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House of Commons
Session 2007 - 08
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General Committee Debates
Housing and Regeneration

Housing and Regeneration Bill

The Committee consisted of the following Members:

Chairmen: Mr. Joe Benton, †Mr. Roger Gale
Blackman, Liz (Vice-Chamberlain of Her Majesty's Household)
Blackman-Woods, Dr. Roberta (City of Durham) (Lab)
Brown, Lyn (West Ham) (Lab)
Burt, Alistair (North-East Bedfordshire) (Con)
George, Andrew (St. Ives) (LD)
Gwynne, Andrew (Denton and Reddish) (Lab)
Holmes, Paul (Chesterfield) (LD)
Hurd, Mr. Nick (Ruislip-Northwood) (Con)
Love, Mr. Andrew (Edmonton) (Lab/Co-op)
Moran, Margaret (Luton, South) (Lab)
Raynsford, Mr. Nick (Greenwich and Woolwich) (Lab)
Shapps, Grant (Welwyn Hatfield) (Con)
Slaughter, Mr. Andy (Ealing, Acton and Shepherd's Bush) (Lab)
Smith, Ms Angela C. (Sheffield, Hillsborough) (Lab)
Syms, Mr. Robert (Poole) (Con)
Wright, Mr. Iain (Parliamentary Under-Secretary of State for Communities and Local Government)
Young, Sir George (North-West Hampshire) (Con)
Hannah Weston, Committee Clerk
† attended the Committee


Adam Sampson, Chief Executive, Shelter
Caroline Davey, Community Policy and Campaigns, Shelter
Lord Best
Yvette Cooper MP, Minister for Housing
Iain Wright MP, Parliamentary Under-Secretary of State for Communities and Local Government
Philip Cox, Homes and Communities Agency Implementation Team
Anne Kirkman, Housing Finance and Mixed Communities Division , Decent Homes
Peter Ruback, Affordable Housing Division, Department for Communities and Local Government

Public Bill Committee

Thursday 13 December 2007


[Mr. Roger Gale in the Chair]

Housing and Regeneration Bill

1 pm
The Committee deliberated in private.
1.6 pm
On resuming—
The Chairman: Order. For the benefit of those beyond the Bar and outside the Committee Room, I need to set down the ground rules again. First, welcome and thank you for joining us this afternoon. Slightly discourteously, we remain seated, because if we do not, we are off the microphones and not only Hansard but those listening on the webcast cannot hear us, so if you would be kind enough to remain seated, as I am, that would be helpful. Secondly, owing to the programme motion, by which we are bound, the evidence session has to finish at 1.45 pm—mid-sentence or no. That may seem extraordinarily rude—it probably is—but that is the way it works.
We welcome this afternoon Adam Sampson, the chief executive of Shelter, and Caroline Davey, deputy director of community policy and campaigns at Shelter. The Chairman does not normally involve himself in the proceedings, but I shall ask whether either of you would like to make a brief—I emphasise brief—opening statement before we go into the line of questioning from our parliamentary colleagues. The Floor is yours.
Adam Sampson: I shall be brief. First, thank you for inviting us; it is a good opportunity for us to put our views forward. Generally, we support the Bill and consider most of the measures to be entirely appropriate. Although there may be some issues about drafting in one or two places, generally we support the vast majority of measures. One or two individual measures can be strengthened, and, inevitably, we would not be Shelter unless we had a shopping list of other demands that we wish to see in the Bill. However, we are conscious of the need to move swiftly to enact the legislation and not to delay matters. In our judgment, it is imperative that the Government accelerate their programme of social house building, and the Bill is a key step towards that, so we are anxious not to delay its passage by bringing forward lots of extraneous amendments, no matter how important they may individually appear to us. We say that in the hope that there will be other opportunities for housing legislation within the lifetime of this Government.
Q 152152 Andrew George (St. Ives) (LD): That is a very good entrĂ(c)e to my question. Given that we have a decent amount of time—although looking at it from the Opposition perspective, not enough—in which to bring forward constructive amendments, and given that you have said that the Bill could be strengthened in several areas, what would be the top two on your wish list of changes either to add to or to subtract from the Bill?
