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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 703-iii 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
Monday 12 December 2005 MR KEITH MITCHELL, MR NICK SKELLETT and MR BILL BRISBANE DR HUGH ELLIS and MR SIMON BULLOCK MS INES NEWMAN, MS JANET SILLET, MR ADAM SAMPSON and MR PATRICK SOUTH
Evidence heard in Public Questions 264 - 415
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Office of the Deputy Prime Minister:
Housing, Planning, Local Government and the Regions Committee
on Monday 12 December 2005 Members present Dr Phyllis Starkey, in the Chair Sir Paul Beresford Mr Clive Betts Lyn Brown John Cummings Martin Horwood Mr Mark Lancaster Anne Main Mr Bill Olner Dr John Pugh Alison Seabeck ________________ Memorandum submitted by South East County Leaders
Examination of Witnesses
Witnesses: Mr Keith Mitchell, Leader of Oxfordshire County Council and Chairman of SECL, Mr Nick Skellet, Leader of Surrey County Council, and Mr Bill Brisbane, Managing Partner, Roger Tym & Partners, South East County Leaders, gave evidence. Q264 Chair: Gentlemen, can I welcome you to start off our session this afternoon. Can I ask first that you just go along and say who you are and who you are representing. Mr Mitchell: Keith Mitchell, Chairman of the South East England Regional Assembly and Leader of Oxfordshire County Council. Mr Skellett: I am Nick Skellett. I am Leader of Surrey County Council and formerly Chairman of the South East of England Regional Assembly. Mr Brisbane: Bill Brisbane from Roger Tym & Partners and these gentlemen are my clients on a job I did for them. Mr Mitchell: I probably should have said I am here for the South East County Leaders this afternoon, that is my official title. Q265 Chair: When you say you are speaking for the South East County Leaders, that extends beyond the South East? Mr Mitchell: Yes, it does; also to Bedfordshire, Hertfordshire and Essex. Q266 Chair: Thank you for clarifying that. Can I start off by asking how you react to the Government's new proposals in the Pre-Budget Statement for 200,000 houses needed to be built per annum across England, and ask how you believe that relates to the 40,000 in the wider South East that you signed up to in the Regional Planning Guidance; 40,000 made up of the 28,900 homes in the South East and 12,970. I have rounded it up. Mr Mitchell: Thank you. You worried me for a moment there. I sat in on Yvette Cooper's briefing after the statement, so I had the benefit of hearing that. Concern and good news mixed together, I think. I thought the reference to infrastructure from Yvette Cooper was promising --- Q267 Chair: Can we stick to housing numbers, rather than your comments on all of her statement because there are other points later? Mr Mitchell: Yvette Cooper, I think, said that the long-term picture was for 2,500. I think the Government did not have a timescale over that 200,000, unless I have got that wrong. Q268 Chair: How many do you think would be within the wider South East region? What is the implication for the wider South East region of the 200,000? Mr Mitchell: It would imply more than the current level for which we are planning, I have no doubt. How many more, I would not like to speculate. Q269 Chair: Do you still believe that the 40,000 figure would be adequate to meet housing need in the region? Mr Mitchell: No, housing need is demonstrated by numbers to be more than that. Our job is to do more than simply try to meet need. Our job is to balance a number of issues of which need is one. Q270 Chair: You are proposing more than 40,000? Mr Mitchell: No, I said our job as a Regional Assembly is to consider more issues than simply housing need. We are basing our assessment of what can be managed on a bottom-up assessment as well a top-down analysis, and the resulting numbers that have come out of the work to date in considerable consultation is 28,900 for the South East and 11,000 for the East. I really speak primarily for the South East. Q271 Chair: Can I then ask you a further question. One of the intentions of the Barker proposals is that by increasing housing supply it would moderate the increase in house price inflation. Many people are sceptical that even the numbers proposed by Barker would cause a reduction in house price inflation, and yet your submission suggests, or rather the Commission on Sustainable Development in the South East suggests, that half the number that Barker proposes nevertheless would result in a reduction of 1.1 per cent in real house price inflation. What evidence do you have that such a small increase in housing would cause such a fall in house price inflation? Mr Mitchell: I share the scepticism of the Barker view. The IPPR Commission was an independent commission which the South East County Leaders funded and provided membership to but was independent of the South East County Leaders. I believe their quote to the learned professor who demonstrated that the half-number figure has been used to demonstrate that two academics can have very significant differences of opinion; who is to know which one is right? Therefore, it simply confirms the scepticism around trying to predict house price behaviour through a model. Neither is correct in my view, but we have a demonstration of the problem. Q272 John Cummings: The county councils are obviously county councils and not housing authorities. Have you had discussions with the local district councils who are responsible for housing before you made this submission to this Committee? Have district councils seen your submission? Have they discussed it with you? Are they in agreement with your submission? Mr Mitchell: The submission you have is one from the South East County Leaders and is our responsibility alone. South East County Leaders working in the South East Assembly have worked very closely with districts and, indeed, unitaries and the other partners around housing plans. We have worked in the sub-regional groups to identify housing numbers and to plan for them, so we have had close co-operation with districts and unitaries across the whole process. I think it is important to say that the paper that we submitted was on behalf of the South East County Leaders alone. Q273 John Cummings: Yes, I understand that, but have you discussed that paper with the district councils? Mr Mitchell: Not the paper, no, but I think we know where the districts are from our work in the Assembly with them. Q274 John Cummings: Is there any reason why you did not discuss it with them? Mr Mitchell: It is a hard enough bit of work getting the paper out. Q275 John Cummings: We are all very busy people, I understand that, but in a county council the district authorities are the authorities responsible for housebuilding. Mr Skellett: Can I add, the housing figures that the counties put together to submit to the Regional Assembly were figures which came from the districts, boroughs and unitaries. The questions that we were answering in our paper, in the so-called paper, were high level questions about infrastructure and those same questions arise in the Assembly time and time again from the districts as well as the counties. What we were trying to do, as counties working together, was to put some figures through research on those high level questions, but the high level questions which challenge the region are ones which are equally shared among our districts and unitary colleagues, yes, most definitely. Q276 Martin Horwood: At 2.4 in your submission - this might be a question more for Bill than anybody else - Roger Tym & Partners suggest there is an £18 billion black hole in the finance which is not for infrastructure but for the funding of affordable housing. Can you just explain where you get that number from and what do you think the implications would be if, as you predict, that £18 billion is not forthcoming from public funds? Mr Brisbane: I did not say it would not be available from public funds. What it is is the cost of providing social rented and intermediate housing based on a standard model for a two-unit dwelling grossed up to the number of dwellings required in the South East, then split down into 25 per cent social rented and 15 per cent of intermediate tenure. Q277 Martin Horwood: You say at present there is no sign of these sums being made available through government investment. Mr Brisbane: At the moment there is no indication that social housing grant is going to be made available at that level. Q278 Martin Horwood: The implication is that the plans simply are not going to work? Mr Brisbane: Traditionally, RSLs - Registered Social Landlords - fund housing, affordable housing or social rented housing from three sources: borrowings secured against the rental stream; land subsidy from a developer, basically provision of free land; and then increasingly, given the cost of housing, an additional subsidy to subsidise the construction cost. There are three elements there. At the moment, there is no indication that there is a higher level of social housing grant going to be made available for this level of affordable and social rented housing. Q279 Chair: Have you factored into it the cross-subsidy from the market housing, given that 60 per cent would be market housing? Mr Brisbane: Yes, it is the free land assumption. Basically, on each plot there is a 35,000 per dwelling free land subsidy which is effectively a cross-subsidy. Shall I summarise it? Basically, for our standard model of a two-bedroom unit, the total cost of the vision is 105,000 of which 50,000 could be borrowed against the rental stream by an RSL, 35,000 would be a free land subsidy and there would be a construction cost subsidy of 20,000. Mr Mitchell: Can I expand that answer a tiny bit? It seems to me that there are two sources for funding affordable housing, whether it is social rented or shared equity as either government subsidy or from the development gain. The higher amount you expect to take from the development gain, the less funding there is available for other infrastructure needs particularly, but not solely, transport, and also all the local needs. The difficulty is balancing all of that. If you pre-empt the gain primarily for affordable housing you threaten the rest of the infrastructure provision, particularly in the South East transport. I will stop there. Q280 Chair: That is the basis of the current system. Obviously when you did your submission the consultation about planning gain supplement was not started, so that was not in the game, so to speak. Mr Mitchell: Correct. What we now have is a system where, if you want to get on to the announcements from Gordon Brown, we have planning gain supplement taking over in part, I think, from section 106; section 106 narrowed down for affordable housing and what I have heard described as site specific local requirements. It seems there is less of a take from section 106, the benefit is you will hopefully get those things done more quickly, and there is a take from another tax, which is the planning gain supplement, which will be distributed nationally, regionally and locally and will meet all other development needs. If that is too large, I believe development land supply will just dry up. If it is too small, there will not be enough for development. It is a very difficult balancing act, and also a difficult balancing act between how it is distributed nationally, regionally and locally to meet national, regional and local infrastructure needs. Q281 Anne Main: I think you might have just answered my question but I would like you to expand slightly on what you said about the difficulty of how the planning gain supplement is distributed. Would you have the confidence in an area that has already got a large infrastructure deficit which has been identified that that deficit could be made up and the infrastructure needed to support the new houses would be met out of this money? If not, are we always going to be running at a deficit? That is where I would like you to come from. Mr Skellett: We are already at a deficit on infrastructure across the South East. Q282 Anne Main: Do you have a figure for it? Mr Skellett: The work that has been done by Bill did not look at the existing deficit. Certainly it is accepted that there has been degradation in the environment, accessibility and mobility in the South East and really to cost that you have got to define where you want to get to. All of these costs that have been put on the table here are in respect of the next phase of development and in that respect the community is not happy. Mr Mitchell: Much of the rail infrastructure is at capacity. I think the public believe that rail can be expanded infinitely but much of the rail capacity in the South East is at capacity and that is the biggest single area, but there is a significant deficit in some of the cultural infrastructure. A lot of our towns have libraries that are wholly inadequate for the size to which they have grown with the housing growth that has already taken place. Those are just two examples. Q283 Sir Paul Beresford: On the back of that statement, can I take you back to the figures, not just the figures brought forward by Kate Barker. The difficulty of the South East, as I understand it, is it has a fast economy, therefore a high demand, people want to move in, in addition to the people who are already living there. There are other regions in the country where that does not apply. Yet there seems to be no movement by the Government to try to ease the strain on the South East and try to encourage in any way whatsoever other areas. There is a feeling from some housing authorities that by packing houses into the South East you are actually adding fuel to the fire. Do you agree with that? Mr Mitchell: Yes, I certainly do. There are two views. One is that you simply pack houses in to meet need, and I think you could go on doing that for a very long time without addressing that need. The second issue is the Barker argument that you pack in lots of market housing to provide a subsidy for the affordable element. That is dangerous because it is the affordability issue in the South East that is so important, and it is government subsidy that is going to address that as well as some development gain. I come back to the issue that if too much comes from development gain you do not have enough to meet the backlog in infrastructure investment that we know is there, and that the public know only too well is there. Q284 Chair: Can I just press you on that issue of affordable housing. Many authorities across the South East are having extreme difficulties in recruiting staff and the NHS, the police, et cetera, because of high house prices. How are you suggesting that the Government and local authorities should address that problem? Mr