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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 703-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE office of the deputy prime minister: housing, planning, local government and the regions committee
affordability and the supply of housing
Tuesday 6 December 2005 MR ALAN CLARKE and MR JAMES A CRUDDAS MR STEVE FORREST, MR STEVE GREGORY and MR COLIN DAVIS MR NEIL SINDEN, MR HENRY OLIVER and MS KATE GORDON Evidence heard in Public Questions 153 - 263
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Committee on Tuesday 6 December 2005 Members present Dr Phyllis Starkey, in the Chair Mr Clive Betts Martin Horwood Anne Main Dr John Pugh ________________ Memorandum submitted by the Northern Way
Examination of Witnesses
Witnesses: Mr Alan Clarke, Chief Executive, ONE Northeast, and Mr James A Cruddas, Head of Sustainable Communities, the Northern Way, gave evidence. Q153 Chair: Can I welcome you, to start us off on this afternoon's session, and can I ask if, first of all, you would introduce yourselves, for the benefit of the members of the Committee and for the record? Mr Clarke: My name is Alan Clarke. I am Chief Executive of ONE Northeast and the lead officer with respect to the Northern Way project. Mr Cruddas: I am James Cruddas, Head of Sustainable Communities at the Northern Way. Q154 Chair: Thank you very much. Can I start by picking up from your written evidence, where you suggest, when talking about the supply of housing, that it is not just an issue of numbers but also the distribution of supply. Can I ask you to expand on that but also to say whether you believe there is an overall shortfall of supply across your region? Mr Cruddas: I think, Chair, the first thing to say is that, historically, housing has not been planned with a close correlation with economic projections, economic growth. We have seen increasingly, as we have started to prepare the new Regional Spatial Strategies, some recognition of the relationship between planning for housing and economic growth predictions. We need to see more of that and therefore we need to locate our homes in the future much more closely with where economic growth is to occur. We have tended to see in the past that we have located homes at some distance from where new jobs are being created. Why that is important, particularly in the North and regions, is that we are experiencing people moving out of our urban centres just at a time when our cities are coming back to renaissance, just at a time when we are seeing jobs being created at their hearts. We need to start to locate homes much more closely with the right places for economic growth. You asked also whether we have an undersupply, or an oversupply, I guess, and I think, in the North, historically we have built more homes than we have created households and I would be the first to admit that. In gross terms, we do not have the right supply and so over the coming future years we need to increase the supply, not in net terms but in gross terms. Mr Clarke: I think it is to do with the quality and the choice of homes as well as just the quantity, particularly tied in with new plans, Regional Economic Strategies, the new areas of employment, new job opportunities, so I think it is to do with the quality and choice and location as well as the quantity. Q155 Chair: Have you quantified the number of new homes that you think you need to create? Mr Clarke: First of all, I think the organisation which is responsible for doing that is the Regional Assembly, through the Regional Spatial Strategies, that is where, at this stage, the quantification has taken place and, as a Regional Development Agency in the North East, certainly we have worked very closely with the Regional Assembly to get as close an alignment between the two as possible. Indeed, we will be giving evidence at the examination in public on that. I think we have worked hard to get it very, very close, but we are in more of an influencing role, with respect to housing, we sit on the Regional Housing Board, but we are not responsible for determining the numbers. Q156 Anne Main: You have just said that you do not have the right supply of homes and you have mentioned something again about choice. Are you saying there are not enough homes but actually people want bigger houses, or more family houses, or is it that the housing stock is of a poor quality and they want better quality or bigger gardens? Have you thought what it is that is determining the reason for people wanting to not have the homes that are there but to move somewhere else? Mr Clarke: I can give a broad answer to that. Probably James can give more details. There is a tradition, and I know the North East best but clearly the same is true to an extent of Yorkshire and the North West as well, of very substantial concentrations of council housing or ex-council housing which at one point was highly popular, with long waiting-lists, and so on. There is far less demand for some of those homes now and therefore there tends to be abandonment in parts of the estates and people who are moving into new jobs, people who are moving into the area, do not wish to live in those sorts of locations, and there is not enough of the alternative choices of maybe family homes. Q157 Anne Main: Can you say why they are not wishing to choose those locations; they just get a feel for it