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

Examination of Witnesses (Questions 179-199)



  Q179 Chair: Good afternoon. Would you introduce yourselves, please, one at a time, and then we will start?

  Mr Forrest: I am Steve Forrest, Strategic Housing Advisor at the West Midlands Regional Assembly.

  Mr Gregory: My name is Steve Gregory. I am Chair of the West Midlands Regional Housing Partnership.

  Mr Davis: I am Colin Davis. I am Strategic Director of Malvern Hills District Council, which is a rural area of west Worcestershire.

  Q180 Chair: Thank you very much. Can I start off by picking you up on the issue of housing pressure. Other witnesses to this inquiry have stressed the fact that housing pressure is not confined to the South East and London. In what ways do you think that the housing growth agenda, put forward by Kate Barker, is applicable to the South but not to the Midlands?

  Mr Gregory: The picture in the West Midlands is very complicated. We have had the advantage of a tremendous amount of research into the housing markets of the West Midlands and how they are operating, going back several years, both through the Centre for Urban and Regional Studies and then more lately through Sheffield University, so we have got quite a good picture around the complexities of the housing market. That research has identified four broad housing markets across the West Midlands region, from the rural west, on the borders with Wales, an overheating south, a cooling north and then the central region around the Birmingham conurbation. A crude application of the Barker principles to that complicated housing market, we are concerned, could have an effect of unpicking our Regional Spatial Strategy. The basis of the Regional Spatial Strategy is to attempt to absorb demand within the West Midlands conurbation to deal with the growth in demand in the West Midlands conurbation and not to export that growth out into the rural areas and so exacerbate an already difficult affordability problem. I think we have widespread affordability, but it is a complicated picture.

  Q181 Chair: Are you suggesting that there are not additional houses needed in your region, or have you quantified how many additional houses you need, and what sorts of targets would you set to achieve that?

  Mr Gregory: We have quantified the number of additional houses needed and that has been examined in public inquiry and has been built into our Regional Spatial Strategy. The broad principles behind that strategy are for the conurbation to absorb its household growth and for the rural areas to absorb their own local needs, which are mainly around affordability, rather than meeting the generalised needs of the region, in terms of more aspirational housing.

  Q182 Chair: Does that suggest you want only new social housing in the rural areas, no new private market housing?

  Mr Davis: I think it depends on the situation. Clearly the market towns have a very significant role to play as a focus within the rural areas, providing services and facilities for quite a large hinterland around. There is no reason at all why market housing should not be focused in those larger towns as well but what we have found is that in the rural villages gentrification is occurring, people are coming in and buying up the properties. If I can illustrate this with my own district, the affordability ratio is a multiplier of over nine for newly-forming households, nine times their income, actually to access the bottom rung of the market housing, and over 83% of newly-forming households in the district cannot achieve that. That is the scale of the affordability problem, so we need to focus on that lower rung of the market. There is already a predominance of larger, detached dwellings throughout the rural West Midlands and that is very clear from the research that has been established and so it is the smaller end of the market we need to focus on and affordability. If I could make just one point, I think a lot of the current initiatives in policy, including those announced yesterday, are focused at low-cost ownership. If you think of it as a ladder, the bottom rung is actually social renting and there are lots of mechanisms for moving out of social renting into low-cost ownership. If you move straight to low-cost ownership you miss that vital first step on the ladder and that is what we are suffering from at the moment. What we are seeing is extending waiting lists, the turnover in the social stock is falling dramatically, because people cannot afford at the moment to make that transition out of social renting, and that is creating real problems. It is meaning also that, at one point, 80% of lettings were going to the homeless, which means nobody on the waiting list is getting a chance of general needs housing. That is the nature of the rural problem at the moment.

  Q183 Anne Main: I was interested to hear your comment, Mr Gregory, about not providing houses that are more aspirational houses, because that is just the exact opposite of what we were hearing before. Are you saying that you want to limit the sort of housing that you are having built, that is the feeling I am getting, so that you are attacking that one end of the market, because previous witnesses have just said they want to encourage people with skills sets and things, the aspirational houses, and that is what they want to provide? Are you saying you do not need that in your area, it is more renting, it is the lower end and it is the smaller houses?

