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

Examination of Witnesses (Questions 238-259)



  Q238 Chair: Our apologies for the late start, which was not under our control. Could you introduce yourselves, please?

  Mr Sinden: Good evening. I am Neil Sinden. I am Director of Policy at the Campaign to Protect Rural England.

  Mr Oliver: Henry Oliver, Head of Planning and Local Government at CPRE.

  Ms Gordon: Kate Gordon, Planning Officer, Local Government and Planning Team, CPRE.

  Q239 Chair: Thank you. Do you accept that a major house-building programme is required as a result of household growth and declining housing supply over the last 20 years?

  Mr Sinden: We question whether there is a need significantly to increase the number of homes built each year in order to tackle the problems that we have, but we do agree that there should be a step change in housing provision of a kind. Unlike the Government, we believe the step change should be in the level and proportion of affordable housing that is provided rather than in the overall level of house-building that takes place.

  Q240 Chair: You mean there would be an overall increase, but that overall increase would be largely social housing?

  Mr Sinden: No. We do not agree that necessarily there should be a step change in the overall level of house-building, simply that there should be a shift in the balance towards greater provision of affordable housing within the overall limit. From our point of view, the problem has been that in the recent past there has been a significant underprovision of affordable housing, by which we mean subsidised housing, available to people who are unable to compete on the market. Last year, I think, just over 10% of homes were of that kind, whereas in the sixties and seventies we were seeing provision of social housing at between 20-50% of the overall level of house-building. The issue for us therefore is the dramatic decline in the provision of social housing, which needs to be addressed.

  Q241 Chair: Just to clarify, you think that the numbers of private market housing, built annually, should be reduced in order that those numbers could be substituted by houses for social rent or social ownership?

  Mr Sinden: We think that there is an issue about the level of planned provision for housing. Essentially, there are round about 155,000 homes built per annum in England. According to ODPM data and our own analysis, around 170,000 homes are provided for through the planning system in Regional Plans and Local Plans, so there is a gap between the planned provision and the actual output. We think that gap needs to be addressed and largely filled, that is considered necessary, through an increase in the provision of social housing.

  Q242 Chair: I am still getting lost in the numbers. How many houses do you think should be built?

  Mr Sinden: We have no reason to believe that the planned level of provision, ie 170,000 homes per annum, is seriously wide of the mark. That figure is as good an estimate as we feel we have, so there is a gap between current output and current requirements, and that has to be addressed, we believe, largely by an increase in the output of social housing rather than an increase in the output of market housing.

  Q243 Chair: Roughly 170,000 are what you think is required, but you believe a greater proportion of those should be social housing than is planned currently?

  Mr Sinden: That is correct.

  Q244 Chair: That is helpful. You emphasise the fact that this house-building programme should meet the need for subsidised housing. Do you want that just to be subsidised for rent or also for ownership and do you think there is a limit to home ownership and what are your criteria for deciding what that limit should be?

  Mr Sinden: We think that subsidised housing should include shared-ownership or shared-equity housing. We do not pretend to have expertise which leads us to suggest that there is a limit on home ownership. We do look at the facts in terms of housing output, the balance between social housing output and the output or market housing, and the levels of housing need and homelessness and that leads us to conclude that we need, as I said, to shift the balance towards subsidised housing provision in order to meet needs. We have serious questions about the market-led approach, which the Government's response to Barker seems to continue to promote. This is, despite widespread criticism of proposals put out for consultation earlier this year to make the planning system much more responsive to market signals in allocating the land for housing.

  Q245 Chair: You would be happy if your proposals implied that the proportion of young people who were able to aspire to home ownership would be lower than the proportion of their parents' generation, for example?

  Mr Sinden: No, that is not what we would say. We would say that there is a need to provide greater opportunities for younger families and younger households to access the market through shared-ownership schemes for example, but we should not ignore the fact that a large proportion of people are unable to compete for housing on the market in many areas under any realistic circumstances. The Government's response to that should focus on increasing the provision of subsidised housing of a range of different kinds.

  Q246 Chair: If I may follow some numbers I have just been given, which is, apparently, there are 190,000 new households and you are suggesting 170,000 new homes. Where are those households to go?

  Mr Sinden: The 190,000 households per annum figure is a relatively new one which was mentioned by the Minister yesterday in launching the Government's response to the Barker package. We are eagerly awaiting the publication by the Government of revised household projections. We do not yet have that information and when it is available we will study it very carefully and come to a view on whether or not we feel that housing provision through the planning system should respond to a possible increase in the formation of households each year. I should also say that we are very concerned, in relation to these figures about household formation, to avoid slipping back to a `predict and provide' approach to housing provision, which John Prescott and the Office of the Deputy Prime Minister moved away from only a few years ago in favour of the much more sensitive "plan, monitor and manage" approach, which we believe is vital in order to underpin efforts to promote urban renewal.