Mitchell: If the Government wants a large proportion of social rented housing it requires subsidy. Some of the subsidies can come from developers but take too much from developers and you will continue to have a backlog of infrastructure. You would need a significant amount of Central Government funding from the taxpayer to meet the social rented housing element. I am never entirely clear that the balance between social rented and shared equity is right. Shared equity is a lot cheaper to provide than social rented but it is an affordability issue. You can have as much as a 25 per cent interest in shared equity. We are doing a little bit of work in the South East County Leaders Group around the balance between the shared equity and social rented to see if the experts so far have actually got it right. Again, the assessment of need there is complicated because housing authorities, district councils, are driven by budget need and the cost of homelessness and bed and breakfast on their budget as much as anything else. I think there is an investigative bit of work to be done around the balance between social rented and shared equity. You get more bangs for your buck out of shared equity every day. Q285 Chair: Thank you. Mr Skellett: Can I just add to that. You mentioned local authorities as being able to contribute towards this problem of affordability but I think that is a decreasing provision, particularly with the latest settlement which shows that underlying grant is moving away from the South East because it has a large council tax base. The possibility of the local authorities themselves contributing towards the affordability problem is very limited. It has been done in the past but in the main they have got rid of their surplus land and it is not there any more as a huge contribution to that problem. Q286 Alison Seabeck: Talking about how local authorities could possibly consider helping dealing with affordability issues, and you have talked about the supply of land diminishing, have any of your authorities looked at the community land trust model where they are effectively donating land but it is kept in public ownership in perpetuity allowing affordable homes to be built, both to rent and to buy? That is quite an interesting model. I just wondered whether you have looked at it and it had possibilities in your view. Mr Mitchell: I can only say it has been happening in Oxfordshire relatively recently and there is interest and there is work going on but it has not yet come to fruition. Mr Skellett: Two years ago in Surrey we did set aside some money for equity sharing schemes but we ran into problems with the Inland Revenue because it was not quite clear whether it was a benefit in kind that should be taxed. We are stuck in negotiations with the Inland Revenue on that particular point, so the money we set aside is not being used because it is for employees of the county council. If we could unlock that problem it would help us with regard to social care workers and teachers. Q287 Mr Lancaster: You have touched on infrastructure and I am sure there is nobody in the room who would not support i before e, infrastructure before expansion, as opposed to e before i. I sense from your earlier answers that you almost feel there is a chance that regional assemblies and others will be forced to accept higher housing targets without any form of guarantee of this extra infrastructure that you require. Is that really what you are saying? Mr Mitchell: We have set a number. We are completing the allocation down to district level and that goes to Mr Prescott at the end of March and then goes to examination in public. My reading of what happens next is that the Government will present evidence to the examination in public arguing for higher numbers and leave it to the inspector to determine what those numbers may be. At the end of the day, the plan is Mr Prescott's and not the Assembly's. Q288 Sir Paul Beresford: I should have intervened earlier but I was not allowed, so I will come back to your point about funding. The problem for the councils in the South East applies to district councils as well as the county councils, and it also seems to apply, and I am just checking this with you, to the National Health Service, the police, et cetera. Right across the board there is a funding problem already with the population that is already there with the housing problems that are already there, am I right? Mr Mitchell: Yes. Q289 Anne Main: You say in 3.6 and 3.8 that basically just responding to demand is no planning. Is this because you have concerns about whether or not you can provide enough schools, hospitals, road capacity, rail capacity? Is that the reason behind it, so you feel tough decisions may have to be made about numbers? Mr Skellett: The expansion that is being suggested by local authorities based on capacity is a huge expansion of 600,000 dwellings, an increase in population of 800,000 over that period. It is probably the biggest expansion of any English region. As local authorities, we have to balance the need for extra dwellings against national, region and local guidance on environmental protection as against the need to provide schools and social care for the expansion of the population. Our role is a balancing one, at the same time responding to Government requests to meet population increases as predicted, therefore if you want to take out all of the rules and just allow a totally free market then those things, such as environmental protection, the capacity of utilities, water, the flooding problems, schools, hospitals, would not keep up if the dam were broken. We are in that position of trying to hold the ring to maintain quality of living as well as acceding to the needs to expand. Q290 Mr Olner: You have argued that infrastructure is a major impediment to providing new housing in the South East but if the infrastructure was put in place would you accept the larger housebuilding figure? Mr Mitchell: I think we would like to see the cheque in the account before we committed ourselves to the housing. There is so much concern that housing has come in significant numbers without the infrastructure and there is a very sceptical public out there. There is a significant proportion of the public who have said, "No more growth. No more houses until we see infrastructure". We did not take that view and we have gone for a significant amount of growth, but it is with a caveat around needing infrastructure until we begin to see it happening. I will quote one example in South Hampshire, the SHRT scheme, the mass transit tram scheme that was turned down by Government about ten days ago, which is a real sock in the eye for an area that has been willing to take housing growth quite substantially in order to see economic regeneration. There is a lack of confidence and I am not able to answer your question in the affirmative until that confidence generally across the South East is restored. Q291 Mr Olner: Could you perhaps tell the Committee how you measure your infrastructure deficit as opposed to deficits in infrastructure in other regions? Mr Mitchell: By the condition of the roads and the railways more than anything else. You try driving around this region, it is ---- Q292 Mr Olner: Surely a lot of that is left down to the local county councils as to how much they want to divert their monies into providing that? Mr Mitchell: No. Let us be right about this. Funding is provided through Central Government for capital schemes, entirely through Central Government borrowing and through supported borrowing. County councils have no significant funds to put into transport investment over and above what Government allows year on year. Q293 Mr Olner: Are you telling me you have done a nationwide scheme and checked how blocked up your roads are compared to the roads that are blocked up in the Midlands or in other places? Mr Mitchell: I drive up England to Scotland once in a while and I could close my eyes when I cross the border, I know when I have got on the Scottish roads, you can see the difference. There are two reasons why ---- Q294 Mr Olner: You did not mention the Midlands and you have to go up through the Midlands to get to Scotland. Mr Mitchell: I will come to that. There are two reasons why the South East is particularly clogged. One is because it is the engine room of the economy, it is the one that provides revenue funding to the whole of the country with two other smaller contributions from other regions. Secondly, it is the gateway and it contains Gatwick, Heathrow, a number of ports, the Channel Tunnel, and it is taking a lot of through traffic. We do need that infrastructure investment and it is clear to us in the South East it is not there. The train system is at capacity in many places and needs significant investment. Q295 Mr Olner: I am not going to argue the point with you, Mr Mitchell. There will be regional arguments about what you are have in the South East as to what other areas have. Can I come back to the point my colleague raised earlier whereby you as counties are not the first planning authority. As I understand it, you as county councils are not in any way, shape or form housing authorities. It is usually the districts and the housing authorities who work their way around the section 106 on new developments and what have you. Would I be wrong in thinking you would like to see the section 106 go because they are driven by districts and unitary authorities and get the planning gain supplement system over to you? Mr Mitchell: I get primary schools built 100 per cent by developers out of section 106 agreements, kitted out and ready to move into, so, no, I do not want to see section 106 go. We work with the districts in planning our needs and most of the section 106 negotiations are for roads and for schools. Q296 Mr Olner: Are not 106 agreements by and large very, very good if you want signposts and indicators to provide social housing? I think you mentioned before that you see this as a tension between social housing and infrastructure development. Mr Mitchell: There always will be. The higher you set the proportion of affordable housing, the less cash from the development will be left over to pay for all other infrastructure needs. In my own county we have a 50 per cent target for affordable housing and I think that is too high, that is starving the system of cash that you need for fundamental infrastructure. Q297 Chair: Can I just clarify, perhaps with Mr Brisbane, how he did the assumptions about infrastructure. Looking at the experience of Milton Keynes and the way they have worked out infrastructure costs, I do not understand how you can work out infrastructure costs unless you know where the housing is going and where the jobs are and you do not, do you, in your assumptions? Mr Brisbane: You are quite right. This is why we had to adopt the methodology that we did. On most provision we work from increases in the population and standards required for schools, health care, affordable housing and whatever, which is driven solely by the increase in population, so for another million you need x, y or z. For flood defence that does not apply, flood defence is irrespective of population change. For transport it does not apply because transport responds to existing levels of congestion. For transport and flood defence we looked at what the proposals were for additional infrastructure projects over the next ten years basically. Q298 Chair: So if the population increased without any increase in housing, if people just carried on living with their parents, et cetera, how much of those infrastructure costs would still be required? Mr Brisbane: Fundamentally, most of the social services, health and education is driven by population increase, not household increase or housing increase, so you still have to provide for the additional population. It is the increase in households that drives the requirement for affordable housing but all the other community, socially based things are driven by population change. Mr Mitchell: Can I take you forward a tiny bit in answering your question? Chair: I am trying to move us down the agenda. Anne, would you like to move us on to the environmental impact issues. Q299 Anne Main: It has come on from the infrastructure and you said you were unhappy and sceptical. Even if all the infrastructure was met, do you believe that the environmental impact would be sustainable having all the extra houses? Do you feel comfortable? Mr Mitchell: No, I do not, not at the scale of numbers that I hear coming from this Government. I am not unique in having Green Belt in Oxfordshire but, as the Chair will know, it is a corset around the city at the moment. It is much valued by those who think it is right to restrain unbridled growth. It is a real issue. We will have a reservoir built near to Abingdon Didcot to cope with the water demands, not of Oxfordshire so much but the Thames Valley. That will represent, I guess, a ten year blight on people living around there as this thing is scraped out of the ground and created. It might be quite nice when it is there but it will be a serious environmental blight for the time that it is being constructed. My real fear, and again I will be very parochial and talk locally, is the impact of more housing on major transport routes in Oxfordshire, on the A34, on the rail system and M40 junctions. I think every single county leader in the South East would say something similar about their own patch. We are at capacity on the road system and the rail system. If you want more management effort on the roads you need to provide the capacity on the rail for people to have an alternative choice. People are not going to stop travelling, it is the nature of life that they travel, so you need to provide whatever mode is the appropriate policy mode at the time. Mr Skellett: It would be helpful if ODPM was a signatory to the Climate Change Public Service Agreement. The problem is that there is a tendency at the present time for them to push the number of houses, and the price and the cost of houses, without looking at the quality and environmental protection provided by that housing. Defra and the Department for Transport are signatories to the Public Service Agreement on keeping CO2 emissions to a certain level; ODPM is not. I think it would be very helpful if that were to be changed because we have seen a tendency for ODPM to push numbers and to push costs at the expense of the environmental impact. Q300 Mr Betts: Can I pick up on what you have been saying to us. Perhaps because I am a Northern MP, I can recognise the syndrome. You have said already there is a constituency in your region of people who would say, "No housing growth at all". We have all got normally fairly well housed people in our regions who