  Mr Gregory: I think, as Colin said, within the rural areas, the pathway of choice that is missing is the first rung on the ladder, the lower value. The market has provided executive houses, not to excess because clearly they are occupied and they are performing a useful role, but the market has provided four-bedroom, detached houses in Warwickshire to the exclusion, virtually, of the lower-rung types. Within the conurbation, without intervention and the change in our planning processes, the market tends to provide, within the inner-city part of the conurbation, smaller units, lower-value units, so people who aspire to a larger house, a better quality property in the core of the conurbation have a very limited choice. Although the economy might be doing quite well, their skill set might be right, they have not got an opportunity to stay there so that puts additional pressure on the housing market outside the conurbation and takes the general house price up, which is then competing with what are very low wages in the rural parts of the region.

  Mr Davis: I think it is fair to say that it is a very diverse range, in terms of its housing markets and its housing needs. There is no `one size fits all' solution to the West Midlands, it needs a variety of tools and opportunities to create those pathways of choice.

  Q184 Martin Horwood: Some of the more extreme micro markets, if you like, are near your regional boundaries, which raises an interesting issue. I am not challenging the validity of regional boundaries, because they have got to be somewhere, at least not today anyway, but, to quote one local example, you talk about overheating in the Vale of Evesham, presumably that is affected by what I would perceive, coming from Gloucestershire, as overheating in Gloucestershire as well. Are you doing any kind of liaison with the South West Regional Assembly, for instance, to try to influence them to follow your kind of approach, because at the moment they seem to be taking a very different and a much more market-led one?

  Mr Forrest: We are conscious of this connection across our boundary and again we have discussions through our colleagues, through the English Regions Network, liaising with each other to find out what can be done. This is at the very early stages but we have opened that discussion.

  Q185 Martin Horwood: I have never even heard of the English Regions Network. Is this yet another tool?

  Mr Forrest: Those of us who are planning bodies meet together and those of us who are in the housing fraternity meet together.

  Mr Gregory: The research we have done across housing markets though suggests a fairly self-contained region, with some influences from outside the region but a region that holds together reasonably well. Certainly, within those rural areas, the research has shown there is a highly mobile community, a very, very mobile community, which is not tied by employment to where they live, so I think that gives the close boundary.

  Q186 Martin Horwood: Certainly we have people commuting from Gloucestershire into Birmingham and we have commonality of housing between Gloucestershire and the Vale of Evesham, so it must be affecting those boundaries?

  Mr Gregory: There is some evidence of migration from the South East and the South West to cheaper areas in the Midlands. One area that we are particularly keen to explore is some links with the south Midlands-Milton Keynes growth area. If we could co-ordinate the development and the growth within the Milton Keynes area with the aspirations of our Regional Spatial Strategy and make the two fit together, really we could have win-win. If we get the planning wrong and we do it at the wrong time we could have lose-lose. You could see the unity of greenfield sites on our boundary with Milton Keynes taking up some employment opportunities which then draw people to that employment.

  Q187 Martin Horwood: Would you welcome a National Spatial Strategy then?

  Mr Gregory: Ish; as long as it does not become a sledge-hammer. I think the problem is actually that the interpretation of this needs to be done at quite a localised level and built up and then some needs and connections between sub-regions and regions worked out. I think the danger is of opportunities and initiatives coming down from the top that they do not always hit the right buttons locally.

  Q188 Anne Main: Can I take you back to what you believe might unpick your Regional Strategy. Because you do not want a national one, or `ish, do you feel then that having the Barker view, which is a national view, is a problem to you, that you would rather not have it? You would not have imposed housing targets given by a Treasury vision, would you rather have more looking at what you need locally and then deciding what sort of housing you need to provide? Is that you are saying, or not?

