne and Wear City Region, based in the heart of Newcastle but linked into Durham University, Northumbria University, Sunderland University will get involved as well, which makes the absolute point that if you stuck just to the Newcastle City Council boundary you would not get that wider linkage.

  Q162 Mr Betts: Let us move on to look at the area which you have raised. It might be seen that therefore, by city regions or whatever, you are following the line in your submission that really this is all a technical process and you are looking where growth is and therefore you are working out where the houses need to follow the jobs, and what we have got is a bit too much political interference and a bit too much democracy in this. Indeed, this is almost the submission you are making to us, we should have a technical solution, nothing to do with this democracy that gets in the way of this?

  Mr Clarke: The major cities within the North have been involved in the Steering Group from the outset, so the Leader of Manchester Council, the Leader of Leeds Council, the Leader of Newcastle Council, as well as Chairs of Regional Assemblies, they have all signed up to and supported the Growth Strategy. Indeed, the proposals that are coming forward now for city regions are also linked in with the proposals that ODPM are looking at, following the City Summit visits, which the Minister, David Miliband, had during the summer. In fact, there is very much a democratic angle to all of this and politicians within the North, at local authority level and regional assembly level, have signed up to the Growth Strategy, including the eight city regions.

  Q163 Mr Betts: Absolutely: "the effect of the `strategy' in determining supply is the most important factor, but is often less than transparent and overly-influenced by political considerations"?

  Mr Cruddas: I think we are talking about two different strategies. If I may just clarify the point in the memorandum, at the moment the political process is brought to bear in Regional Spatial Strategies very late on and so what tends to happen is that people interfere, if you like, in the technical process. What we are suggesting is that you need to bring that political process into play much earlier at the city regional or sub-regional level, as you are working out what the future is of that locality—the functional spatial area that relates most closely to the real world economic geography in which we are set. Far from denuding the role of the political process, actually we are advocating its earlier involvement and that should lead, we hope, to less change later on, less unclear action, that is currently part of the political process.

  Q164 Mr Betts: Just to follow up particularly on how you think things might move forward then, you are saying that things should be more developed at the sub-regional level, yet, another point you have put, you are almost totally prescriptive, are you not? In 2.11 you say to us: ". . . the emergence of Greater Manchester and Leeds, and to a lesser extent Lancashire, as important locations for household and employment growth." In other words, those city regions are going to get on and do the business because you have said it is a good thing that they should. "However, the housing allocations adopted within Regional Planning Guidance actually underplay the economic importance of Greater Manchester, Lancashire and Cheshire yet overplay the economic importance of areas such as South Yorkshire and Humberside." In other words, they should actually reduce their projections for housing growth, determined at the regional level, before they even begin to look at the sub-regional approach?

  Mr Cruddas: Although the memorandum is ours, that data is not ours. That data is derived from both regional data and city regional level data. Economic forecasts that have been prepared for those places, either at regional level or sub-regional level, show that West Yorkshire and Greater Manchester will grow significantly over the next 15 years. What we are demonstrating to the Committee is that at the moment the Regional Planning Guidance as currently drafted presents you with higher, in proportionate terms, housing allocations in South Yorkshire, East Riding and Hull as compared with that economic trajectory and it underprovides for housing in those areas with high economic trajectories. That is not our data; that is just a contrast between the two.

  Mr Clarke: I think the other tension in here, and it is one, is that, if you look on a European scale then the only cities in the North that even begin to hit the radar screen, in terms of economic performance, are Leeds and Manchester, and clearly Manchester, with the only international airport in the North, is of great importance to the whole of the North. Part of this is about playing to success and building on success and improving that even more, while at the same time clearly trying to improve the economic performance of other areas which at the moment are much lower down in any sort of European league table. We do feel that, within the Northern Way Growth Strategy, rather than through housing, I am thinking of at the moment when I say this, we need to build on our strengths. Certainly the sort of wealth creation that has gone on in Leeds and Manchester over the last five or ten years needs to be built on and further reinforced, and housing, transport and skills are all part of the agenda with respect to that.