cannot see a reason why anybody else should actually have a house built for them. It seems you are going to have to go one step beyond that. You could be saying as local authorities, "We want to sit down and work with Government to provide the infrastructure that is needed to build the homes that we know are needed" but you seem to be saying, "Because we do not believe the infrastructure is going to be provided we are going to resist new homes to the maximum amount we can, in other words we are only going to agree to the minimum amount of new housing we possibly think we can get away with". Is that a fair construction of what you are saying? Mr Mitchell: That is unfair. We consulted on 25,000, 29,000 and 32,000 houses, so we have not gone for the bottom end of the consultation option, we have gone for the middle. We have proposed a concordat with Government through GOSE to look at infrastructure planning together as a joint exercise. Yvette Cooper has made encouraging noises about it but it has not yet moved forward. I am now needing to press Yvette for another meeting to try to take this forward because the Assembly has taken very seriously the concept of concordat between the region and ---- Q301 Mr Betts: So infrastructure is the actual key to this concordat? Mr Mitchell: Yes. Q302 Mr Betts: So if the Government came back with sufficient infrastructure you would agree to a higher number of houses, would you? Mr Mitchell: I have told you, when I see the cheque in the bank and it is cleared ---- Q303 Mr Betts: If Government comes and meets all the problems you are identifying in terms of infrastructure, whether it be transport, sewerage, water or libraries, all of the things we have heard, then you are prepared to see a far greater number of houses built than currently? Mr Mitchell: Government has not got the money to build them. Q304 Mr Betts: I did not ask you whether Government had got the money, I asked you the question if Government came up with that infrastructure and committed itself to it, would you be prepared to commit to a much higher level of housing? Mr Mitchell: I understand the question but I am not willing to answer a question that is based on something that cannot happen because there is not enough money in the foreseeable future to meet the whole of the infrastructure requirements in the South East. Q305 Mr Betts: It seems, which is the point I was trying to make, that you are rather hiding behind the fact that infrastructure will not happen in your view to defend a position of lesser housing growth than the need for housing would justify. Mr Mitchell: It is a process and when we see the infrastructure come we can negotiate levels of housing, but the two have to sit side-by-side. I am not giving a blank cheque until I see, on behalf of the South East, that infrastructure investment taken seriously. I do in ODPM but I do not see it extending from ODPM to the Treasury who I think see a nice new tax in planning gain supplement, and I want to see the small print of how it is divided. I do not see Department for Transport signed up yet to linking housing need to transport need and to the funding, I just do not see that. We need more joining up. Mr Betts: I think ODPM might be interested in knowing what your view of it is joined up. Q306 Anne Main: Can we come back to the environment, which was where I thought we were at, because we have gone back to infrastructure. I did ask you even if the infrastructure was met, do you have major environmental concerns? I also want to know, I am a Hertfordshire MP, and there are air quality management areas, increasing levels of people suffering, as they believe, from poor air quality, noise quality management. Do you have concerns that even if infrastructure is met these would be unsustainable communities in terms of environmental impact? That is what I want to know. Mr Skellett: The position at the moment is untenable and it is getting worse. There is twice the national density of traffic in Surrey and probably in Hertfordshire because of the M25. The hotspots for nitrous oxides and particulates are worse around London and the Home Counties. The present position is not tenable. We are talking about infrastructure for the future development and growth. There is insufficient investment now to repair the South East from the problems we have already had. The trend in funding is looking worse. For example, because most of the large authorities in the South East are now on the floor, it is probably questionable whether they will have the resources to fund or approve requirements in local transport plans and the expansion of schools because there is not the support from grant to those proposed investments. The clear picture at the moment is getting worse. How do we make that up? Certainly we reverse the trend of moving grant away. I dispute the fact that a population increase to 800,000 with 600,000 homes ---- Q307 Chair: Can I pick you up on this point you keep making about moving grant away. You are not losing grant, it is just that you are not getting as much extra grant as other parts of the country. Is that not a correct way of describing it? Mr Skellett: The underlying grant to Surrey in a recent settlement was cut by 40 million. Q308 Anne Main: You said they were on the floor, I would like you to explain that. Mr Skellett: What I meant was that in approved borrowing requirements for transport plans and schools, normally in the old SSA system you had capital grant to fund the interest repayments but, because most of the large authorities in the South East are on the floor, that has now disappeared, so even if we do get good settlements for the local transport plan or through education it is only where there is a specific grant from Central Government for that capital investment that we will be able to proceed with it without question. Q309 Chair: I think, Mr Skellett, once you get into the intricacies of local government finance you will find that almost every Member of the Committee would have an argument with the view you are projecting. Mr Skellett: I do apologise. Q310 Mr Betts: We know from your paper, and from other sources as well, that there is currently planning permission for 90,000 homes that has been given on various sites around the South East and in your plans you have got an allocation for another 109,500 new homes. You would not have any problem if that could be speeded up and those homes could be delivered more quickly, would you? Mr Mitchell: No, we would be delighted because it would mean the Highways Agency would be providing some of the improvements that they currently will not provide that are holding up, for example, 3,500 houses in Didcot from being built. Q311 Mr Betts: So you would have no problems at all with any increase? Mr Mitchell: Providing that infrastructure investment comes with that quantum of housing. I am not enlarging that from the numbers you have quoted to me to anything beyond that. I am not giving you a blank cheque, Mr Betts. Q312 Mr Betts: What are local authorities doing to get that land? Mr Mitchell: They are making the case every time they see ministers about the Highways Agency not being joined up with the rest of Government in the context of meeting those needs. Q313 Mr Betts: You are saying all of those 90,000 new homes are not being built because of the Highways Agency? Mr Mitchell: No, by no means all of them. Q314 Mr Betts: Builders are actually sitting on some of that land, are they not? Mr Mitchell: Some of the land is builders sitting on it, yes, and some is local authority ---- Q315 Mr Betts: What are you, as a local authority group, doing to get the builders to release that land and develop it? Mr Mitchell: You can lead a horse to water but you cannot make it drink. If developers want to sit on land banks ---- Q316 Mr Betts: Have you collectively approached developers at all? Mr Mitchell: We are working with developers, or the housing authorities ---- Q317 Mr Betts: Have you collectively approached developers at all? Mr Mitchell: No. Q318 Mr Betts: You have not? Mr Mitchell: I have discussions with housebuilders' representatives, they are very keen to see the housing numbers grow. At a national level, the housebuilders are very keen to promote higher housing numbers. Q319 Mr Betts: But in your evidence you said you believed you could not get the land to be released any more quickly because that would damage the profits of housebuilders and you felt there was not a chance of getting that to happen. That contradicts what you said just now. Mr Mitchell: The national federations at a national level are very keen to push up the numbers. What individual builders are choosing to do with their land banks is for them and it is not something that local authorities can influence. Q320 Chair: When the local authorities agreed planning permissions for these sites which are not developed, why did they not extract money through the section 106 to go towards the infrastructure required for the sites to be developed? Mr Mitchell: They probably did. Q321 Chair: So what have they done with the money? Mr Skellett: A couple of years ago we were asked to look at why the housebuilding rates in the region were less than the RPG9 and there were various issues. In some cases there were planning problems. There was also a lot of consents which were not being pursued by the industry and, depending on which company you are talking about, each story was different. There was also a huge amount that was dependent on infrastructure in transport and there were several local plans, particularly in Sussex along the coast, where the numbers could not be agreed until that infrastructure was put in place. Although in certain areas of the South East the rate of building was more than RPG9, particularly in my own county, in others there were these other reasons. Clearly companies involved in housebuilding do have obligations to their shareholders and they will probably release according to what suits them commercially as well as coming under pressure from ourselves. We do sit with them on the Regional Housing Board, Keith is a member of that Regional Housing Board, so we do share objectives and information, but our objectives are not always identical to theirs at any particular time. Q322 Mr Lancaster: You hinted that - forgive me, I call it roof tax, which seems to be the name for it in Milton Keynes - the new system announced by John Prescott may stop developers releasing land. Would you rather see the US system where land that is earmarked for development then attracts a levy each year if it is not developed? Mr Mitchell: I was not aware of it, but I think anything is worth trying. This is the fourth development land tax we have had since the war. The other three lasted a very short time and they failed but I have heard from reliable sources there is hope that this one will not. It is a very delicate balance between the quantum that you take to meet infrastructure need and killing the golden goose if you take too much. Some sort of penalty or some incentivisation for councils to progress the release of land, perhaps being able to retain some of the penalty you charge the developers for local infrastructure investment, might be an exciting one. I would be willing to look at that. Mr Skellett: I have one point. There was one issue in the Kate Barker report which we do agree with. Q323 Chair: I am glad. Mr Skellett: That is the local authority loses every time a house is built in their area. Q324 Chair: Because? Mr Skellett: The on-costs of servicing, providing the infrastructure and education, social connectivity, is never made up. That point was made in her report. It would be very useful to have a strategic understanding with the Government, not just in our region but across the country. It would also be very useful to have an understanding with the Government on a PSA for the supply of infrastructure allied with development so that local authorities do not lose as they do in the present process, and Miss Barker made that point. Q325 Chair: Of course, if people are already living there but in overcrowded accommodation you may save on the costs of social services by them moving to more suitable accommodation, which also needs to be factored in. Mr Skellett: I am just reinforcing the point that she made. Chair: Can I thank the three of you, I am afraid we have to move on to the next witnesses. Thank you very much. Memorandum submitted by Friends of the Earth Examination of Witnesses Witnesses: Dr Hugh Ellis, Planning Adviser, and Mr Simon Bullock, Economy Adviser, Friends of the Earth, gave evidence. Q326 Chair: Sorry we have started a bit late but, as you will appreciate, that was a moderately contentious session. Can I ask the two of you to start by saying who you are and then we will move into the questions? Dr Ellis: My name is Dr Hugh Ellis. I am Planning Adviser to Friends of the Earth. Mr Bullock: I am Simon Bullock. I am Economy Adviser to Friends of the Earth. Q327 Mr Olner: Just as an aside, you heard the evidence we just had and I still feel there is something missing between the planning authority, the housing authority and the strategic authority, like the county council. What sort of court does Friends of the Earth play in? Do they play in the strategic one to the detriment of the planning authorities and the housing authorities? Dr Ellis: I think we do take a strategic one. Our concern is that the right framework to deliver sustainable development is in place. The difficulty we face is that both Barker and the draft PPS3 undermine some fairly critical elements of the framework that might deliver sustainable development. It is most important to say that we are not an anti-development organisation and it is important to recognise that the green sector has not been as socially responsible as it needs to be in provision of housing. That is not where we are at. Where we are at is trying to say there is a need, how can we best provide it and deliver it in the right framework. Government proposals are going to fundamentally undermine our ability to achieve that. Q328 Mr Olner: The evidence that you gave to us was fairly enthusiastic about the merits of social housing provision, and I do not demur from them, but you were virtually silent on private supply. How much private supply of housing is needed? Mr Bullock: The Government's housing objective is clear: everyone living in a decent home which they can afford. For us, the priority is more affordable non-market housing. We agree with Shelter on that. What the ODPM is proposing here is more general market housing. Firstly, we think that should be a lower priority compared with the social housing but, secondly, we feel that the ODPM's mechanism of providing more general housing is wrong. There are two things wrong