Adam Sampson: There are several. If you are asking us to narrow them down to two, the first is to include in the legislation a definition of overcrowding. Yesterday, the Minister for Housing, in a very welcome way, committed the Government to move towards the bedroom standard on overcrowding, which is the fulfilment of a promise that was made for a new standard during the passage of the Housing Act 2004. It has taken three years for the Government even to indicate what the new standard will be. We have absolutely no doubt about Ministers’ commitments to reaching a bedroom standard, but we recognise that there will inevitably be timetable issues about how quickly that standard can be embodied, as it has taken three years for the Government even to give an indication of what the new standard will be. In view of the time it has taken, we are sufficiently nervous about the historical delay to think it would be extremely helpful if the ministerial commitment given in the speech yesterday were included in legislation. Yesterday’s announcement of a review into the private rented sector means that we will not be pushing for anything further on that sector.
Secondly, I want to push for changes in the right-to-buy legislation, although my colleague may disagree. Many areas would benefit from a reduction in the maximum right-to-buy discount, in particular council housing in designated areas with less than 3,000 inhabitants should be exempted from the right to buy. There is a problem because of the almost total disappearance of council housing from small rural communities, and it would be relatively simple to stem that haemorrhage by exempting small local communities from the right to buy. I would prioritise those two measures.
Q 153 Andrew George: You have said that the announcement of a review into the private rented sector was sufficient for you to believe that it would not be necessary to amend the Bill to bring the private sector within the proposed regulations for registered social landlords. Is that sustainable in the long run, given the amount of casework that Shelter deals with, especially in respect of the private rented sector? Do you accept that, provided that it does not scare off the private rented sector and is proportionate and appropriate, there is scope for the application of some of the regulations to the private sector?
Adam Sampson: It would certainly be helpful in considering the role of a regulator if the framing of those regulations were sufficiently flexible to allow the private rented sector to be brought under the ambit of that regulator at a future time. However, I do not want to anticipate the outcome of a full review of the private rented sector. Shelter’s preferred option is to have far greater regulation of the private rented sector, and no one should be in any doubt about that. However, regulation needs to be married with a package of incentives to encourage the further development and professionalisation of the private rented sector. I would not want to move swiftly to regulation without understanding the package of incentives for decent landlords to remain in the sector. Yes, frame the powers of the regulator sufficiently so that they can in future be applied to the private rented sector too, if that is seen as necessary and desirable, but postpone any decision on whether to do that until the out-turn of the review of that sector.
Q 154 Lyn Brown (West Ham) (Lab): Was it Shelter that advocated placing good private rented landlords in a different tax framework, which you felt might offer some incentives?
Adam Sampson: A few years ago, Shelter, with the Joseph Rowntree Foundation and some of the landlord bodies, put together a commission on the private rented sector, which concluded that, by changing the tax regime for private landlords to make being a private landlord a business as opposed to something different, there would be incentives for landlords that would allow them to accept greater regulation. There was a trade-off, which the landlords we talked to were willing to accept. We still think that that idea has considerable potential, but we want it to be approached sensitively and properly as a package, rather than rushing into one side without looking at the other.
Q 155 Sir George Young (North-West Hampshire) (Con): A quick supplementary question, just to clarify where Shelter is coming from on the regulation of the private rented sector. Are you arguing for controlled rents and security of tenure?
Adam Sampson: We are not at this stage, no. Security of tenure is a profoundly interesting issue. At the moment, one matter that really concerns us is the disjunction between the rights of similar groups of people trying to secure social housing. If you manage to get through the homelessness application route, for example, and be accepted as homeless, if you are not fobbed off at an earlier stage, you will end up having lifetime security of tenure and regulated rents. If you do not manage to negotiate those hurdles, you end up in the private rented sector with unregulated rents and only six months’ security of tenure.
It seems to us that the two sectors need to be brought closer together. How to do that, whether through rent regulation and legal extensions to security of tenure in the private rented sector or through a package of incentives and managing the market, is precisely the sort of stuff that the review of the private rented sector needs to determine.
The Chairman: Order. Mr. George still has the driving seat, but I assume that all the Members who are indicating that they wish to contribute are pursuing the same line of questioning. If not, please wait.
Q 156 Mr. Andrew Love (Edmonton) (Lab/Co-op): There was disappointment about the narrow definition of houses in multiple occupation in the Housing Act 2004. Is that a matter that you would like to be taken up in the Bill?
Adam Sampson: If there were time within the Bill to extend the definition of houses in multiple occupation, we would certainly support it. We have all the briefings and potential amendments from three years ago ready to go, so believe me, if there were an opportunity to do that, we would support it.