  Mr Gregory: We would rather build up the needs of our region from an understanding of how housing markets are operating.

  Q189 Anne Main: Rather than being given a target to work to?

  Mr Forrest: Yes, absolutely. Your interpretation is quite correct. That is how we see it. The problem we see with a Barker-style solution is that if new housing is to be put where the house prices are highest it will be in exactly those areas where we are trying to discourage in-migration. The problem is that there will be far more development in those rural areas where there is pressure for occupation, whereas we would prefer to see that accommodated within the major urban areas. It is that out migration which has gone on historically for so long from the conurbation into the south of the region which we wish to see reversed. That is not to say that there is not some scope for owner-occupation within the rural areas, which was the point the Chair made earlier, there is some scope for owner-occupation for local needs but not at the expense of undermining the strategy and trying to rebuild and have an urban renaissance within the major urban area.

  Q190 Chair: Can I pick you up on two things. One is, from your submission, there seems to be quite considerable hostility, in principle, to most private house-building in the region. Is that accurate, or not? The second issue is do you think that the only way you can persuade people to build houses and live in urban areas is by positively preventing them from living in rural areas?

  Mr Gregory: No; no, no. No, certainly not. The private sector will be the provider of most of the new housing. The amount of subsidy that we are going to be able to put into the system will provide only a small proportion of the totality of housing that is provided within the West Midlands. What we are trying to do is create an environment within the conurbation that would make it attractive for developers to build houses, aspirational houses more, more executive-type houses. That is not to the exclusion of every other property type but it is attempting to address a balance that we have missed over a long period of time, over a 30-year or 40-year policy period. No; certainly there is absolutely no hostility to working with the private sector. There is, I suppose, quite an interesting debate with the private sector though of the sort of framework we need to provide within the conurbation to encourage them to provide that sort of aspirational housing. We have done some consultation across the region, in the Regional Spatial Strategy and in developing the Regional Housing Strategy, of what sorts of things we might need to change within the conurbation to make it more likely it will provide that aspirational pathway. Some of it was mentioned in the last submission. It is around a better environment, a less-degraded environment, better transport links, better education, crime and community safety issues, so it is very much a holistic approach to regeneration that is needed there. In terms of the rural areas, we would like them to hold the tiller on providing more and more executive homes to allow more outward migration from the conurbation, but we would like them to concentrate on lower-value homes for meeting the local needs that have developed.

  Mr Davis: Certainly in rural areas we need to focus on meeting local need rather than market demand, because the nature of the houses that are already there can satisfy that market requirement for aspirational homes.

  Q191 Dr Pugh: Obviously you are trying to do quite a difficult task, in a way, because you are trying to create affordable housing in rural shire areas, but not everybody in those areas has a high wage and can afford a large, four-bedroom, executive house, also trying to make the city more attractive so that more people migrate into the city. What is your policy? Have you had any chance to look at the data to see whether you are actually succeeding to any extent, or could you be doing other things, such as forcing a person looking for an executive house further out to a place where maybe the planning regime is more benign and less constraining?

  Mr Gregory: I think the research that we have done has been quite helpful in that. Touching on your first point, we now have evidence of quite an interest from the private sector in developing what are fairly difficult sites within the conurbation. In my own authority our housing target for the Regional Spatial Strategy is 900 units. Last year we managed to complete 1,200 units and there is not any sign that interest is slowing down now. We have got some fairly significant sites coming forward for redevelopment and, through the issuing of planning briefs, we are managing to get a reasonable spread of houses on those sites, which includes more aspirational housing. I think also in Birmingham City Centre, particularly, there is a boom in private sector development. There are the first signs that our focus is actually beginning to get the private sector to respond to the needs of the region as a whole rather than a narrow part of the market.

  Q192 Dr Pugh: If we take the region as a whole, the capacity is in no way decreasing; builders begrudgingly, as it were, are going and building in one place rather than another because of the constraints you are applying, is it fair to say?

  Mr Gregory: Yes, I suppose that is the crude interpretation.