  Mr Oliver: It appears that Ministers have been saying "This many households are forming every year, therefore this many houses need to be built every year." Aside from the fact that the relationship between household projections and house-building need is not necessarily a very clear one, as a proxy, the real relationship that needs to be looked at is between the total number of households that there are and the total number of houses that we have. The 2001 Census showed that in most English regions the surplus of houses over households had actually increased since the 1991 Census, therefore we think it is a little bit misleading to make a direct comparison between the number of households forming every year and the number of houses built every year. If it looks as though the total number of households is going to be bumping up against the total number of available dwellings then there is a problem, clearly, but we have not yet identified that problem and all the data seem to show that actually that may not be such a problem at the moment.

  Q247 Anne Main: I just want to take you back to what you were saying about market-led; then are you concerned that, with Barker advocating building more and more houses to try to suppress the price in some way, actually that could make things even worse? It could drive up prices rather than suppress them because it would be hard to build up the differential and you might be building the wrong sorts of houses, not the sorts of houses you are talking about, but houses for "buy to let" investment, and so on. Are you saying you would like to have the market tailored more to what the market needs, that is what I think I am trying to say, rather than just market-led, more toward local need rather than a market-driven system?

  Mr Sinden: I think that is right, yes. We are saying that and, this is a point I want to emphasise, we are not saying, to be absolutely clear, that there is no need for market housing. We accept that there is a need for more market housing but we are saying that the proportion of it needs to be reduced in order to provide for need amongst those people who cannot access the market. We do feel there is a risk in pursuing a crude, market-based approach that you may actually reduce the ability of the planning system to control the size and type of market housing provided. There is also a risk of a perverse spatial effect, if you like, in the sense that if you provide for housing on greenfield land outside of major conurbations, you can actually stimulate demand in those areas and encourage urban out migration, in the kind of way that we have heard is feared in the West Midlands.

  Q248 Dr Pugh: What Barker argued also, of course, and you disagreed with, with your sort of household/home analysis, is that market housing is required otherwise prices will just continue to rise. Assuming you think there is some, and the evidence is that there is, sharp, upward pressure on house prices, what is your alternative approach to tackling that problem? Affordability is the big issue for many people, is it not, that is why we are having this inquiry?

  Mr Sinden: That is a big question. We have suggested that it would be much more sensible for the Government to look at demand-side pressures in the housing market. In this respect, we were very encouraged by the announcement yesterday that the Chancellor is abandoning the provisions to allow people to invest pensions in residential property.

  Q249 Dr Pugh: That had no impact at all on the problem we were talking about. It would have averted the problem but it is not the problem we have at the moment?

  Mr Sinden: No, but it is just an illustration of some demand side pressures on house prices. We have heard estimates which would suggest that that provision would have unleashed more than £23 billion into the housing market and it is undoubtedly the case that it would have had an unbalancing effect, in terms of demand for rural housing. We think there are other ways in which the Government might look at the demand side, for example in terms of examining fiscal measures, to reduce the way in which housing is treated increasingly as an investment. This is a difficult area, we accept, and it is not a politically easy area to explore, but we believe the Government needs to look very carefully at the demand side of the equation, alongside the supply side. We are not even convinced that the supply side measures which Kate Barker puts forward in her Report would actually do much to improve levels of affordability at all. Indeed, her own modelling indicates that one would need at least to double, or thereabouts, the output of market housing in order to reduce house price inflation to the European average. That kind of marginal impact on house-price growth would do very little indeed to close the gap between average earnings and house prices in many parts of the country. It comes back to a point I was making at the beginning:- our approach is to encourage the Government to look at affordable housing, in terms of subsidised housing, rather than to adopt crude measures to try to tackle the issue of market affordability, which we believe is a very complex and difficult issue.

  Q250 Dr Pugh: Many teachers in schools and relatively reasonably-paid people in hospitals would not qualify for affordable housing, there are priority lists drawn up, and as a result schools and hospitals in the South East are suffering severe recruitment problems. The obvious solution would seem to be to build more houses at the right price for these sorts of people. If that is not the solution, what is the solution for them?

  Mr Sinden: There are two possible solutions, to continue the line I have been trying to elucidate up till now. One is to look at ways in which new shared equity options can be made available to people on moderate incomes in the kinds of places that you are talking about. The Pre-Budget Report yesterday, I believe, contained some interesting new proposals, which were welcomed by the Council of Mortgage Lenders and others, that could well encourage the provision of housing of this kind and provide a first rung on the ladder for people on moderate incomes. The other mechanism that we would like to see used much more effectively is the planning system being enabled to control the size and type of housing provided so that we see more, genuinely low-cost market housing—market housing in the lower quartile of the market range provided—so that people on moderate incomes have a better chance of being able to access that housing rather than housing in the upper quartile of the market range.

  Q251 Dr Pugh: Presumably, you would not support direct subsidy, such as key-worker schemes, and things like that, in the rural or any other area really, because presumably, in your view, that also would fuel demand?