Q 157 Margaret Moran (Luton, South) (Lab): You will be aware that the report of the Law Commission on tenancy conditions addresses a long-standing issue. Do you see any scope in the Bill for examining mechanisms that might enable us to move forward on that? Is it something that you will be pursuing?
Adam Sampson: That relates to our general strategic approach to the Bill and the broader housing reform context. Our sense is that, while those measures are important and to a degree attractive, although we have some detailed disagreements on some of the report’s conclusions, it would be better, on the assumption that there is every likelihood of a second housing Bill in this Parliament, to hold back fundamental reforms of that nature for a second Bill. They could be taken forward simultaneously with any changes following the Hills report or the outcome of the private rented sector commission, and we could do the whole thing as a package rather than implementing fundamental reforms in a piecemeal way, as you are suggesting.
Q 158 Mr. Andy Slaughter (Ealing, Acton and Shepherd's Bush) (Lab): I am concerned by what you have said. I was not going to ask a question—I normally agree with what you say, Mr. Sampson—but you have just said that you believe that the two types of tenure, public housing and private rented housing, should come closer together. There have been bits of nibbling away at security of tenure in the public and RSL sector, and there are rumours, including in the context of the Bill, that that may continue. Could you make clear Shelter’s position on that? I hope that it is that you support secure tenancies and assured tenancies, in so far as they give that level of protection.
The Chairman: Order. Just before you reply, I ask Members to bear in mind that these microphones are not always quite as directional as they might be. It would help Hansard if you could speak up just a little.
Adam Sampson: For ease of reference, Shelter would oppose root and branch any proposition to water down the existing security of tenure arrangements in social housing.
Q 159 Mr. Slaughter: So, when you say “move together”, you mean private rented moving further towards—
Adam Sampson: Our aim is to improve the quality of security of tenure and management standards in the private housing market, but should that be done by regulation or by a judicious package of incentives? It is interesting to note that if you look at the higher end of private renting, many landlords are anxious to offer longer-term security of tenure to their tenants, because it guarantees good rental streams. It is by no means an assumption that it is in the landlord’s interest to have very short-term tenure with a constant churn of tenants.
The Chairman: Ms Davey, you have been very patient. Is there anything that you would like to add before Mr. George picks up another point that was raised in Mr. Sampson’s opening remarks?
Caroline Davey: No.
1.15 pm
Q 160 Andrew George: One further point that you raised in your opening remarks was that there should be a restriction on the discounts available through the right-to-buy mechanism. That is something that I would support. If that were to happen, there is still a need for the development of an intermediate market. Has Shelter taken a view on the need to create, invest and enable an intermediate market? Is there any mechanism within the Bill to strengthen that opportunity, as an alternative to bringing social housing into the private sector in the way that the right to buy allows?
Adam Sampson: There is nothing that we are suggesting of that nature at this point. [Interruption.] It is interesting. I am looking at my colleague, because I now cannot answer the question. [Interruption.] No, there is nothing that we are suggesting in that respect.
Q 161 Grant Shapps (Welwyn Hatfield) (Con): Clause 69 attempts to define low-cost home ownership, and it is a confusing clause. The Minister has already hinted that it may be amended. The concern is that the definitions might introduce a means test into the process. Is that concern shared by Shelter?
Caroline Davey: Do you mean the definition of low-cost home ownership or of social housing?
Grant Shapps: Both. Low-cost home ownership is defined in clause 69, but there is also wider concern in the Bill about whether there is an attempt to redefine access to social housing, and what the difference is between social and affordable housing.
Caroline Davey: We took a view from our head solicitor, who said that, in practice, this clause is not very different from the existing situation. On that advice, we are not particularly concerned about means-testing or the definition of social housing. On low-cost home ownership, it is a clarification of a situation that already exists.
Adam Sampson: There are some questions about the precise definition of rules of eligibility in clause 68. It may be that some greater specificity around precisely what that means would be helpful because this could be a loose concept or something more specific, and it would be interesting to know what is precisely meant by that. Generally, my colleague is right. The advice that we have had from our housing solicitors, who are extremely well qualified in this area, is that there is little here that changes the situation that heretofore applied in councils.
Q 162 Grant Shapps: Are you concerned that the Bill may inadvertently or otherwise try to redefine different types of social and affordable housing? Some groups raised that concern on First Reading. Their worry was that the housing market has only just got used to the definitions of social housing and affordable housing. Mixing up the two definitions could create complications in the field. Does that worry you?