  Q165 Martin Horwood: You seem to be enthusiasts for sub-regional, real world economic geography, which is not a phrase I would say often, but you are fairly scathing about regional assemblies, saying "being based upon the model of 70% local authority membership was often cited as being unhelpful . . . " I am not clear whether that means you are in favour of 100% or a smaller percentage, or you want to get rid of them altogether?

  Mr Cruddas: I think the point is the one I made earlier. There is not a right percentage. The issue is that our consultees were those which produced that evidence; we have consulted quite widely, as the memorandum explains. I think what we need to do is involve the political process much earlier.

  Martin Horwood: I am talking specifically about whether you think functionally the regional assemblies are unhelpful therefore they should be got rid of, or unhelpful therefore they should be changed or made more democratic?

  Chair: I think that is part of another inquiry.

  Q166 Martin Horwood: Not part of the process. It is a point you raise in your evidence?

  Mr Cruddas: We do raise it and I think we raise it because we want to draw the Committee's attention to the difficulty it creates when you are trying to make a technical system work successfully. We have been challenged, on the one hand, about the involvement of the democratic process, if you like, the democratic accountability and the merits of that. If you are trying to make a technical process work successfully it is a challenge and you have to factor in that political process. I think that is what we want to draw to your attention. I am not sure that we have an immediate solution to that, other than the one that I have already suggested.

  Q167 Dr Pugh: I think what we are struggling with, putting it as kindly as possible, is the raison d'etre for the Northern Way itself and, in a sense, what you bring to the feast. As I have followed what you have said so far, the distinctive approach you have got is to approach most problems via some development of something called the city regions, and I think you define a city region fairly broadly so it includes other things apart from very obvious conurbations, like Liverpool and Manchester and Leeds. These are regarded as a central Lancashire city region but it was news to many people in central Lancashire that it was. If I can try to figure out what you are bringing to the feast, you seem to bring a kind of philosophy or an idea that says, in the past, housing strategy has been focused on putting housing where we think we need jobs and you are moving now towards a market-driven philosophy that says, in order to get economic expansion, where we are getting economic expansion and development, we need to have an adequate supply of housing. Am I fair to identify you with a switch of philosophy or thinking?

  Mr Cruddas: I think probably that is fair. I would suggest though that our criticism of past approaches is perhaps stronger than that. I think we suggest that current approaches focus very much on housing numbers and a competition for housing, as you suggest, in order to grow a place's economy. I think we are suggesting that where you are seeing economic growth you need to support it and housing can do that. What we have seen also is that housing has not been the panacea that people have tended to advocate in the past.

  Q168 Dr Pugh: From my experience on Merseyside, I think I would endorse that, in respect of many areas where you can get economic growth you cannot get housing, and in many areas where you are getting housing you are not getting any elements of economic growth, or not appreciable elements of economic growth anyway. Taking that as the obvious data, do you think that you are going to have a problem, in terms of the strategies you are evolving, coming to terms with some of the strategies that are already there? Many of the strategies, like Pathfinders, which were well supported by Regional Development Agencies, are supported primarily because they are about economic inclusion rather than because they are specifically to do with economic growth.

  Mr Cruddas: Market renewal began, of course, as a response to the low demand for housing that we were seeing three or four years ago. I think what we have seen increasingly is that most Market Renewal Pathfinders have identified the economy as absolutely critical to the strategies that they have pursued, and some are pursuing a strategy therefore which reflects their relatively low economic potential and some are pursuing a strategy which either supports or seeks to promote their economic growth in the future. As the Northern Way develops, as we develop our proposals, of course we will have to seek to influence other people's strategies. I think we see that as a key part of our job. We are not suggesting that we are taken as a given, that would be very foolish. I think we need to promote what we are saying and advocate it and win people's support because of the strength of our argument.