really? Mr Clarke: The quality of the wider facilities, the schools, the living environment sometimes, might not be of the standard that people are looking for, they might not be close to where the new jobs are that are being created, so that might be an issue as well. It may well be to do with the quality of the homes themselves, in terms of what people are looking for now. I think it is a mixture. Mr Cruddas: I think that we are seeing economic change happening in more regions. People's jobs are changing, in terms of type. Many of the homes that we have were built a hundred years ago, or more, for a different economic era, and they are just not the type and quality that people would prefer to choose to live in today. Alan has talked about our locality in the North East, but across the North you can experience quite rapid change. If you take Newcastle, there is a perfect example in an estate called Scotswood, 3,000 houses used to be there, they were there because the shipyards were there; the shipyards are no longer there, people no longer need to live there, they want to live in rather more attractive, quality accommodation. Sixty to 65 per cent of homes in our urban areas across the North are in council tax band A and, if you are trying to grow the economy and attract wealth-creating individuals into 21st century jobs, the knowledge economy employment, you have to provide the kind of accommodation that those people are likely to want to live in. Q158 Martin Horwood: In 2.4 and 2.10 of your report, you are fairly rude about some of the rather generalised population and household statistics that Government seem to be using and you point out that is not at all sensitive to some of the micro housing markets that you experience, including some areas of high unaffordability, even in the North, but you do not suggest much in the way of alternatives. Can you suggest more sophisticated models that they might use, or do you want them just to leave it up to you and not interfere? Mr Cruddas: No. I do not think we are looking for a laissez-faire approach nationally. The memorandum reflects the stage that we have reached in our own work. We have moved on since we submitted the memorandum to you but we are not yet complete. We would be happy to share where we have reached on a confidential basis but we are consulting with our stakeholders on the final work at the moment. I think though I can highlight some key points, and much of this is reflected, to be honest, in the proposals in the draft PPS3 which was published yesterday by Government. What you will be looking for is to start not from the basis that you need to calculate a number of new houses but to start by looking at the spatial areas of influence within the region, so looking at trying to understand the city region logics, sub-regional logics, then starting to work on those to understand at a detailed level what is the economic structure of those functional areas, what does that imply for our future housing, looking also at the existing housing, the current system does not look really at existing stock. The key point then is to manage and monitor what you have planned for as well; at the moment, although we talk about management monitoring, the system does not really involve much of that. Those are the key steps I think we would want to emphasise. Q159 Mr Betts: You have gone to the idea of city regions; is there not a danger that it will get very complicated? You would not have taken the County Structure Plans away to try to remove one extra layer in the planning process. We are now going to end up with a local authority with a Local Development Framework, we are going to involve the city regions in planning of some kind to look at their 'travel to work' areas, we are going to have the Regional Strategies and then we are going to have the Northern Way. That is four levels before you get to central government. Is not that going to complicate things? Mr Clarke: I think, from my perspective, we have got to do something that will make a much more significant difference to the economic performance of the North across the board than what we have done in the past. The evidence, certainly going through ODPM and also OECD, from European experience, is that those really successful economies and successful regional economies are based on very, very strong city regions and not always are they co-terminus with local authority boundaries as you describe. If you look across the whole of the North, even a city as big as Manchester really does not cover the 'journey to work' area, the 'journey to learn' area, the cultural attractions that it offers, and so on, the transport network. Although you are right to say it is complicated to make arrangements across a group of local authority boundaries, if done properly, I think, based on experience and academic work done through ODPM, it will lead to a greater uplifting economic performance than working to traditional local authority boundaries, which very, very rarely are co-terminus with a local economy, that have any meaning to local business and local people. 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 level, 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 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 per cent 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'être 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'être 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 per cent 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 because you have got 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 always 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. Memorandum submitted by West Midlands Regional Assembly Examination of Witnesses