Adam Sampson: Our in-house solicitors are not concerned about that matter. We have asked them, and they say that this is merely restating in slightly different words the existing arrangements and definitions.
Adam Sampson: When I first started in this job—my career up to this point was not in housing—I was invited to be on the home ownership taskforce and to chair its user group. This was three or four years ago. As a preparation for that I sat and read through the various low-cost home ownership products available then—they have since proliferated further. At the time, there were 38 such products. At one point in my career, I was an Oxford academic, yet I could not understand the vast majority of the products as described.
There is certainly a marketing problem. It is very difficult as a consumer to understand what it is you are being sold and its implications. When the taskforce tested the impact of those products on consumers, the consumer view of the worth to them of some of those products was by no means complimentary. Some of the best established of them, such as shared ownership, were reasonably unpopular with many consumers who saw them as a very bad deal because, for example, even though you owned only 50 per cent. of the equity of your house, you had 100 per cent. of the upkeep and repair obligations.
You should add to that the fact that we do not yet have an adequate market in many of these products, so it is difficult to sell on. The proliferation of products means that it is difficult to know where you go to get any one of them, so you have a very unsatisfactory situation. So the problem is caused by a combination of poor product design from a consumer point of view, poor marketing and selling of the products and a bewildering proliferation of products with the absence of an effective market.
Q 164 Mr. Raynsford: What is to be done to remedy that?
Adam Sampson: It is partly about simplification. One of the recommendations that came out of the home ownership taskforce was about simplification. We need fewer, better products, not an increasing number of products. It is also about a single point of marketing and sale. Those two things seem to be the keys from that taskforce’s point of view. Nothing that I have seen in the past two or three years has changed my view.
Mr. Raynsford: Except that the Government introduced the home buy scheme with exactly the objective of simplifying the system and having a single point of sale, but take-up has been derisory.
Adam Sampson: Indeed, it has. The market is speaking. Consumers do not necessarily want these products, no matter how much we want them to want them.
Q 165 Paul Holmes (Chesterfield) (LD): Returning to clauses 67 to 69 and the definition of low-cost housing to buy and low-cost housing to rent, many organisations have expressed concern. The National Housing Federation has suggested that if you change the definition of low-cost rental in clause 68 from
“occupied by people who cannot afford to buy or rent at market rate”
to “let to” such people, it would still allow the means-testing of those who should have access to such property, but it would rule out means-testing people once they are in the property. You could not move them on, because their living standards improve. The Minister wrote to everyone who spoke on Second Reading to say that that was not the intention. However, many people have pointed out that, if it is there in statute, someone in the future could use it in that way, even if that is not intended by current Ministers. Do you not see any potential problem in the wording as it is drafted?
Adam Sampson: All I can say is that our head solicitor, who is an acknowledged expert in housing law, has advised us that he sees little risk in it. That advice may be different from that which many others have received.
Q 166 Paul Holmes: The background, in the last few months and the early part of this year, is that a think tank loosely associated with one party and an internal policy review associated with another party have come up with arguments that we should, indeed, be moving be people out of rented social housing once their income reaches a certain level.
Adam Sampson: That is part of what Mr. Slaughter was hinting at.
While we understand the arguments, particularly given constrained supply, to ensure that social housing is used only for people who have no other recourse to housing; equally, going down that line would be a very worrying development, not least because it would introduce perverse incentives for people to keep their income levels low to retain social housing. It also militates against the desire for mixed communities, where there are different income levels within the same geographical neighbourhood. Much as we want many of our new communities to be mixed, as John Hills pointed out, on the vast majority of existing housing estates, social housing will remain for decades to come.
Q 167 The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): To take up the issue raised by Grant Shapps, I am concerned that people would misinterpret that as means testing for entry into social housing. Crucially, as Paul Holmes pointed out, if someone got beyond a certain level of social income, they could be kicked out of social housing, but that is certainly not the Government’s intention. As has been mentioned, I have written to hon. Members who contributed on Second Reading. I am very much minded to table amendments to clarify this matter. I am reassured by your legal advice, but I would welcome any further advice that you can provide as to how we can tighten the provision.