  Mr Clarke: It goes back to your earlier question about the raison d'e®tre of the Northern Way. It is very much an economic growth strategy. It is a view and an opinion that, by collaborating across the North, with a 14 million population, the strength of the universities, the business base, and so on, not on everything but on a small number of big areas of activity, which are important, around transport and skills, perhaps marketing the North for tourism and internationally with investment, there are greater economies of scale of collaborating in that way, as long as you know when to move back and do things at a regional, sub-regional or local level as well. There is a £30 billion productivity gap and it is the view of the three regions of the North that really to start making an impact on that we need to collaborate more effectively together, and so the Growth Strategy was produced for that reason. At the core of it, it is an economic growth strategy and that is what the vision is about.

  Q169 Dr Pugh: You commented favourably on the Government's changes to the planning system. It is not entirely clear to me at the moment, are there further changes that you think should be made?

  Mr Cruddas: Obviously, we are still looking at all of the things that came out yesterday, a substantial welter of consultation documents. I think our initial view of those that we have had the chance to look at, which is in particular Planning Policy Statement 3 in draft, is that it has made substantial progress since Planning for Housing Provision was published in July, and obviously we want to work with Government as they finalise their proposals. I think a key test will be how well we can implement the framework that is now proposed. I do not think we should be under any illusions that the publication of a Planning Policy Statement will suddenly make the world right, and we need to recognise that implementation is a huge issue for us. It is a very sophisticated system that we are moving towards.

  Q170 Chair: Can I pick up on just one further point on the housing supply issue. Your strategy of moving the houses to where the jobs are and not providing them in the other areas, will not that lead simply to an even greater polarisation of housing supply in your region, which you outlined as a problem in your paper, in the first place?

  Mr Cruddas: I cannot see how it would, Chair, but I am not sure I completely follow the logic. The present polarisations that we experience are because people are leaving our urban conurbations because they can find the kind of property that they want to live in at a distance from where they work. What we are intending to do, in adding to the supply, which is only one% a year that we add to the supply, is concentrate that new supply more closely to where people can work.

  Q171 Martin Horwood: Can I just be clear, you are not suggesting a kind of market-led process where the supply follows housing demand, you are saying it should be steered towards jobs?

  Mr Cruddas: Absolutely.

  Q172 Mr Betts: In terms of logic, you support the move towards building on more brownfield sites, because they are probably located in the cities that you are talking about. I do not know whether you have had a chance to look at yesterday's announcement and whether you think that the Government's proposals now will assist in that objective that you have, or it is going to make it easier for builders to look for sites elsewhere and avoid the obligations on brownfield sites?

  Mr Cruddas: I am aware that there has been some comment on whether or not we are now going to see less emphasis on brownfield land. I think we would support anything that emphasises brownfield land and we have not yet reviewed yesterday's announcement for that.

  Q173 Anne Main: You have highlighted the problems of rural areas where demand from tourists and for second homes is driving up housing prices. What would you think was the way forward with that?

  Mr Cruddas: It is important to recognise that the rural communities in the North are not a homogeneous whole and I think there is a danger that we perceive the rural housing market to be one single market. We will work closely with the Rural Affordable Homes Commission, as it does its work over the next few months, to look at how the North's housing markets are reflected in their work. I think what we will be looking for are solutions which recognise the differential nature of the market and it is something I think, Anne, is a point that has been made to you in the evidence from the Commission for Rural Communities. Their memorandum to you says very clearly that the rural markets are very different across the piece.

  Q174 Anne Main: Where they are rural markets for second homes in particularly beautiful districts, do you have any thoughts about that?

  Mr Cruddas: Some places are approaching it by imposing planning controls such that new homes are available only to local residents in the future. That may be one option, long term, but we need a variety of options. I do not think we have looked in detail yet at what the options might be for rural communities. I go back to our advocacy of a sub-regional approach. If you were looking at housing markets sub-regionally, you would be able to take into account, in the way you planned for new houses, the particular circumstances prevailing in rural communities as much as you could for cities. I think what we are doing at the moment is not reflecting individual circumstances.