Witnesses: Mr Steve Forrest, Strategic Advisor, Housing, Mr Steve Gregory, Executive Director, Urban Regeneration, and Mr Colin Davis, Strategic Director, Operational Services, Malvern Hills District Council, West Midlands Regional Assembly, gave evidence. 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 Hallam 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 per cent 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 per cent 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 there 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 encourage people to stay. 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. Q200 Mr Betts: Social Housing Use Class, how do you think it would work? Mr Forrest: This has been suggested on a number of occasions in the past and has come back forcibly to us as part of a tool-kit of solutions to meeting the need for affordable housing. So often the discussion goes along the lines of, even when land is available the market price of that land is so high that housing associations cannot bid successfully for it, and it is just one way in which the land value might conceivably be reduced below an open market figure. Q201 Mr Betts: Why does not Section 106 suffice to achieve that objective? Mr Forrest: One of the things about having a Social Housing Use Class is, it is not just that but also, I think, it does enable planning authorities to plan proactively and constructively for the future provision of affordable housing in the right places and not just relying upon the way in which the market may be working and then responding after the event, as it were, after a planning application has come in, with a Section 106 Agreement. Although there are other ways, rural exception sites are another way in which affordable housing is delivered in rural areas, but I think a Social Housing Use Class can certainly have that effect of reducing value and enabling associations to bid. It also has one other effect, which is similar in urban areas across the piece, actually, where a combination of legal advice, public sector organisations, where, again, they have to deliver best obtainable value for their land, if the valuers feel that a site is going to achieve far more from a private sector developer than a housing association can pay for it, they are not prepared to release that land necessarily for social housing. The issue there is that if the planning arrangements with regard to that site could include a Social Use Class on it then there is just the possibility there that the land then would be reduced in value and be capable of being sold to housing associations. Q202 Mr Betts: There are two issues here, are there not? First of all, you are saying that it enables you to plan for social housing because you know where it is going to be built and actually that presumes that anyone who wants to come forward can sell the land at that price. At least with 106 you have got somebody who is proposing to build houses and you are almost working with them to make sure that a percentage of those are better for social renting. The Social Use Class; if you designate the land just for that purpose then it may be that they have not noticed the market at all because it has been downvalued, and you said the whole object is to downvalue and downprice that land, and no-one actually wants to develop it? Mr Forrest: I think sometimes the prospect for Section 106 Agreements also may be said to inhibit the release of land if they do not want a social housing component on it. The argument can go round that loop in different ways. Q203 Mr Betts: You do recognise that could be the effect? Mr Forrest: It may be; there is also the implication that if that site really is needed to meet an unmet affordable housing requirement then there are other ways of bringing that forward, either voluntarily or through compulsory purchase powers. Q204 Chair: You are proposing compulsory purchase? Mr Forrest: I think, in an ultimate situation, if a community needs that affordable housing and the land suppliers are coming forward then it is one way in which that can be achieved. Q205 Mr Betts: How do you actually produce such a thing, because presumably one should begin to give the idea that you want to do that, or Government announces its intention, then there will be a consultation period, presumably, in which time every owner of a piece of land which is going to be rezoned for social housing is going to get a planning application in and get permission for private housing, are they not? Mr Forrest: Not if the planning system is working effectively within the allocation of numbers within the Regional Spatial Strategy. It is not a free for all. Q206 Mr Betts: The land is already zoned for housing. Presumably we are talking about giving up the housing land between different uses, i.e. for social housing or for moderately-priced housing, then once you begin to give an indication that you are going to bring in this sort of system everybody who has got land who thinks they may be going to fall into this category is going to immediately downvalue the price