Clause 67(2) states that social housing which is classified as social housing now will remain as such. That is very important. I think that clause 71(2) will require amendment, as it covers social housing provided for
“the needs of a group whose needs are not adequately served by the commercial housing market”,
even if they could afford a market rent. Hon. Members could mention more, but three groups spring to mind immediately: older people, people with disabilities with specific needs, and people with larger families—we have already talked about overcrowding. I am minded to table amendments to avoid any doubt about whom the provision covers. Any help or suggestions that you can provide will be most welcome.
Adam Sampson: We will certainly take that back to our chief solicitor. It is probably worth quoting the current legislation, for ease of reference, which states that councils are permitted to take account of
“the financial resources available to a person to meet his housing costs”
in determining priorities under allocation schemes. In other words, local authorities already have powers to look at people’s income levels. That is the basis of our opinion.
Q 168 Mr. Wright: I will make two points, the first of which I mentioned the first on Second Reading. I am concerned that rationing takes place because of the relatively low supply of social housing. That takes us back to the central point of the Bill, which is that we need more homes and more social houses. That is absolutely essential.
My second point has been raised by Mr. Sampson. To promote mixed, vital, sustainable communities as much as possible, we need people with higher incomes in social housing. It happened in the 1950s and ’60s. Mixed tenure is very important in regenerating and sustaining communities.
Q 169 Paul Holmes: I want to pick up that point. The definition to which you refer would deal with entry to low-cost rent, and there is de facto rationing as a result of shortages. However, that does not deal with the threat to move people out once their income has increased.
Adam Sampson: If the Minister is willing to consider amendments, I will certainly take the issue back to our chief solicitor. I am happy to give whatever help I can on behalf of Shelter by coming back with a legal formula that will deal with those dangers.
Q 170 Sir George Young: I would like to press you a little further on security of tenure, which has been raised several times. Nobody wants to deprive people of their tenure because their circumstances have changed but, in cases where somebody’s circumstances have improved, would Shelter have anything against bringing to their attention alternative means of moving out, to free up accommodation for those who are on the waiting list and need it?
Adam Sampson: Absolutely not. We have no objection to that—indeed, we think that it would be a very positive development. However, we need to distinguish between housing options that offer a menu of choices from which consumers can select what they regard as their best choice and something in which a landlord or a local authority determines what is best for that individual. In other words, the principle behind this must be consumer choice with a package of incentives, rather than a local authority saying, “You are too well off for social housing so we are going to kick you out.”
Q 171 Mr. Slaughter: We are getting a useful clarification on the matter—I am not entirely sure, however, about the reference that Mr. Holmes made to Conservative party policy review in the summer—so that everybody is on all fours regarding security of tenure, permanency and the ability to remain.
I agree entirely with what you said about communities and ensuring that people are not going to be without social housing. Nevertheless, people do move about, and the right to buy has perversely destroyed some of those mixed communities and created a great shortage of affordable housing, so dealing with rationing is an even greater priority. Is Shelter seriously saying, even under the Bill, the limited social housing that is available should be spread across income bands, rather than prioritised for allocation to those who are most in need?
Adam Sampson: That is a hook on which Shelter plainly wriggles, as indeed does everybody else. As an organisation that regards itself as representing the poorest and the most vulnerable, of course we would wish to prioritise access to housing for those most in need. Nevertheless, the consequence of channelling only those in most need into a limited slot of social housing, which is not geographically dispersed but concentrated in small areas, increases the risk of concentrations of deprivation. The aggregation of many individual decisions to help individual people in desperate need forces those individuals to live in places in which none of us would wish to live. Inevitably, the mixed communities agenda has to have an element of priority, and much as we worry about penalising people in desperate need by moving towards a mixed communities agenda, that must be done in the interests of ensuring that those estates are decent places to live in.
Grant Shapps: I could not hear everything that Andy Slaughter said. He made a reference to Conservative party policy on fixed tenure from the summer, and I am not clear what it was about.
The Chairman: Order. Is this related to our discussion?
Q 172 Grant Shapps: Partly, because I cannot hear the whole conversation, which is a matter for the Chair.
On the issue of tenure and beyond, what is the balance for Shelter? Clearly, there is a conflict—you alluded to it—between security of tenure and enabling those in housing stock to be sufficiently mobile to keep the social housing system working. Could you talk us through that a bit more?
Another argument is sometimes made about a culture of dependency, and the Hills report can be interpreted in that way. However, the truth is that if, owing to the fact that we have not built sufficient housing stock, we place people with high support needs in estates with concentrations of deprivation, we cannot blame them for living in a place that does not provide them with the chances and support that they need to build decent lives. We argue strongly that it is wrong to attack security of tenure in social housing. We do not believe that there are coherent arguments for doing so.