with forced release of land whenever it is deemed that demand outstrips supply in our view. The first is it simply would not do the job that the Government wants it to do in tackling the affordability ratios that they have set out. There is far more than just releasing land as a means to tackle these ratios if you look at other supply issues or the whole demand side area of providing housing, which is almost completely ignored. We are also concerned that homes that would be built would not necessarily go to the people who need them. Given the huge wealth and income equality in the country at present, these homes may be just as likely to go to people who want second homes rather than key sector workers. Finally, we think that there is quite a small effect on affordability anyway. If you look at the ODPM's projections in their affordability report, they have got an affordability ratio of six and a half incomes to house prices and that falls to 6.2 anyway and only to 5.8 for this 200,000 homes a year by 2016, which is not a great return. As a final point, we have a whole series of objections to this approach. The first is the fact that it will conflict with other areas of Government policy, which is a fairly critical thing for ODPM's approach to sustainable development. We are concerned that it will focus housing growth in the South East with the massive local environmental pressures that will entail, it will increase regional inequalities where ODPM has a target to reduce regional inequalities, and it will weaken the democratic process that exists through the planning system. Q329 Chair: Can you try and keep your answers much shorter rather than re-rehearsing all of your written evidence. We have got all the written evidence from 100-odd witnesses that will be used in the report. What we are trying to do here is to tease out some of the points, not to repeat what is in the written evidence. Mr Bullock: That was in relation to the new paper. Q330 Chair: I think you still did not answer Mr Olner's key question, which was how much private market housing are you willing to support? Any? Dr Ellis: Yes, I think we are. It was interesting listening to the previous debate that you just had. The planning system has a critical role in integrating the principles of sustainable development. It is impossible for us to give you a figure about how many houses in the South East, although we do not have a great argument with 200,000 houses but - there is a critical but in that - if the Government had committed itself to making those houses focus on social need and delivered at high quality environmental standards then the debate would be different. The debate is very different now because PPS3 completely fails to deliver the houses at a high environmental standard. The code for sustainable homes is a complete disaster. Our problem with housing now is we cannot deliver the kind of housing we want to see and, therefore, increasingly we are going to be opposed to the large scale expansion of market housing when it is not delivered to those standards. Q331 Chair: Can I just pick you up on what you have just said so we can be absolutely clear. If the housing was environmentally sustainable and all of it was directed to social need, normal social housing, you would be prepared to go along with a 200,000 increase across the country? Dr Ellis: Certainly I would be very happy to sit in a regional examination in public and look at the product of a full strategic environmental assessment and change our view, perhaps, if that housing was delivered to the technical standards we know we can deliver. Q332 Chair: And all of it social housing or some of it market housing? Dr Ellis: No, some of it clearly has to be market housing but that brings about a question on the distribution of that. This relates to the National Spatial Framework question really, but in our view there are limits to growth. Of course, the phrase "limits to growth" is heresy but, nonetheless, there are limits to growth and those limits are defined by the big provision of infrastructure that we have heard about and there are also environmental limits. Q333 Mr Olner: You cannot quantify some private growth, you cannot put a percentage on it as opposed to social housing? Dr Ellis: Shelter - I will give you their evidence - have put precise numbers on how much social housing we require. As I say, it is very difficult because in some sense you are prejudging what the planning system is there to achieve. The planning system is there to reach these judgments in detail when we understand in detail what the impacts might be. 200,000 houses in the South East is deliverable sustainably. Q334 Chair: My understanding is it is not 200,000 in the South East, it is 200,000 houses across the whole of England. Dr Ellis: My apologies. 200,000 houses across the whole of England is easily deliverable in our view with the caveat that Government has not reneged on its commitments to build to high environmental standards. Q335 Anne Main: I would like to touch on high environmental standards. Do you feel that cost-wise it is not in a builders' interests, or it should be enshrined perhaps in the planning system, to have a higher environmental standard? Looking at the social housing provision, what are your views in terms of encouraging people to buy? Is this the way forward? I felt the premise in the Barker report seemed to be light on environment and high on encouraging people to buy. Do you believe that is the right balance? Mr Bullock: Firstly, we do believe that environmental standards are essential. Climate change is a growing problem, all world leaders agree with that, and housing is a third of the UK's carbon emissions. I think it would be terribly damaging to the UK economy if we were faced with climate disasters on the scale of the droughts in Spain, Hurricane Katrina and that sort of thing in the decades to come. It is a fairly essential economic as well as environmental requirement to have high environmental standards. We do not believe that the environmental costs would be damaging to people in need of social housing. High environmental standards in housing reduce the running costs. The highest environmental standard houses can reduce running costs by about £500 a year and, of course, for poorer people who pay more of their income on water and energy that is going to be a crucial thing. Q336 Anne Main: Is there enough emphasis in the planning system on environmental? Dr Ellis: No, absolutely not. There is an unbelievable absence of a joined-up position from ODPM on climate change. There is a strong call being made for a national statement on climate change, there is no PPS that deals with it comprehensively. If you want an absolute indictment of the way the Government tackles climate change in housing, look at draft PPS3 which simply says it might be a good idea to "encourage" local authorities to promote the code, the code itself being voluntary. Q337 Chair: Would you like the code to be mandatory? Dr Ellis: The code can be mandatory in a very simple and easy way, and that is PPS3 housing simply should say that local planning authorities should be required through development plan policy to incorporate the code, and the highest standard of the code. It is very simple. Q338 Martin Horwood: First of all, I would like to say on the record I do not think the idea that there are limits to growth is heresy at all and I welcome your report in its general thrust and a lot of the detail, I think it is an important contribution. Just on this issue of the raising of the standard for environmentally friendly homes, in general I support that but I have asked social housing providers and private house providers whether they could afford to do that and at the moment they are unwilling to meet those costs. Where do you think that cost should fall? Do you think they should be forced to meet it or do you think we should meet it from the public purse? Mr Bullock: Currently greener homes can cost more. Merton Local Authority put green design at 2.5 per cent of costs, which is not a large deal, but we would agree that green housing can cost more at the moment. Q339 Martin Horwood: The private developer I talked to, for instance, said it may only cost a couple of percentage points more but it does not command any price premium at the moment for them to sell. To obey their obligations to their shareholders, how do they do that? Mr Bullock: Bill Dunster architects, who have built the BedZED development in London, have said currently their costs are higher. They have done some analysis on it and if you raise the proportion of the new homes built to just three per cent of those high standards then that brings their unit costs down to such a degree that their housing would be the same price as conventional housing. In a very short time we feel it would be cost-effective. Q340 Martin Horwood: It is a question of stimulating the market. Mr Bullock: Exactly. Q341 Chair: Effectively you were saying you would be prepared to agree to 200,000 extra houses a year in England if they were environmentally sustainable. Those 200,000 houses would be about one per cent of the housing stock, so presumably you are even keener that the existing housing stock should be made more environmentally stable, that would really help meet our Kyoto targets. Mr Bullock: Absolutely, it is both. Q342 Anne Main: Sorry, I did not get an answer to the second part of my question. Are you happy that the Barker report pushes purchasing houses to buy rather than houses for rent? Dr Ellis: I do not think we are. We are not very happy with very much that is contained in the Barker report. Friends of the Earth is not a housing charity but our overview of it is that we have a fixation on owner-occupation when there are other needs and other tenure types. What Barker does is to focus very much on creating increased owner-occupation. Also, at its heart it has a notion of trickle down, that somehow by creating large numbers of new housing in owner-occupation this will trickle through the process and help those in greater social housing need. What we are worried about is we do not accept that linkage at all. Also, we do not fundamentally accept necessarily that price is need. That is something that underlies the Barker report and is fundamental. Q343 Alison Seabeck: You are generally sceptical that provision for social housing should be dependent on securing private development. Why is it inefficient to use the planning system to secure contributions from private housebuilders to build affordable homes? Dr Ellis: The reasons for that centre around what is wrong with the planning gain system. We note in the new proposals on the planning gain supplement that we were very disappointed to see that affordable housing remains inside the planning game ambit. Originally, planning gain had its function for dealing with onsite remediation. The reason for that is because planning gain is fundamentally regressive as a way of producing social goods, that is to say it produces more where development values are high. It is also complex, as the Government has recognised, non-transparent and often treated with suspicion by local people. It is not the right way to deliver social housing. Let me give you one direct example of that, which is a site we are working on in a coalfield in North Derbyshire. We can lever in eight per cent affordable housing from the development, and yet in the South maybe around 30 per cent in London, maybe up to 50 per cent. The reason for that is there is a viability issue and PPS3 makes it absolutely clear that local authorities should not place onerous requirements on developers where that threatens the viability of the site. That means that where viability is thin, in areas perhaps undergoing restructuring, you can create less provision for social housing. That seems to us to be fundamentally inefficient in the way that we should deliver it and it covers up a much more central question, which is if you want to deliver social housing efficiently then you should provide that funding centrally. It is inefficient environmentally because it is a cross-subsidy, so to get some social housing you have to produce a lot of general housing to go with the cross-subsidy issue. Where there are limits and where there are constraints that is not an effective way of doing it. I would just conclude that at the end of the day the debate about the provision of social housing over the last 60 years has been fundamentally around this balance between private and public sector. Certainly Nye Bevan concluded that you cannot create and deliver social housing unless you do it with plannable instruments, the private sector's needs ---- Q344 Chair: Can we try not to keep having these speeches and just answer the questions. Members want to come back to you. Dr Ellis: I will say only this: if the Government had examined issues of principle three years ago we would not be in this position now. The principle is the private sector is not a plannable instrument, it has its own business needs and they are not always in social housing. Alison Seabeck: Fine in that case, but if you are not using private builders to build social housing, whether it is part-ownership social housing or to rent social housing, finance is going to be much more difficult to raise. I genuinely do not see how you can get the levels of investment that you need in order to build the quality of homes you are demanding from the social housing sector and homes which look tenure blind, ie the same whether owning or renting. What is your view on that? Chair: Can we have a brief view. Q345 Alison Seabeck: How do we fund it? Dr Ellis: The brief view is Central Government must fund it to a much greater degree, not solely perhaps but to a much greater degree than they do at the moment. Q346 Alison Seabeck: Do you have a figure? Dr Ellis: I cannot help you with a figure. We do not have that. Q347 Chair: How do you achieve the mixed neighbourhoods, mixed private and social? Dr Ellis: That is much more straightforward. The planning system is a very sophisticated instrument and it can deliver that kind of mix through the new reformed planning process; that is what it is there for. Mr Betts: Can I pick up on the issue about section 106 and planning in the private sector. It was not absolutely completely fair what you said, was it? It may not be a completely accurate system but by and large the reason why you can get a higher percentage of social housing on sites in London or other parts of the South East is the value of the homes that have been sold on those sites is much higher, they probably are not affordable. If you go to North Derbyshire, the actual sale price of the properties that are being sold, and built for sale by the commercial builders, are