of the land they own and put in for permission for market housing, are they not, which will scupper your proposal? Mr Forrest: They may, but I think authorities need to think carefully about how that land is being released and who it is being released for, so that their Local Housing Strategies impact on the way in which their planning system is operating. Q207 Mr Betts: It has got permission; if it is zoned for housing under the UDPA ODF, it is up to the owner to come forward for planning permission? Mr Forrest: That is where planning authorities can and need to increasingly be clear why they are releasing land. Q208 Mr Betts: They do not release it, do they? Mr Forrest: In the way in which they are giving consent for that land, so that there are briefs and there are other means of directing how that land should be used. Q209 Anne Main: Can I just be clear, if it went to private sector only then you would be expecting them to release their land at a reduced rate for social housing? Mr Forrest: No, I think it should help with the release of public sector land as well. Q210 Anne Main: We are talking school playfields, and things, so again equally that could be chopped in value? Mr Forrest: If necessary, yes, to make that accessible, if the market price is too high for associations to buy. Q211 Martin Horwood: I am very keen to see more social housing, but does not this fly in the face of the trend away from having single-typed zones and into more mixed-use and diverse communities? Mr Forrest: That is the risk which needs to be avoided, certainly. Q212 Martin Horwood: How could it possibly be avoided, if you are zoning a particular area of land for social housing? Mr Gregory: We do have some examples of a slightly different take on that, in districts that are beginning to run out of their general supply of housing land, in accordance with the strategy. Now they are looking for exception sites which are excluded from the general strategy and they are focusing those exception sites on low-value housing and they are framing the planning permission to release those sites specifically for low-value houses. I think it is Bromsgrove and Stratford-upon-Avon which now have run out of the generality of housing numbers where they can give general planning permissions. They can give planning permission now only by exception, and that is specifically for housing which meets their identified local need, so we have got some examples of where that is beginning to work across the region. Chair: Thank you very much indeed. Memorandum submitted by London Borough of Barking and Dagenham Examination of Witness
Witness: Mr Ken Jones, Head of Housing Strategic Development, London Borough of Barking and Dagenham, gave evidence. Q213 Chair: Welcome, Mr Jones. Thank you for coming. Mr Jones: Thank you. Good afternoon. Q214 Mr Betts: Thank you for your submission. Do you agree that actually more housing is needed in Barking and Dagenham? Are you comfortable with the sorts of projections that we are seeing for future house-building? Mr Jones: Yes; and the revised figures from the London Housing Capacity Study for Barking and Dagenham we are perfectly content with. In fact, we feel probably slightly more unusual than many of our neighbours, we feel that, in fact, the number is perhaps rather low, but that would be totally dependent upon the social infrastructure and the infrastructure for public transport being in place. We are very comfortable with the numbers. Q215 Mr Betts: You are sending a message out to the rest of the South East that you do not want them to come to bother you in Dagenham, is that right? Mr Jones: We are saying a number of things. Firstly, we need to attend to the needs of the existing community, so we are looking at a balance between social rented, intermediate forms of home-ownership and also aspirational housing, because currently there is a shortage of that sector of housing in Barking and Dagenham. Barking and Dagenham has, I think it is, the second highest percentage of social rented homes in outer London. Again, we are quite atypical of a number of our neighbouring boroughs. Q216 Mr Betts: Despite this, you are still after more socially-rented housing. Would you not be looking more at affordable housing for people to get on the first ladder to buy? Mr Jones: Our experience is that there is a considerable demand. I was interested to see the Joseph Rowntree Foundation Study recently in terms of that intermediate sector of housing. We do believe that there is a considerable appetite and demand for that form of housing. The issue for us is ensuring that actually it is affordable, because we have the lowest income levels in London, so we have to get the equity share pitched at the right kind of level. We have done that with our housing association partners on a number of developments, where we have gone down to something like the person purchases just 25 per cent initially and then staircases up as their careers progress. Q217 Mr Betts: In terms of that, given that can help with initially getting to home-ownership, but eventually those people can move on subsequently and often make quite a nice profit, sometimes, out of the initial benefits to enable them to get on the housing ladder. Have you looked at any methods of locking in any initial assistance to first-time buyers, so that when they eventually sell on the property the next buyer of that