  Q193 Dr Pugh: The worst case scenario is that builders will go somewhere else, is it not?

  Mr Gregory: Yes, that is right. Some of the sites in the middle of the conurbation are not easy; there are site assembly issues, there are mediation issues. If it is easier to take an option on a farm with a single landowner and a friendly planning authority, that is a relatively easy deal to put together. Assembling a site in multiple ownership, currently occupied by low-grade industrial uses, which is contaminated, is quite a different business, so really we are trying to encourage developers to look at those.

  Q194 Dr Pugh: How do you do that, constraining them from building on the perimeter of cities, and so on? What do you do, apart from tell them "These are the rules"?

  Mr Gregory: In effect, that is what we have done. We are slowing down the supply of land in the greenfield areas and we are giving greater capacity in the conurbation.

  Q195 Dr Pugh: If you look at the supply of land, it is a similar supply of land, or you are getting plainly higher density in the cities, are you not, really?

  Mr Gregory: Yes. Just touching on your `can we persuade people to move further out', I do not think we would want to do that because we do need sustainable communities and very long-distance commuting does fight against that sustainability, so we would prefer to see shorter-distance commuting, I think, so I do not think we would encourage people to move out. The work we have done around analysing the markets is suggesting that there is a limited influence in the west of the region of the markets within the central core of the region, that there is little evidence of commuting out from Birmingham into Herefordshire and Shropshire. As I say, there is limited evidence. The markets do seem to be reasonably discreet.

  Q196 Dr Pugh: Can I put to you one point which has just occurred to me. You are trying, presumably, to move your executives from the perimeter of the cities or the leafy shires, or whatever, into attractive places, by a canal in Birmingham, or something like that, with a substantial amount of investment. Just thinking of it from the commonsense point of view, that is alright for young executives, but as young executives move on and get older they tend to produce families and they want gardens, and all that kind of thing. Is there not a tendency for you actually to skew the market, so that somebody who does wish to have a reasonable house and a garden, and so on, simply decides that it is not the area for him, or her, at the end of the day?

  Mr Gregory: We are sort of dipping our toe in the water with that. The work we have done around the Urban Living Pathfinder, the Housing Market Renewal Pathfinder, suggests that people move actually very short distances, that there is little movement from the core of the conurbation out, it tends to be in shorter hops. Our task really is not to persuade somebody to move from Stratford-upon-Avon into the core of the conurbation. We might want to do that eventually, but all we have to do to stop that outward migration is persuade somebody not to move three miles that way but to move three miles that way, so it is less of a task. Our strategy is built around initially retaining the existing population and making sure there are adequate aspirational housing opportunities for the existing population, with an ambition for the executives to remain in the conurbation.

  Q197 Anne Main: You talked about having sustainable communities and having communities that people wish to live in. Have you identified a current infrastructure deficit and are you confident that you will have the infrastructure in place for the houses you wish to build in the areas in which you wish to have them?

  Mr Gregory: Largely because most of that increased supply will be in the core of the conurbation—

  Q198 Anne Main: Where you want to keep them?

  Mr Gregory: Where I want to keep them. There will need to be some additional investment into infrastructure because we are getting the land for those new houses from existing industrial uses. We have protected over the years a large core of land in the middle of the conurbation for industry, which has increasingly become low value-added employment opportunities and is very, very low density so it uses up a huge amount of land. There is a need to consider whether we need more extended schools, new clinics and health facilities, as part of a new development, and what we are trying to put into place now is an understanding of how that development will be timetabled so we can build some of those costs into the development process and then to the Section 106 process for something like that.

  Q199 Anne Main: Is it best for you to keep on urban regeneration brownfield sites because you already have a large amount of the infrastructure you think you will need?

  Mr Gregory: Yes.

  Mr Davis: I think there are five sub-regional areas identified in the Spatial Strategy for growth outside of the major urban areas, secondary growth, and certainly there will be infrastructural requirements in some of those, particularly highway investment, which will not be able to be financed purely from developer contribution, it will need public investment.

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