much lower, they are probably more affordable there. In that sense, is there not a bit of redress by the system? You will get more social housing which is affordable in areas where the houses that are sold are not affordable. Dr Ellis: I see the point but the creation of that eight per cent or that 50 per cent is in a specific social market. I take the point that the other houses are relatively cheaper but the incomes are relatively lower. Q348 Mr Betts: They are more affordable. Dr Ellis: They are but there is still an issue and there has to be a progressive taxation system. That is why we are so determined that the planning gain supplement has to be very heavily redistributive, because otherwise you end up with those problems. Q349 Mr Olner: Can I ask your views on what we need to redistribute housing demand pressures away from the south east to other regions in the UK? You mentioned south east Derbyshire. How do we take some of the pressure off the south east? Dr Ellis: We have argued for a national spatial framework like many other organisations have. There are two purposes for that. The national spatial framework allows the current situation where you have competing regions to be played out in a much more strategic way but, to cut to the real issue, a national spatial framework has to deal with the pressures that have led to the demand side pressures in the south east. That is about decentralisation and controlling growth. We should not mythologise about regional policy. Regional policy is much more sophisticated and more successful than is generally considered. If you turn that regional policy off somewhere round 1983 just like that, which is what happened, you end up with the problems we face today. In terms of what you do, you probably do not have industrial location certificates brought back. You probably do incentivise development in the north in a much more sophisticated way. Q350 Mr Olner: There is a school of thought that says that is a possibility but by and large the private companies will relocate abroad sooner than relocating in different regions in the UK. Do you think that is a real threat or not? Dr Ellis: It is always a real threat but it was a real threat as well 30 or 40 years ago. They will relocate abroad if the south east goes on being developed in the way that it is because there are economic inefficiencies in that as well. It is something that government has to grapple with though. Whether we like it or not, regional policy will return. Barker is the most comprehensive regional policy laid on the table that we have had in 30 years. It is just a market led regional policy. The situation we are in about regional equality is not a natural situation for us to be in. It is made by free market mechanisms. Barker is saying there is nothing we can do about that; let us reinforce the process. That ultimately will be a disaster for the overall development of England. Q351 Chair: I do not want you to elaborate now but you mentioned that you were deeply disappointed in the code for sustainable building. Could you put in a brief additional written note on your objections to it? Dr Ellis: Yes. Anne Main: Do you believe there has been enough demographic assessment of the sort of houses that we are building? Chair: Size-wise rather than tenure. Q352 Anne Main: Yes. We have had other people saying, "We are getting lots of one and two bedroom boxes". How do you feel in terms of sustainable communities? Are we building the right sort of houses? Dr Ellis: We have not done any detailed work. Our discussion on the way in is that high density should not be a complete mantra from the environment sector. We need to build houses regardless. You can do that at high density but it still needs to happen. I think the government is right that different areas need different circumstances. The issue of density is not such an issue if you have a more even development across England. Q353 Mr Olner: The high density was brought in to make brown field sites more attractive. Dr Ellis: Yes. Where there are needs for it, it should happen but there is need beyond two bedroom apartments right in the centre of cities. There is also need for family housing. Q354 Anne Main: With gardens. Dr Ellis: With gardens. Chair: Thank you very much indeed. Memoranda submitted by the Local Government Information Unit and Shelter Examination of Witnesses Witnesses: Ms Ines Newman, Head of Policy, Ms Janet Sillett, Policy Officer, LGIU; Mr Adam Sampson, Director; Mr Patrick South, Director of Policy, Shelter, gave evidence. Q355 Chair: Can you say who you are and who you are representing? Mr Sampson: Adam Sampson. I am the director of Shelter. Mr South: Patrick South. I am the interim director of policy at Shelter. Ms Sillett: I am Janet Sillett. I am a policy officer at the Local Government Information Unit. Ms Newman: I am Ines Newman. I am head of policy at the Local Government Information Unit. Q356 Mr Betts: Would it be fair to characterise what you both say to us in this way: the government is broadly right in saying there should be an increase in house building in this country to meet need, but you think the government has overstated the need for housing for home purchase and understated the need for social housing for rent? Mr Sampson: That sums it up reasonably well. It is important to say that there is nothing intrinsically wrong with home ownership. We are not opposed to home ownership. It is a perfectly decent tenure and it is perfectly decent for government to wish to encourage people to realise their aspirations. Our position is that at this point in the housing crisis that engulfs this country it is possibly the wrong emphasis to be placing on home ownership and greater emphasis needs to be placed on social renting in particular. Ms Newman: We agree. Q357 Mr Betts: There is an argument which says we have sufficient houses in this country; it is just that people are in the wrong places. If we had a different policy of trying to move people to where the houses are, there would not be this need for this massive house building programme in the south east. Mr Sampson: People are rather irritating. They want to live where they can get jobs, access to decent schools and infrastructure. It is very difficult. We have been trying to regenerate areas of the country in order to provide people with what they aspire to in terms of life chances for decades now without conspicuous success. In the meantime, the south east of the country remains the economic engine of the country. That is where the jobs are; that is where people want to be. Sadly, people vote with their feet. While there are a large number of empty homes in this country -- something like 700,000 -- that figure hides the fact that at least half of those homes are only empty for a very short period of time and, of the remainder, a significant proportion are in areas of the country where there is massive oversupply of housing. While trying to move people to where the empty homes are may help a little, it will not be sufficient to solve the crisis in any way at all. Q358 Martin Horwood: Do you not think there is a risk though in this free market approach that always drives people to where the housing demand currently is, because that can create housing hot spots where, just like building more roads and having more people driving on them, you inflate prices? Ms Newman: Both your question and that from Clive Betts point to a lack of coordination between regional policy and housing policy. That is fairly fundamental. We would definitely like to see greater emphasis on economic development in the north. However much we welcome the idea of the Olympics in London, it is probably a big mistake in terms of where infrastructure is going and where investment is going to take place. It is probably going to be done at the cost of some development and infrastructure investment up in the north. We will be lucky to see it all happen but if you are going to try to get people to live in the north you have to put the infrastructure and the economic jobs up there. Q359 Martin Horwood: One of the things that has become clear in the evidence we have heard already is that this simple north/south divide is not very meaningful. There are areas of low demand, including I suspect Newham, and areas of high demand in the north so it is about subregional markets as much as anything else, but in general you are concerned about this idea of housing hot spots? Mr Sampson: Absolutely. We are very supportive of the principle of housing market renewable areas in areas of the north. It is not that one is against the notion of trying to stimulate economic activity in other areas of the country where there is housing. We know there is a huge shift towards areas of economic activity. The truth of the matter is that we have been building insufficient numbers of houses to deal with household formation generally across the piece. We have been building roughly 150,000 houses a year. The numbers on household projections are around 190,000 a year. Regardless of the economic distribution of houses, nevertheless there is an underlying mismatch in terms of supply and need. Q360 Martin Horwood: We have seen some evidence that the level of private house building over the decades has not been that different. The big difference is the loss of social housing, but it is not about housing supply in the private sector so much. Mr Sampson: That is why our view is that the most significant proportion of the additional 50,000 homes a year the government is seeking to build should be in the social and socially rented sector. Q361 Anne Main: If the government goes down the route of building a far greater number of houses, hopefully to reduce the amount of house price inflation, do you have any concerns that maybe people would just build a property portfolio if the house prices are suppressed on an open market? If you do, what would you suggest we do about it? Ms Newman: Could you explain that question? Are you thinking about people buying second homes? Q362 Anne Main: If the market is an open market, do you have concerns that people might just buy more of these slightly cheaper houses or buy them for investment purposes? If you do think that, what would you suggest we do about it? Ms Sillett: The evidence is becoming clear that that is, to some extent, happening. There has been a huge expansion in the buying to let market. It is common sense that if house prices were slightly lower there would be more incentive for people to buy more. The LGIU probably differs slightly from Shelter in what we were saying around the changes to planning. We probably take your view slightly more about continuing concerns about the changes in the planning for housing provision and the new PPS3 about the balance shifting more to the market led approach. We have enormous concerns about that. Q363 Anne Main: You do say you might increase wealth inequalities because we are looking at affordable housing. You could be saying, "Affordable for who?" because it might make it affordable for a different group of people to what the government might be wanting to target. Mr Sampson: We share the fear about the impact of a totally free market, undirected approach to who occupies the new housing. We have produced considerable evidence recently of the way that home ownership has driven wealth and spatial inequalities in this country where people who are able to afford to get on the housing ladder increasingly occupy greater amounts of space and accrue massive amounts of additional wealth. There does need to be some mechanism for ensuring that the new housing that is to be delivered is targeted properly at people in the greatest housing need. That is the particular reason why, although we do not take any tenure approach, social housing seems to us to be the most efficient means of doing that. Q364 John Cummings: It is obvious that the government is of the opinion that the majority of householders aspire to own their own properties and yet there are many tens of thousands of people with dire housing need. What suggestions do you have for the government in squaring the circle? Mr Sampson: We need greater levels of investment in social housing. As has been pointed out, the area of the house building market that has fallen away has been the directly government funded area. Successive governments over the past 30 years have withdrawn from their responsibility in investing in social housing and that is the key first step. The other thing is to tackle the notion of owner occupation property. There are lots of people who now are in owner occupation who are nevertheless in poverty. There are roughly as many poor people who are owner occupiers as there are people in socially rented housing. There are considerable problems with disrepair in the owner occupation sector. As recent research indicates, there is a lot of evidence that some of those who are in owner occupation are just hanging on by the skin of their teeth and it would not take very much in economic downturn to have a significant rise in potential repossessions. It would also be important for government to look at its offer to poor private home owners too. It is particularly disappointing that the government rejected the home ownership task force recommendation that it should look again at the safety net for home owners in trouble. Q365 Alison Seabeck: You talk about the poor condition of private homes but this is not a new problem. This has been in existence for as long as I can remember. You are not saying the blame is at the door of affordable and supply issues? Mr Sampson: No, but as government has pushed home ownership down or, as home ownership has gone down towards lower income households, as has happened quite rapidly over the past couple of decades, you have a situation where people may be able less well to afford the upkeep on their houses. Q366 Alison Seabeck: I take the point you are making but do you have any evidence to prove that it is those people who are finding it difficult as opposed to the elderly home owner who traditionally has had trouble maintaining and repairing their property? Mr Sampson: It is a combination of both. Undoubtedly part of the difficulty is to do with longevity as people live longer and they become asset rich and income poor. That we are familiar with. There are some indications in Janet Ford's research for our recent publications that people stretch themselves an awful long way just to get on the home ownership ladder, that all their spare income goes on paying the mortgage and they have nothing left over for upkeep. There are therefore problems in that respect. Q367 Alison Seabeck: You would be in favour, if we are looking at shared home ownership or shared equity packages, of having some form of sinking fund or