property also gets some sort of benefit? Mr Jones: Yes. This a very interesting point. We have done that on a number of our developments where the Council actually own the land, so that we retain the part of the value we called, I think, in this particular instance "community bonus" so that share of the property was always retained by the Council. It ensured that, irrespective of the staircasing effect that you point out, a proportion of the value of the property will always be retained, so you are retaining the affordability in perpetuity. We have done that in one instance. We are also extremely interested in doing that on some of our larger developments that are to come in the years ahead. Q218 Mr Betts: You are not experiencing any problems with mortgage lenders or others on that? Mr Jones: On that particular development, we did have extensive discussions with the developer, but they agreed to that in the end. I must say that, in that particular development, which we are trying to cement in with all of our developments, there was a breakdown between approximately a third for social rent with a housing association partner, about a third then for intermediate and then a proportion of that specifically on the term "community bonus". Q219 Mr Betts: In terms of 'buy to let', you have expressed concerns about that. What would you want to see for that particular issue to be tackled in a proper way? Mr Jones: It is a major issue for us and, in fact, it is thwarting a number of our attempts to try to facilitate more balanced communities, because what has happened in many instances is that, the proportion for market sale, investment companies come in, purchase large sections of that property and then it goes to 'buy to let'. I think there are two things really. Firstly, clearly, when the land is publicly owned we have considerable control over that. I think, as well, at the moment it is about negotiations with developers, we are trying to forge long-term relationships with developers, so it is not just come in, do a development and out, it is long-term relationships with developers and partnerships with the Council. In those instances, it is not really in anyone's interests to have an excessive amount of 'buy to let', it is not good for the reputation of the development, quite frankly, so it is that kind of discussion that we are trying to pursue. Q220 Chair: Why exactly is 'buy to let' not good? Mr Jones: I think there are two points really, I would say. Firstly, as I mentioned before, we have high concentrations of social rented accommodation within the Borough. We have some estates, 2,400-flatted estates, all owned by the Council, with some 'right to buy' on there. If you are trying then to get a more balanced community, some outright market sale, sure summary provision of rented and some intermediate, you are losing that impact if a high percentage of the outright market sale then is to let. A second point I would make on that is it can have quite a destabilising effect on a community in terms of transience, a high turnover really it is not good for the local community. Q221 Anne Main: Really this could follow on from that, because you say it is transient, are you not creating the right sorts of homes for families to live in, do you feel that you have enough family housing in your area, or is there too much focus on high-density housing? Mr Jones: I think the point about larger homes for families is a very important one to us and indeed to London generally and the sub-region of east London of which we are a part. Certainly the London Housing Strategy looks at something like 40 per cent, I think, of new developments being three-bedroom and above and our view is maybe that is slightly too high but it is about right. You have this tension with developers because obviously they are looking to maximise their profit, that is fine, and to pursue that they want to create developments which are populated largely by one- and two-bedroom apartments. Again, what we want to try to create are balanced communities, places where people will stay, we do not want people not to have the opportunity then to move on in the Borough. Q222 Anne Main: Do you think that 30 to 50 per hectare as a minimum is actually working against you, because you are having to deliver very small, high-density units, rather than founding homes which you feel would give a more mixed community? Mr Jones: I am sorry to keep using the word 'balanced' but I think it is about balance, actually. I think, for example, in some of our town centre settings high density is right and maybe there are ways imaginatively with design to create opportunities in town centres at pretty high density to have homes, three- or four-bedroom homes, at the lower levels perhaps, for families. You want a variegated approach: town centres, where you have the infrastructure there, you have the close links into central London from Barking town centre, you want high density, but I do not think that argues necessarily against some family homes. Q223 Anne Main: Do you think enough assessment has been made of the demographic in your area, of the sort of people who want to live in the units that have been built, or units being built speculatively, or whatever, without a lot of thought of the sort of people that want to live in them, families or groups? Mr Jones: It is an issue that certainly we consider quite a bit and certainly