Q 173 Ms Angela C. Smith (Sheffield, Hillsborough) (Lab): I want to challenge the usual understanding of housing needs. The conventional use of the term “homelessness” applied by local authorities relates to those in the direst need. Divorcees, particularly fathers, often require access to their children and a place for them to come and stay. Do you agree that if such a person were to have their house repossessed—they may have lost their job or had debt problems, for example—they too would be in serious need and could, in a more liberal society, be classed as homeless?
The Chairman: That was a big question, but we need a brief answer, I am afraid, Mr. Sampson.
Caroline Davey: It might be useful to mention that we are very supportive of the proposed Homes and Communities Agency, but we think that one useful addition could be made to its remit: an assessment of housing need, particularly social housing need. No one is currently responsible for such an assessment. Shelter does its own research, but we would be very happy to hand over the baton to an official body so that it can undertake an assessment and look at the wider housing need and how best to provide for it.
Q 174 Ms Smith: That could help to create mixed communities as well.
Caroline Davey: Absolutely.
The Chairman: Thank you very much for joining us, Mr. Sampson and Miss Davey. The Hansard report of these proceedings will be available within a couple of days. If, having read it, you wish to add anything, please feel free to put it in writing. The Committee will be most pleased to hear from you further.
1.45 pm
Sir George Young: On a point of order, Mr. Gale. The witnesses referred twice to a speech that the Minister for Housing made yesterday, which was obviously important. Could Committee Members have a copy of it?
The Chairman: Order. That issue is not a matter for the Chair. It is open to the Under-Secretary to make any papers available to the Committee that he believes are relevant.
Mr. Wright: Further to that point of order, Mr. Gale. May I suggest that the Minister for Housing, who is to give evidence to the Committee in about three quarters of an hour, could, with your permission, make reference to the speech as part of her opening address? We would then provide copies of the speech.
The Chairman: That would be fine, if we had not already briefed the Minister that she will not be invited to make an opening remark. However, I am sure that she will find a way of dealing with the matter.
Good afternoon, Lord Best. Thank you for joining us. We have until 2.30 pm, when the knife falls, discourteously or otherwise. I invite you to make any opening remarks that you wish to make before I invite members of the Committee to put questions to you.
Lord Best: I listened to the speech of the Minister for Housing yesterday, so I might introduce some of the points that she made.
The Chairman: Please feel free to do so, but if you wish to make some brief opening remarks, we would be pleased to hear them.
Lord Best: Absolutely. Like more or less everybody to do with housing, I welcome the Bill and think that it is important. I must admit that I was a sceptic for quite a long time as to whether it was really necessary to create the new Homes and Communities Agency and whether that would not cause an awful lot of disruption, redundancies and all the hassle that comes with creating a new body. I have also been an admirer of the way in which the Housing Corporation, combining regulation and funding, has managed to make sure that housing associations are never guilty of corruption or mismanagement of any consequence and never lose a penny for any of those private investors, over all these years. I was a bit worried that separating those functions was not going to be helpful in the great scheme of things.
However, I have come to the view that this is the moment for a change. Joining up the different parts of government that deal with the delivery of new homes and the regeneration of old places is an enormous task, and they have an £8 billion budget. It is better that they are in one place. I accept that putting regulation somewhere separate probably gives it a bigger role. It would have been difficult to accomplish, with all the complexities nowadays of regulating different kinds of agencies, rather than just the old-fashioned standard housing association.
These are probably good moves, and having walked round the issue quite a few times, I think that this is good stuff. It is psychologically and symbolically good for Government to say that there will be a new Bill, new agencies, and a new era, and that they are going to go for it. I think that that is worth having.
Q 175 Lyn Brown: Do you think that there is anything missing from the Bill? Are there any big missed opportunities that you think could be considered at this late stage?
Lord Best: Thank you for that question. I think that there is a sin of omission, and I notice that Shelter picked up on this. This is the moment to bring in some regulation for the private rented sector. It is a huge elephant standing there. We now have dozens of schemes in which there is private renting next door to social housing—literally next door. The owner of the private rented accommodation is increasingly likely to be a taxi driver who owns one flat in Brighton or a very, very small company.