maintenance fund built into how that policy, that mortgage, is sold? Mr Sampson: I do not think we are necessarily endorsing that particular proposal. Ms Newman: The idea is that we do not particularly want to see money going into expanding the numbers of home owners at this point. The combined view is that, if there is money for the home ownership sector, there should be some money going into existing home owners who are struggling to maintain their houses which is a serious issue. There should be some attempt to make people realise that, partly why people aspire to home ownership -- this has come out of Shelter's work -- is the capital gain they think they will get on their house. If you look abroad where that capital gain has not traditionally been so much, this aspiration for home ownership is not so embedded in society. To some extent, we have to get to a situation where people are not pushed into situations where home ownership is unsustainable and where, in the long run, they will be struggling to repair their homes. Q368 Alison Seabeck: We are not talking about home ownership in a lot of these things; it is sort of shared renting, is it not? If you have 12.5 per cent interest only, the bulk of what you are doing is renting. Ms Newman: Yes. Q369 Lyn Brown: I represent an area that is about to see a huge increase in the numbers of houses. I understand I am going to have a city the size of Portsmouth within my constituency boundary so it is fairly huge. One of the issues for our constituents is people getting access to the housing that is going to be built for them or in their area. I am not sure that the younger population who are looking to access that property are necessarily doing it because they see it as an asset gain. They are seeing it as an opportunity for them to control their own destiny and for them to be able to impact upon their own lives. Their parents are seeing it as an opportunity for the family to stay together. In the 1980s, the London Dockland Development Corporation, whom I had a number of difficulties with in terms of their policy, did use public money in the first tranche to subsidise local people for their access to housing in my borough. Would you say that was good use of public money? Do you think it is something that we should play with and perhaps see replicated? Ms Sillett: It depends on where you are. There must be some cases in some communities where it is a relatively good use of public money to enable people to have an equity share in a property. I do not know what borough you are but there may be some London boroughs where they have a very high percentage of local authority or social housing where it might make sense in terms of mixed tenure and so on or changing gradually the profile of communities, where that seems to be a reasonable use of public money. Overall, where there are huge housing needs, the balance should be in favour of public subsidy going into rented housing for housing association, possibly local authorities and ALMOs. In some cases, it would make sense but it does not make sense as the overriding driver of government housing policy is to increase home ownership or part home ownership at all costs. Q370 Mr Betts: You have argued very strongly that the government should be doing a lot more to increase their social rented housing. Is there not a case for doing a bit more to increase partial home ownership or helping people who are currently in social rented housing to be able to buy in the private sector and therefore free up social rented housing for somebody else who cannot afford to buy? Mr South: It is much better to target those resources on people in social housing because you free up a letting than it is to subsidise, say, first time buyers. We would agree with that. It is not that we are against shared ownership schemes; quite the contrary. It is targeting that subsidy on the right people. Q371 Lyn Brown: Part of the problem with shared ownership in London is that it is unaffordable and inaccessible for many of the people for whom one would hope it would be accessible because of the price. Do you accept that that is an issue? Is there any way around that that does not go back to renting? Mr South: We are talking a lot here about social housing and owner occupation. What the government do not appear to have a strategy on which could help here is the private rented sector because an expanded, high quality private rented sector could meet the needs of a lot more young people and that is appropriate. For people starting out in life, maybe in their first jobs, the private rented sector ought to be a good option. Q372 Mr Betts: To come back to subsidising people in any form to buy into the private sector as home owners, whether it be people who are currently socially renting tenants or people who have been given the ability to part-buy their homes, people are chasing the number of houses in the private sector and it pushes house prices up. Mr Sampson: Absolutely. I know the Committee is going to be looking at low cost home ownership schemes in future. If you look at those and examine the impact of where the subsidy goes, very often the subsidy immediately disappears off in fuelling house price inflation, but you can target subsidy effectively for a whole different number of reasons. The reason you articulated about in order to win over the local population to convince them that there is something in it for them to support housing development is a perfectly reasonable way of doing it. We know that people oppose housing development because there is nothing in it for them, because of concerns about infrastructure, because of concerns about the environment. All of those are perfectly legitimate concerns. They do need to be addressed if we are going to overcome the opposition to house building and see the uplifting in building that we need. Ms Newman: For a lot of those people, if they could access a very nice, new council house that was not stigmatised on an estate, that would be a very popular option too. In the 1940s and 1950s in particular council housing was built which was attractive to a much wider range of people. Part of what we have done over the last few decades is residualise that housing. I still think the emphasis should be on trying to make social housing an attractive option as well. Q373 Mr Betts: There will still be quite a lot of funding needed from somewhere to achieve all this. We have had discussions with other witnesses about whether section 106 works, whether the planning gain is better or whether the government should be simply putting money in. Do you have any views on that? Ms Sillett: I think most of us would say there is a need for additional investment. Whatever tricks and so on you get to, in terms of the kinds of degree of housing need that we have, the levels of homelessness -- I know there were good figures out today -- the levels of people in temporary accommodation and so on, there still is a need for additional investment. Nothing can get away from that. Whatever that investment is going into, we want it to be value for money and targeted properly, producing the right homes in the right places for the right people. Q374 Mr Betts: That is straightforward government funding? Ms Sillett: Yes. I am not saying you do not have everything else additional to that but there is still a gap and in the next spending review it needs to be clearly said. There needs to be more funding if we want more people to be better housed. Q375 Martin Horwood: We accept that you say there is a need for more subsidy and it must be targeted to the right people, but some of the targeting you are talking about is pretty subtle stuff. It is one group of first time buyers as opposed to another, who are the ones who are stepping out of rented accommodation. Can you suggest a precise policy tool or mechanism that might help us to deliver that? Can you give us a practical suggestion? If section 106 will not do it, what will? Mr Sampson: More can be got out of section 106. We do not yet know how the planning gain supplement, if it comes off, is going to interact with section 106. There are some concerns about that but section 106 as applied by good local authorities gets an awful lot out of it. We can give a figure. We are talking about an additional billion and a quarter. Q376 Martin Horwood: I am asking about the mechanism. Mr Sampson: Some of the mechanisms the government is playing around with at the moment in relation to the social home buy scheme, if they can get the modelling to work -- there is a big "if" there -- may be a very interesting way of freeing up social tenancies at relatively nugatory costs without fuelling house price inflation. Q377 Alison Seabeck: We have talked about funding and levering in new funding from a government stream. Have any of you looked at investment from the private sector, something like the asset trust housing? They seem to be quite effective not only in levering funding but also allowing for 100 per cent local authority nomination rights and doing it without any social housing grant. Do you have a view on what they are doing? Mr Sampson: We have heard of schemes like that but we have not looked at them in any detail. We understand that schemes like that can work but they tend to work in particular sets of market conditions where the precise balance between land price, availability and return works effectively. Your general point is well made. It brings us back to Patrick's point about the private rented sector. We believe there is considerable potential for getting increased levels of institutional, private investment in the creation of an expanded private rented sector. If the Government can tie in incentives to private investors to come on board with that, with added management standards, increased quality and look at security of tenure issues, you may have a recipe there which will not solve the problem but will relieve some of the pressure in the intermediate and low markets. Ms Sillett: We do not disagree with any of that or with any innovative ways of levering in investment. We need to go back to basics and why local authorities and housing associations are not able to meet the gaps in terms of affordable housing. I do not know if you have had witnesses from housing associations but there are still concerns about the changes that were made to social housing grant. Local authorities would say -- and I have some sympathy with them -- that the pooling of capital receipts and so on means that there is very little available funding for housing associations. We would say that the government has just said there will be some scope for high performing local authorities and ALMOs to start to build. We want to see what they mean by that but why not? Let us get back to promoting the most effective, direct and efficient way of providing social housing through local authorities and housing associations. Q378 Alison Seabeck: You touched on people being more marginalised. With a possible 80 per cent or maybe higher aspiration target for home ownership, are you concerned that we truly will end up with a sub-class of people who are possibly marginalised into very poor accommodation if we go down that route? Do you have any views on lending people five or six times their salaries, possibly leaving them standing very much on tiptoe, maybe because there just is not the investment in the housing you are talking about? Ms Newman: Absolutely. I agree. That is why you need to think about making the council housing, social housing and housing association offer more attractive to a wider range of people. Q379 Alison Seabeck: A target to buy would be quite a socially regressive step, as far as you are concerned? Ms Newman: Yes. Q380 John Cummings: Would you care to share with the Committee your thoughts on the government's proposal to introduce affordability indicators? Do you think this would work in increasing housing supply and bringing down house prices? Shelter indicates a range of affordability indicators should be used. Would you tell the Committee what they should include? Mr South: We are concerned about an open market led approach to planning and therefore, although market signals are important, you should also look at affordability indicators alongside them. In terms of a national affordability goal, the jury is still out. We need to see the detail. It could be a blunt instrument but anything that enshrines in policy -- we live in a target and goal led environment -- and affordability at the heart of policy and that encourages housing therefore to be seen as primarily somewhere where people live rather than something that is acquired for capital gain could be a good thing. Obviously, we have to wait until the comprehensive spending review to see what the government comes up with on that. Q381 John Cummings: Do you agree with that, Adam? Mr Sampson: He is my director of policy. I agree. Ms Sillett: I am not an expert but the whole issue around affordability, house prices and so on is incredibly complex. There are lots of things that affect it. It seems slightly crude if you use affordability targets as a mechanism for establishing where growth in housing is needed in that mechanical way, when clearly you also have to look at needs and income, as the government says. If they do balance it right, that is fine but if it becomes a crude trigger there is concern about that. Chair: Thank you. Witness: Mr Alan Benson, Head of Housing and Homelessness, Greater London Authority, gave evidence. Q382 Chair: Can I welcome you to this session? In your evidence you say that high house prices are affecting London's economy and that in your view the supply of housing, or presumably the lack of it, is the main problem. How important is it to you to expand housing supply to promote economic growth and sustainability in London, rather than meet housing need? Mr Benson: That is not an either/or question. It is important to promote housing supply to meet both those aims at the same time. Housing supply in London is not just about the social aspect of housing and social policy. There is the fundamental issue about London's economy and how vital it is that we provide the housing we need to keep the workers in London to keep the economy growing. There is an expectation in the next 20 years of a significant increase in the number of jobs in the London economy and in the number of households there will be in London to service those jobs. Unless we can produce the housing that is necessary to meet that need as well as tackling the backlog of housing which is creating the social problems it does, we have both economic and the existing social problems. Q383 Chair: I understand you have already merged the regional planning body with your regional housing body. Is that the case? When did it