it is an issue that our neighbouring boroughs in east London consider, because if we take the point of social rented accommodation, we know that we have protocols across London for sharing the nomination rights to those properties, and there is an issue about choice. Will people from Hounslow, for example, want to move to Barking Riverside development, where there is a planning application currently before the Council for something like 11,000 new homes, will people want to move there; I think that is a question that really we do not have an answer to at the moment. Dr Pugh: Barking Reach, it says in my notes here you are planning to build 26,000 new homes and to generate 15,000 new jobs - actually it says in my notes 260,000 new homes but that is probably a tad optimistic, I think - and this is to take place over the next 20 years. Chair: I am incredibly sorry. There is a vote and I will adjourn the Committee. The Committee suspended from 5.45 pm to 5.51 pm for a division in the House. Chair: Can we restart. John, can you remember what you were asking? Q224 Dr Pugh: I was asking about working with all the new homes and all the new jobs and I was sceptical as to whether it was all going to happen. What do you think? Mr Jones: Two hundred and sixty thousand homes are not going to happen. There is an application at the moment for almost 11,000 homes in Barking Riverside. It will happen only if the infrastructure is in place, particularly the Docklands Light Railway Extension through the site. If that is not there and some other infrastructure, for example, there needs to be on the A13 a new gyratory or junction, and of course it is the investment in terms of the schools, the PCT facilities and the rest, if that is not there and on time then, firstly, the development in that number I do not believe will happen. If it did happen, by any strange chance, then I think it would be a place where people just would not choose to live. I think it is as blunt as that. Q225 Anne Main: Are you saying that the infrastructure has to be there beforehand? Mr Jones: The infrastructure has got to be timely, it has got to be there or phased so that there is a very, very clear commitment that it comes in at an early stage. Q226 Dr Pugh: You will appreciate, you are on the horns of a dilemma, are you not, because a light railway is very, very expensive, in many respects, as infrastructure goes, and nobody is going to invest in very expensive infrastructure if there is not a real purpose behind it and a large community to serve. Yet, at the same time, what you are saying is, until you get the transport there you are not going to get that community? Mr Jones: There is somewhat of a community there at the moment. There are something like 1,000 homes there. There is also an existing estate, built by the Council in the 1950s, of something like 2,000 homes adjacent to the main development. There is something to be built upon. I think there is another point that I would want to make though, in terms of the Council's overall approach, and that is, which I hope came through in the submission, that we actually maximise and build out from existing centres, because that seems to us to be the correct approach, in terms of maximising the usage of the existing infrastructure. There is a town centre there, let us develop that. Q227 Dr Pugh: What you are saying is that you want to develop Barking Reach so it is compatible with the evolution of the town centre rather than the alternative? Mr Jones: Yes. Q228 Dr Pugh: In terms of how this new community is to be envisaged, is there any sort of premium put on environmentally-efficient housing and sustainable lifestyles? I think it is an attractive feature of any new community really. Mr Jones: Yes, and I think it is a very important point. In fact, I think it swims with the tide in terms of modern methods of construction as well, because, in terms of trying to do something about build costs and also in terms of capacity in the construction industry, which we have not considered so far this afternoon, there really does need to be a drive towards the modern methods of construction, of site manufacturing, which is going to deal with some of the overheating in the industry. Also you can get very high, or much higher, environmental sustainability standards from that kind of development. Q229 Chair: Before I pass on to Martin to start on Thames Gateway, can I press you, you said that you did not think, even if the Docklands Light Railway went to Barking Reach, that anybody much would want to live there. Mr Jones: No; no. Q230 Chair: That was what we thought you said. Mr Jones: Oh dear; oh no. Q231 Chair: Let me try again, for the record. Mr Jones: For the record, yes, indeed; if we have the infrastructure in place, DLR and the other social infrastructure, then, yes. Q232 Chair: People would want to live there? Mr Jones: Indeed, yes. Q233 Chair: Why was the bid turned down, the bid for the Docklands Light Railway Extension, was there not a sufficiently convincing case presented? Mr Jones: No, it is a current submission, I think it will be within the next Spending Round, the Comprehensive Spending Assessment period, and certainly there are negotiations ongoing with the Mayor of London to get that as a line within the TfL. Certainly the Mayor has given commitments in the past; now we just need to see a very firm commitment, but it is a desired