The buy-to-let market, which has borrowed £120 billion, is a huge phenomenon. Great, we have had all of this massive investment, but we have a tangle of amateur and often speculative landlords mixed in with some complete rascals. We all know that the worst landlords are some of the most unpleasant people. I was wrongly quoted as saying that most landlords were drug dealers. That is not what I said, but I did say that most drug dealers are landlords, because that is the best place for a drug dealer to put their money. Nobody asks any questions and you can put your addicts in there.
We have a very scruffy bottom end of the market, but even among perfectly respectable people, we have a bunch of absolute amateurs next door to organisations that have to deal with regulation by the Housing Corporation, Audit Commission inspectors and an excellent housing ombudsman service. There is all that paraphernalia, and the Bill is talking about refining and finessing and even more regulation. Fine, I am all for that, but then we have the wild west—the private rented sector with no regulation. There are now rules to deal with the standard of the accommodation, but whether they are implemented is another matter. With regard to the management and the landlords, we do not have any regulation or redress. You can complain that no one has answered your letter and can go on sending that letter, but no one will do anything. The tenant’s only recourse is to take the landlord to court, and how many people are able to do that? We have got to have some regulation, as this is the last outpost where there is none.
Q 176 Alistair Burt (North-East Bedfordshire) (Con): May I take you back to your opening statement, in which you said that you began as a sceptic about the concept of the agency because of the difficulties of disruption, but had been won over? You may still remain a sceptic in relation to delivery because the record of the past 10 years has been pretty woeful. You painted a picture of a really rosy future in which everything was somehow going to come right under the new agency. What, in particular, gives you the confidence that this new vehicle can deliver after 10 years of failure?
Building prices have gone up by 14 per cent. in a year, it is difficult to squeeze things out, and planning difficulties are not yet solved, so although the Planning Bill will certainly help, I absolutely agree that hitting a target of 3 million homes by 2020 is a big call. John Calcutt’s review stated that the industry could do it, but whether it wants to is another matter, because it responds only to the market, and that is a second consideration. There might be some cajoling and a need for that other stream of housing to be much bigger than it has been—the bit that is not propelled entirely by what the market says.
Q 177 Alistair Burt: Interestingly, you echo some of the comments made this morning by the representatives of the Campaign to Protect Rural England, who fell into a discussion with Nick Raynsford about whether those targets could be delivered. The homes have to be built and the house builders are not going to do it because of a downturn in the market. If everything is getting tighter, with the best will in the world, it might not be delivered, whatever an agency says or whatever the latest 10-year plan for housing is. Just because the agency has been created and the Government say what they will do, should there really be any confidence that that will happen, because many other things will affect the delivery?
Lord Best: It certainly will not happen automatically just because you have a great big agency, that is for sure, even with the public money for the 70,000 homes a year that could be afforded if everything worked right. We are told by the economic pundits that the economic downturn is not a major recession and looks like a trough from which recovery is still possible, so we have to be prepared and get our standards and ourselves in place for an upsurge. Fortunately, the timetable—we get milestones such as 2016 and 2020—is not inconceivable. I hope that we can get our 3 million by 2020, but next year is not going to be the best year, and the year after that is not going to be the second-best year either.
Q 178 Andrew George: In your comments to the Communities and Local Government Committee, you expressed concern about the quality of the housing that might be provided under this type of regulation. Let us suppose that you were to hit the 3 million target. Under clause 35, the HCA’s duties are to ensure that the recipient of financial subsidy is the landlord of the housing provided. There is no question about quality and standards. How can the Bill be strengthened to ensure that it does not result in a driving down of housing standards and quality for those who are desperate for accommodation, but not so desperate that they should receive substandard accommodation?
Lord Best: We cannot write all the standards in the Bill. Pushing up standards will be very much part of the HCA’s duties. The most difficult thing for the agency and society at large will probably be to produce family homes rather than the small flats that we are used to seeing. If we keep talking about 3 million homes and they turn out to be 3 million one or two-bedroomed flats, it will be a complete failure. We are running out of single, childless, mobile, young, yuppyish people who can fill the flats and thus getting increasingly into a backlog in which we need actual family homes. Perhaps if we can house a few older people and make the retirement package good enough, we will get back a lot of suburban three-bedroomed houses with gardens, but we must build family homes.
Although I am guilty of it, we must stop talking about 3 million homes. We need to start talking about 9 million people. It is the number of people whom we house that matters, a lot of whom will be children. In many continental countries, they talk about people and square metres. There are targets on square metres and the numbers of people. We have units—just one figure. That will not work. Ministers will have to feel proud of the number of people housed instead of just the number of units and homes.