happen? Mr Benson: It has not happened yet. It has been on the cards for some time. It was recommended in the Barker review and in the subsequent Budget statement the Chancellor of the Exchequer announced he was going to do so and there was consultation on how rather than whether it should happen. The aim was to have it all in place by September 2005 but, for a whole series of reasons which I am reliably informed by the ODPM and the Treasury are wrapped up in problems in other regions in terms of the capacity to deal with this, everything was put back. There was a joint announcement in May this year by the Chancellor and the Deputy Prime Minister that they were definitely going to go ahead and merge the bodies but there was no definitive timetable given. The first announcement of a timetable was in last week's Barker review response by the government when they said it would all be in place by September 2006. Our only problem in London which has made it slightly more complicated is that, after the election, the government launched last week a consultation and review of the Mayor's powers in London and the housing powers are wrapped up in that. It is a bit more complicated in London, but there is now a timetable to do it across the whole country from September 2006. Q384 Chair: In general, do you believe that the announcements made by the Chancellor last Monday will help housing supply to increase in London or not? Mr Benson: Many will but we wait to see the detail of how many announcements will work. One of the core announcements is on planning gain supplement. That is a matter of consultation so it depends what comes out of the consultation response. We said at the time of the original Barker review that we have never been in favour of planning gain supplement. Some of the other announcements we welcome. We welcome the commitment that there will be a high priority for social housing and investment will be found, we hope, in the next spending review for that. We welcome the commitment to increase overall the level of housing delivery across all tenures. We welcome the commitment on real estate investment trusts etc. I am not sure I would give it nine out of ten as Kate Barker did. I would not have the precociousness to give it any mark at all but generally, overall, it probably will do good things for London. We wait to see on the key announcements, in terms of new investment and where the planning gain settlement is going, what the effects will be. Q385 Mr Betts: In terms of the requirement for social housing or intermediate housing, the housing needs study for London suggests that about two thirds of housing should fall into those housing grades; yet the target for individual sites is only 50 per cent. Might I suggest that there are very few sites currently where that 50 per cent has been achieved? Is there some mismatch therefore between what is likely to be achieved, what has been achieved and what the aspirations ought to be in terms of percentage of social housing? Mr Benson: There is a mismatch. The direction is very important here. I would correct one thing. We do not set targets for sites in the London plan. Those London plan targets are overall regional, aspirational targets. Each borough is supposed to try and deliver that across a range of sites. In the majority of sites, if you are just looking at sites, the delivery is well over 50 per cent. In reality, the majority of sites that deliver housing in London are still very small housing association infill sites with sometimes two, three five or 12 homes, which are often 100 per cent social housing. We still get over half the social housing in London through those small developments. It is vitally important that they continue to be delivered. On the larger developments where you have section 106 negotiations, this is where we are getting into a debate. You are right: we are not currently delivering the extra 50 per cent affordable housing in London. The target within that 50 per cent is 70 per cent should be social and 30 per cent should be intermediate. We are not delivering that mix either. It tends to be a high percentage of intermediate rather than social. In the year before the Mayor came to power there were 6,000 affordable units delivered in London. This year it will be 10,000. By the end of the next investment round for 2006/7 and 2008 there will be 15,000 produced that second year. There is a significant increase in affordable housing, particularly new build, social housing, in London. The targets are percentage targets and that percentage of the overall build has increased significantly since 1999 before the Mayor come to power when it was 17,000 homes. In the last year it was 27,000 homes. It is not yet 50 per cent but it is not quite 50 per cent of a much larger overall quantum of house building. Q386 Mr Betts: Are you about putting pressure on certain boroughs in London to get their target figures up? Barking and Dagenham were saying to us in the last session that they felt it was not a one size fits all for London; that they were probably going to need a higher percentage of homes for sale there because they already had a very high percentage of socially rented housing. If that is the case and you still have an overall target for London, you are going to have some other areas where there is much higher than 50 per cent, where currently perhaps there is little social rented housing. Are you going to find the boroughs willing to cooperate? Mr Benson: It has been a difficult battle for a number of years. Various boroughs are not wholeheartedly accommodating to the 50 per cent target. All the boroughs that have reviewed their unitary development plans and planning documents since the London plan have upped those targets towards the London plan target. We have continued to battle through negotiations with boroughs and through the necessary Secretaries of State. You are right: it is not a one size fits all policy. If we achieve the 50 per cent we would be very happy indeed. The difficulty with the argument made by boroughs is twofold. One, the borough level is the wrong level to be looking at. There are boroughs with a high percentage of social housing and boroughs with a low percentage of social housing. What is important is the neighbourhoods. If two boroughs next door to each other have 30,000 social homes, one of them has three houses in each street and the other one has a great big estate of 30,000 mono-tenure estate social housing, one borough has a problem and the other one does not. We need to go below the borough level and look at those neighbourhoods to see where the concentrations of mono-tenure estates are to start to try and break those up. To take it at borough level, to be honest, is sometimes used incorrectly by boroughs as an excuse to prevent social housing on the basis that they do not have the capacity to deliver. The second argument has completely slipped my mind. Q387 Mr Betts: Will PPS3 last week help you in trying to achieve these objectives? The issue has been raised with us about the need for some larger units of accommodation. Can the process be used more effectively? Mr Benson: PPS3 is very helpful. I have remembered the second argument now. As I travel around London, whether I am talking to politicians in boroughs or the planning officers or tenants in boroughs, when I say that the Mayor says we need 30,000 homes of which 50 per cent should be affordable, everyone agrees with me. Everybody also says, "But not in this borough. They should be somewhere else." That is a consistent message you get from almost all players across London. Q388 Chair: Could you answer the question on larger units? Mr Benson: In London, there is a pressing need for larger units, particularly in the social housing sector. The housing study requirement study we did two years ago showed that we need 42 per cent of that social housing to be four bedroom plus, mainly to pick up the long term failure to build enough larger units in social housing and in particular to make up for the loss of the voluntary right to buy, where we tended to lose the larger social housing units. What is interesting also -- it is a more challenging question to deal with -- is the need for larger units in market housing. Increasingly, if you go back over ten years ago, London produced about 26 per cent three bedroom plus in 1991/2 for market housing which was less than half of any other region in the country. Over the last ten years, every other region has increased its output of three bedroom plus market housing. London has reduced it from 26 to 19 per cent. We have a significant problem of larger homes, not just in the social sector but in the market sector and increasingly in the intermediate sector too. Q389 Anne Main: Is that because you think the planning densities you have been given mean that you deliver far smaller units? Mr Benson: There is a long term trend towards these smaller things which predates any Mayoral diktat on density. This trend was already there before the Mayor's London plan came into place with density targets. Density targets are somewhat overstated sometimes. There is a range of density targets in the London plan from fairly low density in suburban areas you have fairly low transport accessibility, which are not close to town centres, to much higher density levels in the very centre of London where you have very good transport levels. Density of itself has not created the problem of us producing smaller homes and does not necessarily create that problem in the future. There is a launch at City Hall tomorrow where the G15, the big housing association in London, are demonstrating a whole series of developments, large, high density developments they have created all over London. If you take them all together, they produce 37 per cent three bedroom plus homes which is far in excess of the average of social rented homes across London. It can be done. It just takes a good deal more imagination. Q390 Anne Main: You spoke about 30,000, some having a large estate and some having dispersed social housing. Are you saying that if you need to take it right down to a neighbourhood level, this needs to be enshrined in the planning system? Would you like to give me your views? If you have, for example, areas which have a large amount of social housing and you want to see more housing to buy there, how could you make people develop in areas to sell on the open market if they do not see that as an attractive area to build in? Mr Benson: It is not necessarily a planning issue for a London planner and planning document per se. It is more a housing investment and housing strategy issue. The London housing strategy at present has an as yet not completely formulated commitment to try and even out this balance at local levels in terms of the tenure mix. The reason why it was not more formulated was because there was not time to do the work at a local level. We could see the analysis at the borough level but I think that is the wrong analysis. It misplaced the complexity. We are doing some work now with the Housing Corporation in mapping software to see exactly where the investment is going and to see where the concentrations of mono-tenure estates are. When we say "mono-tenure estates", it is not just a broad brush attack on social housing estates; we also do not really want to see mono-tenure estates of private development either being created because both are equally problematic to us. We want to see mixed tenure estates happen. Q391 Anne Main: Could you say why the private estate is problematic, since we are looking mostly at developing private housing? Mr Benson: What we would not want to see develop in London -- as you would see across, say, north America -- is the gated communities of private housing which lock out the community and separate themselves out from the wider, local community. We think development should be sustainable. Enshrined within the government's sustainable communities plan is the definition of what a sustainable community is. It does say a range of tenures and housing to meet a range of needs and that is what we would like to see being developed in London -- not one set over here of private sector housing and over here a social housing development and never the twain shall meet. We think that is not a recipe for a socially cohesive London. Q392 Anne Main: How would you get your developer into the more socially rented sector? Mr Benson: This is happening at quite a significant level across London already and it is being tied to the regeneration of estates and the decent home standard. Quite large social housing estates are working predominantly with housing association partners to bring in mixed tenures on developments, using the funding from those mixed tenures, from some private sales, from some shared ownership, to cross-fund the decent homes work. You are creating not just better homes for people in social housing but you are also meeting the other key requirement which is getting a mixed community and increasing the density of that development. Quite often the ones I have seen are producing some very good public space as well. Q393 Martin Horwood: You talked about the difference between boroughs that accepted the housing requirements, that could not personally identify much capacity in their own boroughs. Presumably at this point you produce from your back pocket your 2005 housing capacity study which you say shows a total of about 31,000 homes per year that could be built. Two questions: first of all, that is a per annum figure but what is the total? If it is over the ten years of the housing requirement study, that is 300,000 houses in London alone which would be enough for the rest of us to go home. The other question is: is there a mismatch between that capacity study and what the boroughs are saying? If so, where are you saying the homes will come from in the capacity study? Mr Benson: There is not a mismatch per se. That capacity study was done over a long period of time in very detailed consultation with the boroughs. The bulk of the methodology was based on 4,000 sites we identified which were not currently being used for other uses, things over half a hectare. We went back to each borough and looked at all the parameters for what could increase or decrease density with current transport accessibility, likelihood of flood, noise et cetera and other damage. We agreed with the borough a figure for each of those sites that would be reasonable to bring forward in terms of also meeting the mix of housing we would like to see developed on those sites nominally. Each single site was agreed with the borough and then the targets were agreed with the borough. I should say the figures were agreed with the borough for the capacity. There is a big difference between