  Mr Sinden: That is right. There are issues about the extent to which subsidies of that kind will further stoke the market to the detriment of people who are unable to access or do not qualify for that kind of subsidy.

  Q252 Mr Betts: I think we might well agree with you that we need more social rented housing and other forms of affordable housing but it seems that you are posing that provision as against market housing, you are not saying that they are both possible, you are saying you want more of the rented housing to displace market housing. Is not that because you have decided, for a completely different reason, nothing to do with housing but to do with the environment, that you want a limited amount of house-building and you are not prepared to go beyond it?

  Mr Sinden: I can see what leads you to that conclusion, but the answer is no. We recognise that as a nation we need to provide for the nation's housing needs. We believe that we can do that in a way which respects more effectively than we are at the moment environmental limits and wider environmental implications. I think there is a real opportunity to maintain momentum, the momentum that we have seen emerge recently, towards urban renewal and urban renaissance, not just in towns and cities in the South East but increasingly in the northern regions, by focusing housing investment, market housing as well as social housing investment, within existing urban areas. There is still huge capacity, we believe, in many urban areas to accommodate the housing that the nation needs. We have seen significant improvements in the reuse of brownfield land over recent years, largely as a result of the changes in policy put in place by John Prescott after the Urban White Paper was published in 2000. We have also seen improvements in the average densities of new housing provided, which mean that we are using land more efficiently and that we are able to promote housing which is well designed, which contributes to the character and quality of urban neighbourhoods, and which minimises its demands on infrastructure.

  Q253 Mr Betts: With all those things then we should be able to increase the amount of housing we build without having the impact on the environment that you worry about, should we not?

  Mr Sinden: Our concern is that, in making the planning system more responsive to the market, we will lose sight of the long-term strategic objectives of promoting urban renewal and making best use of existing infrastructure. It is not so much about the scale of provision, it is about the pattern of provision and the sequence within which land is made available for housing development.

  Q254 Mr Betts: One of the things you said was that actually one of the problems at present is that builders, developers are sitting on a whole bank of land, and it is not a problem with the private system but the fact that the builders are just sitting there, making money out of it. Now if they suddenly decided to release this land we would have a splurge of house-building which you would not support, so there seems to be some element of contradiction in what you are saying there?

  Mr Sinden: No. We believe that there is an issue about land-banking. We recognise why house-builders are involved in land-banking, we are not opposed to it in principle, but the facts are that the amount of land which the major house-builders have in their land banks has increased significantly over the past few years. I believe the position now is that the 14 major house-builders have a third of a million plots with planning permission for housing and that has increased by more than a third since 1998. This points perhaps to a dysfunction within the market.

  Q255 Mr Betts: If they are excused from having these, we are going to have more houses built, which presumably is what you are not in favour of?

  Mr Sinden: It depends where those plots are. We are not saying that we do not want to see, or we do not think there is a need to increase house-building levels.

  Q256 Mr Betts: You cannot be discretionary now, can you? If the land has got planning permission and you are saying you want measures to make sure that builders who have got planning permission on their land and are sitting on that permission release the land for building, you cannot be discretionary on that, probably it is just going to increase the number of houses which are built?

  Mr Oliver: If I might step in just to clarify this, remember that those land banks are not land held in some hope of getting planning permission in future, they are plots with planning permission, therefore they are provided for through the planning system. As we have already pointed out, there is a shortfall between output and the actual amount of housing that is currently planned for annual provision.

  Q257 Mr Betts: There is a 15,000 shortfall and there are 331,000 plots there which could be released?

  Mr Oliver: There is a 15,000 shortfall, roughly, between output and planned provision, I beg your pardon, I misheard you. Yes, of course, they could be released and they have already been planned for and planning permission has already been given. The point that we would make is that our evidence, from our own research, is that where local authorities have allocated land, sites, for housing they have generally indicated broadly the percentage of that which needs to be affordable housing. In practice, historically, the actual proportion of that housing which was affordable was considerably lower than the identified need that was planned for, therefore the proportion that was market housing was considerably higher than identified need. The point we are making is that the planning system seems currently underequipped, with not enough public finance as well to help make this happen, to provide the type of housing which it has identified a need for. Historically, in the eighties and nineties, we have seen overprovision of market housing. We have no reason to believe that has changed, although we do not have more recent data.

  Q258 Chair: What do you mean by "overprovision", do you mean it is not being sold or occupied?

  Mr Oliver: We mean that the amount of housing built in a given plan area is greater then the need identified for that kind of housing. Demand for market housing is enormously elastic, particularly in attractive areas, so it is very hard to say that just because it has been sold there was a need for it, because very often it stimulates its own market. The point we are making is that the planning system needs to be providing the sort of housing that a need has been identified for, and historically it has been very bad at that.

  Q259 Martin Horwood: I want to restate Clive's question, just quickly, because I am not sure you really answered it. Are you saying that you are happy for the land that is now held in land banks to be built on?

  Mr Oliver: If the land has got planning permission, yes, of course, because it has got planning permission.

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