programme of the Mayor. Chair: Thank you for clarifying that. Q234 Martin Horwood: We heard earlier on from the West Midlands Regional Assembly that they thought greenfield development in shire counties was actually undermining their attempts to try to regenerate the central urban areas in Birmingham, in their case, and elsewhere. Do you think that is a problem for you, too? Mr Jones: No. I think we are looking at a different set of circumstances. If you look at the proposals from the Mayor within the London Plan, we are three miles from the Olympics. I really do not think that the problem you have presented is an issue for us. Perhaps the issue for us, I suppose going back to the point before, is the relationship of the developments, and I do believe that town centre developments, intensifying development there, increasing density, improving design, getting the kind of mix right, and then allied to the brownfield developments, like Barking Riverside and others within the Borough and indeed within the sub-region, is the right way forward. Q235 Chair: How can you be sure you are going to get the jobs as well as the houses, or is it suggested that many people will be working in central London? Mr Jones: It is probably the expansion of the Isle of Dogs, Canary Wharf, that area, in actual fact, to which many people will be commuting, and we are very close, it is literally two or three miles. Again, Barking and Dagenham is very unusual, in the sense that we do have a higher percentage of working population actually in manufacturing. It is declining, obviously, but it is still reasonably high, compared with the rest of London anyway, and we think that there is certainly opportunity, again around town centres, to increase commercial activity. There will be displacement of industry from the lower Lee Valley as well for local jobs. Q236 Chair: There seem to be a very large number of different development agencies in the Thames Gateway. Do you think that the numbers should be reduced and, if so, how? Mr Jones: The life of the UDC, it is very early as yet. We have established relationships with that and I think we have come to understandings, certainly about the planning protocol. I think they need the confidence that we are actually going to bring forward developments; we are. I think they are acting in a co-operative way with us. We have had very good involvement, very good co-operation with English Partnerships, extremely helpful, around site assembly issues, again in town centre development. I think at the moment we are reasonably comfortable with the arrangements. The GLA family, LDA, again have had considerable involvement in the Borough and we have some tensions in relation to targets that are set by the GLA in terms of mix, for example, between affordable homes and market-price homes. Q237 Chair: Can you be more specific; are they requiring more affordable homes than you want, or fewer? Mr Jones: I am absolutely signed up, as is the Borough, to a London-wide target of 50 per cent of new development being affordable homes, I think that is absolutely correct, and within that something like 70 per cent being social rented. I think that is fine as a target across London then you have to look though at individual circumstances of local boroughs. Whereas that may be perfectly correct for some boroughs, for Barking and Dagenham, as I mentioned before, we have the lowest house prices in London, we have the lowest income levels in London, we have got the second highest social rented, is that the right prescription for Barking and Dagenham; I think not. We have had discussions with GLA and they have been very fruitful discussions and there appears to be understanding, but the proof will come when we get major planning applications coming through and discussion then takes place with the Mayor. Chair: Thank you very much indeed. I am sorry that your session got (a) delayed and (b) then interrupted. Thank you. Memorandum submitted by Campaign to Protect Rural England (CPRE) Examination of Witnesses
Witnesses: Mr Neil Sinden, Policy Director, Mr Henry Oliver, Head of Planning and Local Government, and Ms Kate Gordon, Planning Officer, Campaign to Protect Rural England (CPRE), gave evidence. 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 of 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 ten per cent of homes were of that kind, whereas in the sixties and seventies we were seeing 40 to 50 per cent provision of social housing as part of the overall level of house-building. The issue for us 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 and we are using figures that are provided by the ODPM. Essentially, there are round about 155,000 homes built per annum. 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 needs to be filled, if you like, 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, i.e. 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, but that has to be filled, we believe, 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 housing and we do not pretend to have expertise which will lead 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 market output 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, despite widespread criticism about earlier 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, 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. 