  Q175 Anne Main: Are you looking at the demographic need, because you said about, for example, attracting people into areas with larger houses, perhaps who have got the enhanced skills set that you want and you want them to be able to find a level of housing that they find acceptable? Are you looking at the demographic need of your rural areas, is that being analysed, apart from the second-homers, and are you looking at who wants to live in your rural areas? Based on the fact that you are thinking of houses following jobs, is that the case in your rural areas, or is it just demand because people want to live there?

  Mr Clarke: I think, the point that James made about rural areas not being a homogeneous collection of housing, if you take somewhere like the Tyne valley, in the North East, it is rural, very attractive, expensive housing, mainly not second homes, mainly just first homes for people who have well-paid jobs, often based on Tyneside, the journey to work, either by train or by car, is relatively short, in terms of time. There, there will be an issue about younger people growing up in the villages of Hexham or Corbridge being able to afford housing, and that is where some of the planning issues will be looked at and tenure issues can be looked at to see if you can go for some sort of mix and element of social housing. In other rural areas, ex-coalfield areas, which can be in rural as well as urban locations, probably there is a greater range of housing available at a lower or more modest price and you might have to travel a bit further into employment to do that. In parts of Northumberland we have rural areas, ex-coalfields, with a lot of new, modern housing, which is very attractive, and the whole image of those areas is being transformed as a result of that. If you go into County Durham you get a different range of issues. You get some villages which are really somewhat off the beaten track and the economic heart has disappeared from them, so there you are looking for a different sort of approach, and the same if you took Yorkshire and the North West, so our rural areas are really very, very diverse. Then Berwick is almost in Scotland but it is still in the North East with a different set of issues.

  Q176 Anne Main: If you had local control over how you manage those particular areas, how would you feel that went in with your sub-regional approach? You are coming up with different issues by just restricting it to who can live there, perhaps second generation, or whatever?

  Mr Cruddas: I think control is perhaps taking it too far. There needs always to be reconciliation, moderation, if you like, at the regional level of what is being proposed from different local areas. You have to see that moderated, otherwise you could have somewhere pursuing its own strategy, flying in the face of all the evidence and all that others were trying to achieve. I think there has to be recognition that the housing market does not stop at a local boundary, and that is quite an important point. On the other hand, there needs to be recognition of particular circumstances, as Alan has said, about where there are particular issues for different rural communities. We have not pursued a lot of this ourselves directly yet because, of course, a lot of the work is being done at regional assembly level.

  Q177 Chair: Can I just follow up the earlier question about housing moving to where the jobs are. Would not that have the undesirable side effect of leaving some people marooned in the areas which have no jobs in which nobody wants to live?

  Mr Clarke: I think that you need to have a twin-track approach. It is a question of, on the one hand, building on opportunity, which is, in the Manchester and Leeds case, where the success has been, in terms of academic development, and I think you need to make the most of that. Also I accept that other areas have needs. Easington, in the North East, is an area where the coalfield activities have declined, where a lot of investment has been put in, shopping development, business park development, Enterprise Zone development, and so on, but with the best will in the world it is almost impossible to get the same number of jobs, and new jobs, knowledge-based jobs, and so on, in Easington as used to be the case. The same would be true in east Durham, and so on. I think we have to work out complementary strategies of trying to create a new economic focus for such communities but accept that probably it will be at a more modest level, and some people may have to travel what is not necessarily a massive distance to jobs that might be just a little bit further away and of a different type as well.

  Chair: Thank you very much. I think Mr Betts has just one bit of information he would like you to send, possibly.

  Q178 Mr Betts: Your response about yesterday's announcement, which obviously you have had very little time to digest, would it be possible to give us another submission in writing about your response to that, particularly the issue about brownfield sites, and whether yesterday's submission will help or hinder in the direction we want to go?

  Mr Cruddas: Yes, of course. It will be interim because the consultation is likely to run longer than your inquiry; but, yes.

  Chair: Thank you very much indeed.

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