saying there is the capacity to do this and saying, "That is a target which you must achieve" because if there is a target you have to have the wherewithal to achieve it. Capacity is the core issue if you have the land to build the homes. Q394 Martin Horwood: What is the total capacity, because you only give the per annum figure. Mr Benson: It is over the ten years. Q395 Martin Horwood: It is 300,000 homes available? Mr Benson: Indeed. Q396 Martin Horwood: There is the potential to build 300,000 homes in London alone? Mr Benson: Indeed. The potential is probably for more than that because what this does not take into account is any large windfall sites that may come on. For example, we have been discussing the Ministry of Defence's review of its own sites as it is trying to relocate out to one major site in London, freeing up a whole series of sites that are currently used. That will not have been taken into account there. Q397 Martin Horwood: Do you know what proportion of those are brown field and what proportion are green field? Mr Benson: It is about 95 per cent brown field. Martin Horwood: That is astonishing. Q398 Chair: Would there be the commensurate job growth that would go along with that or would you be expecting some of the people who currently commute into London to start living there instead? Mr Benson: We are hoping that people who are currently in London and would leave London to buy homes out of London and commute in would no longer need to do that. It is part of the whole concept behind the London plan that London should be able to meet this economic growth challenge it has but contain its own problems within the boundaries of London rather than trying to develop satellite, small towns outside and have people commuting in, which is not ecologically sound. Yes, we do hope it will minimise the amount of commuting. Q399 Martin Horwood: I am not familiar with what the ODPM is assuming will be the growth targets for London. Are they under or overestimating it? Mr Benson: I am not sure I can answer that question. I am sorry. Q400 Martin Horwood: The ODPM have from Barker and elsewhere national targets for increasing the supply of housing. You seem to have enormous potential within London. Has the ODPM underestimated the potential within London itself or overestimated it? Mr Benson: The figure they would assume is in their previous planning guidance. Given that the London plan is the statutory planning guidance for London, they should be adopting that figure. At the moment it is out for consultation so they will be reviewing their figures on the basis of do they accept that our figures which are out currently for an alteration in the London plan, to put those figures into it. Once that is adopted, they will use those figures. Q401 Martin Horwood: What is the situation now? Mr Benson: The figure is based on the 23,000 per annum, which is in the London plan currently. Q402 Anne Main: Given that many people commute into London and you would like to encourage people to live in London near where they work, has the ODPM got it right in looking at expanding in all the areas based on housing need when the housing need might be where they work? In Hertfordshire, 18,000 people commute, mostly to London. Should we be perhaps looking more on, if that is where people work in London, we should be putting the development there rather than people saying in Hertfordshire or the surrounding counties they would like to have a house there and you say, "Put it in London. That is where you work. It is more environmentally sustainable." They are not commuting all around job miles. Mr Benson: The 31,000 is the capacity in London in terms of land to deliver. Our housing requirements in London are higher than that. Just to meet London's own housing need in terms of its existing backlog and the likely growth in households living in London over the next ten years, it is about 35,000 a year. What we are not including as well is a figure for additional people who might decide to stop commuting from the home counties. Q403 Chair: I am being told that the gross annual migration of people out of London apparently is 80,000. Mr Benson: That is within the UK, yes. Q404 Chair: How could you ever possibly build enough homes in London to stem that flow, never mind encouraging people from Hertfordshire to move into London? Mr Benson: The population in London is growing. That migration is the figure for people who move out of London to other parts of the UK and people who move into London from other parts of the UK. Like most big cities in the world, it is a negative figure because more people tend to leave London than come into it. What it does not take into account is two other factors. One, the indigenous growth in London, which is the very young population in London. That is very high. A lot more people are born in London ever year than die. The second thing is international migration which is a massive increase too. The overall population in London will grow significantly every year. We do not expect to stop all the people that migrate out of London but we may be able to stop some of those people. One thing you do notice is that we have the richest people in the country and the poorest people in the country living cheek by jowl in London. What we are losing increasingly are those people in the middle, second, third or fourth income quintiles, who are moving out of London. We would like to stem some of that loss. We do not expect to stem 80,000 people. People have very good reasons for migrating in and out of London but if we can stem some of those people we would have a more sustainable community. Q405 Lyn Brown: In your written submission you talk about how changes to the Mayoral powers will help you to direct local plans and impact upon local housing supply and affordability. Can you tell me how you think that might happen? Mr Benson: In two ways. There are a number of changes in the Mayor's powers which are currently out for consultation. The two that are most germane to this are housing and planning changes. The housing changes are to a large extent already on the table because of the Barker review and previous announcements that they will merge the regional housing boards and planning boards which, in London, means in effect the Mayor will take responsibility for writing the housing strategy and making recommendations to government on the investment that flows from that. What the Mayor would also like very strongly is to be able to make decisions on that, not just recommendations. To him that is key in many ways because he does not want a position where you currently have the housing board with 91 per cent of that funding pre-allocated by government to various schemes before the housing board can make a decision. He wants to be able to make a decision without civil servants second guessing whether he is right or wrong and advising ministers whether he is right or wrong at the end of the day. More importantly in making things happen is putting the housing powers together with the planning powers that are being consulted on in the review of powers which should give the Mayor a degree of positive planning power. At the moment, he only has the power to say no to large developments if it is agreed by boroughs and that is only the large, strategic developments. Only 0.3 per cent of all planning applications in London go to the Mayor for review. They are the large developments. The reason why we think it is important that the Mayor should have positive planning powers is that, over the last ten years, there has been a significant increase in London of planning applications, about an 80 per cent increase, for new housing. There has been about a two per cent increase in the number of planning applications approved. There has been a massive growth of planning refusals in London over the last ten years and we think a lot of that is because of boroughs that just do not want the housing developed in their local area. It would be extremely important for the Mayor to put this back into the ability to invest in housing and make decisions to pull planning through, both on the large, strategic developments, which come to him for review anyway, and secondly to have the ability to make sure that the local planning documents are in accordance with the Mayor's London plan. Q406 Lyn Brown: Do you not think that possibly one of the reasons why local governments are knocking back some of the housing applications is they are not pertinent to their local communities? You talked earlier about looking at housing mix and making sure that we have mixed tenures and sustainable communities. You spoke about that being a neighbourhood decision to be made and not a borough-wide decision. I have a lot of sympathy with that but I fail to understand -- I would love you to tell me how -- how having it at a regional level, which is a step above the borough level, is going to combat the difficulties you yourself raise. Mr Benson: It is an issue raised in the boroughs quite often. The local councils are far more in tune and in touch with local people than the Mayor is. They are absolutely right. There is no way you can argue that because they are directly accountable to local people. Everyone is guarding their local area but, when you have all those local decisions being made, the aggregate of all these decisions is that again and again what seem to be perfectly reasonable planning applications get turned down because of local opposition. A piece of work we are doing on picking out what is behind those planning development refusals is quite clear. A lot are turned down for questionable reasons which do not amount to much more than NIMBY-ism. Chair: Could you provide us with a brief, written summary afterwards, to back up what you have said, of the planning applications turned down -- I do not mean each one -- as to which boroughs and which of those you think are turned down for NIMBY reasons as opposed to perfectly reasonable planning reasons? Anne Main: I would hate to think that we could have spurious reasons to turn down planning that would not then be overturned on appeal. If councils are throwing away their local taxpayers' money by doing that, they are mad. Q407 Alison Seabeck: How many have been overturned on appeal? Mr Benson: I can provide that information. Q408 Anne Main: Are you making it very clear that you want to override local considerations on planning and have imposed planning for a much higher level? Mr Benson: No. Q409 Anne Main: That is what it sounds like to me so I would like some clarity. Mr Benson: The applications the Mayor sees at the moment are 0.3 per cent of planning applications in London. That would not change. On the large, strategic developments, the Mayor should have the power to say yes as well as no. These are the Wembley stadiums and King's Cross and these sorts of things. Q410 Chair: We are not really talking about housing; we are talking about economic development? Mr Benson: A lot of them are large, housing developments. Q411 Anne Main: What about the calling in of the ODPM of large developments? That is what happens now. Are you saying the Mayor should come in on that? Mr Benson: No. On those large developments it is quite difficult for boroughs to have a reasonable approach, because they are so high profile. The issue about appeals is important. What happens is that all the small housing association developments are very easy to turn down. Those housing associations will not go to appeal. It will cost them too much. It is not worth them ruining their relationship with the local authority. Q412 Alison Seabeck: Could you tell us how many additional houses the Mayor has eked out of those which he oversaw and took a decision on? Mr Benson: Not off the top of my head. Q413 Alison Seabeck: I would like that information. Mr Benson: I can send that in. Q414 Lyn Brown: In 12.1 of your written submission you talk about there being too few players in London who lack the competition and that the supply and demand within that sector is causing concerns that you believe additional powers for the Mayor would assist with. I presume this is in your economic strategy but I would be grateful if I could have further information about that because I am lacking clarity. One of the difficulties with the new builds as I understand it in the east of London up and down is about the size of tenure and the density. Given that the communities are young and are not necessarily at the top of the priority for housing policy allocation -- young, single people in particular who live locally in Stratford and the east end -- can I ask you the same question I asked earlier? Would you believe that there is a need to use public money in order to incentivise and enable young people from an area to get onto a housing ladder of whatever sort? Mr Benson: Yes. The Mayor does support the government's aim to invest public funds to help people get onto the home ownership ladder for very strong reasons. You need to be clear why you are doing it. If you are going to invest public funds, you need to be clear why and what you want out of it, not just opening up public funds to anyone who wants some money as a subsidy to buy a home, but who you are investing in. These are people who are coming out of social housing, who will not inherit a deposit from their parents to buy a home. Those are the people we should be investing in to get them onto the home ownership ladder or people who would perhaps leave London as they have families and settle down. We need family sized, intermediate housing for them. The Mayor does not support the wide open market homebuyer programme that the key worker scheme has done, where it is just giving people £50,000 loans to buy houses on the open market generally. One thing that programme has shown is that there is a huge appetite for those people to buy family homes and keep themselves in London. That is the one part of the programme which has been successful in its original aim about supporting recruitment and retention in public services. Q415 Chair: Can I ask you about the proposal in the pre-Budget statement about increasing housing supply by allowing ALMOs and three star local authorities to use their assets to build additional homes? Do you think those initiatives would significantly add provision in London? Mr Benson: I do not know. It is a welcome opportunity and the Mayor would welcome the fact that the boroughs could be given a chance to do so. Whether they have (a) the development capacity within the borough and (b) the resources available to them to do so we do not know. That is as yet unproven but it is good that they have the opportunity and the chance to try to do it. That is a very positive step for the government to take. Chair: Thank you very much indeed, Mr Benson. |