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 created 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 that information 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 have to say that we are very concerned, in quoting 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 was able 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 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, one point I wanted 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 that by pursuing a crude, market-based approach actually you reduce the ability of the planning system to control the size and type of market housing provided, first of all. Also there is a risk of a perverse spatial effect, if you like, in the sense of 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 and 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 provision would have unleashed £23 billion more into the housing market and it is undoubtedly the case that 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, in terms of looking at fiscal measures, in order to reduce the way in which housing is treated increasingly as an investment, more generally. It is a difficult area, we accept, 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, roundabout, 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 I think 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, which could well encourage and develop 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 the 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, development, market housing as well as social housing investment, within existing urban areas. There is huge capacity, we believe, still in many urban areas to accommodate the housing that the nation needs. We have seen significant improvements in the release 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 seen improvements in the average densities of new housing provided, which mean that we are using land more efficiently and we are able to promote housing which is well designed and which contributes to the character and quality of many 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. 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 and I think the figure now is something like 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 over the past few years. 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 the 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, 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 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. Q260 Martin Horwood: You have a very strong emphasis in favour of brownfield sites and against greenfield sites, which, broadly speaking, I would agree with entirely, but there must be exceptions, surely? I think, for instance, of the very small villages which are having their shops and schools closing and you might want to encourage limited greenfield development in order to make those communities more viable and more sustainable. Would you support that? Mr Sinden: In broad terms, yes. We believe that there is a need for housing in rural communities and there is perhaps, broadly, a greater need for affordable housing in those communities in order to provide the kind of balance in rural communities that you are suggesting. Inevitably, that will require the use of some greenfield sites and we are encouraged that the Government has widened the tools available to local authorities very recently, in order to deliver that kind of housing, by allowing rural authorities to allocate land, small sites, solely for the provision of affordable housing. Q261 Martin Horwood: Are you happy for that to happen ahead of brownfield development elsewhere? Mr Sinden: Yes; we say that we believe there is a need, the need is not necessarily huge, in the nature of the scale of rural settlements, but it does exist and there is a legitimate role for the planning system to make provision to meet that need. Q262 Chair: You talked earlier on about there being a surplus of housing in every single region. Obviously, there is always a need for a slight surplus, otherwise everybody would be stuck where they were and unable to move. Have you looked at what type of housing is in that surplus and whether the type of housing actually meets the needs of people, or whether it is all one-bedroom flats in the middle of Manchester, for example? Mr Sinden: We have not looked in detail at that. The situation is complex. The data, for example, relating to empty housing is interesting, and whilst some inroads have been made in reducing the amount of empty homes in some regions there is still significant opportunity there for the Government to make inroads into that part of the housing market, in terms of improving the use particularly of private sector, long-term empty housing. We very much welcome, I think, a part of the response to the Barker review, published by the Government yesterday, which gives an indication that the Treasury at least are very interested in seeing if we can improve the practice and performance of bringing that empty housing stock back into use. That is one key element, I think, of the excess of stock over households. Q263 Chair: Thank you very much. Can I ask you to answer just one more question in writing, because we have all got to go to vote, which is to do with whether you think that planning authorities have got sufficient powers to ensure new housing is built to high environmental standards? Mr Sinden: We will be happy to do that. Chair: Thank you. |