Q 179 Andrew George: If some developments are provided through the quota scheme—with private developers allowing a proportion of the properties to be made available to RSLs—rather than through exception sites for which we can insist on 100 per cent. and the social landlord is engaged from day one, those properties will be the smaller and less acceptable, or those built on the edge of a busy highway and the swampy bit at the bottom of the site that private owners would not want. I accept that this is blurring the planning and the housing provision side of government, but do you not think that there is a need for stronger regulation in the Bill to ensure that that is not one of the outcomes and that we do not end up with ticky-tacky boxes in the worst sites on the edge of developments?
Lord Best: These are mixed developments in which all the decent stuff is over here, while the social and affordable housing is planted in the corner near the gasworks, which is the real rubbish and where the units are too small anyway. Everyone is becoming cleverer about such matters and the deal under section 106 specifies increasingly that people do not get the worse end of the deal. At present, when you are piggy-backing on what the house builder wants to do, the RSL and housing association is playing second fiddle, especially in those areas where, unwisely, a beauty parade is allowed so that the house builder can choose the softest touch—the one that will be most compliant with what he wants. You can then end up with some pretty rubbishy results for affordable housing.
I much prefer the model of the housing association, possibly with considerable support through a local housing company that involves the local authority. New local housing companies will be set up. It will not be the house builder making all the running with others piggy-backing on him. The RSL, the local housing company or the agency itself will specify in a master plan what will happen. The house builder will then do the things that house builders do best and build houses for sale, but as part of someone else’s plan, not as the person leading the show. They will not hang around very long or be there to manage the property for the next 30 years.
There are people who will be around for 30, 50, or even 100 years. I have run organisations that are more than 100 years old and are still looking after properties that were built 100 years ago. If you are going to be in the sector for 100 years, you do not want the people who are just there today, and who will sell the property and go, to run at the beginning the planning process and also the quality and standards. You want them to do their job, but for the real control to be in the hands of the long-term agent.
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Q 180 Ms Smith: Having been involved in a process in which the housing association and the local authority came first, I completely endorse what you have just said.
The context of this discussion is our belief that we still have underlying housing demand that will effectively mean that delivery of the new housing will be a top priority, despite any problems in the next two years. First, do you not think that land constraint has been a significant factor in our inability to deliver large numbers of new housing units so far, and that the new requirement on local authorities to identify land supply is a useful tool? Secondly, regarding retirement, would it not be useful to develop a new culture in this country whereby older people see moving back into the rented sector from home ownership as a positive move that allows them to enjoy their equity while making more housing available in the market for other people to buy? That would not necessarily mean moving them into sheltered housing or very small one-bedroom flats.
Lord Best: Yes. Those are two separate and important points. Land is absolutely the key. Who controls the land always wins in the long run, and the private sector has had a pretty good run of controlling land supply.
I am very familiar with the scene around York. It has been extraordinarily difficult for even the Joseph Rowntree Foundation to acquire land. I ran the Joseph Rowntree Housing Trust. Frankly, at Rowntree, we have pots of money, but buying any land, with options already sold and deals already done, is pretty well sewn up around York. Getting your hands on any sites in order to lead the process has proved to be incredibly difficult. Rowntree is, in fact, developing a large site on local authority land.
So, it is about unlocking the public sector land; for sure, we need to be cleverer about that. Sometimes the public sector is extremely slow in bringing the land forward and extremely hard on the price, which militates against doing something socially worth while with that land. Getting the land is absolutely critical and I think that the Bill—especially some of its planning provisions—will be helpful in doing that. You are so right; land is the secret.
Regarding retirement, yes, people should possibly move back to being tenants having been home owners for 35 years, or whatever period it might be. I chair the Hanover Housing Association, which provides retirement housing all over the country. We are looking to see what the next big thing is. We are the largest provider of extra-care housing. Obviously, extra care is a fantastic product and there are always queues for such housing, but I do not think that the old-fashioned sheltered housing will suit in the future. We must have a retirement offer that is better than we have had before.
The biggest target for who is going to move into retirement housing is no longer the under-occupying council tenant—although they still exist, and creating mobility within the social housing sector is great—but the under-occupying owner, who might not be very rich at all. Enticing them to leave the three-bedroom suburban house is a huge prize, because that would produce the family housing that the house builders are so reluctant to build, because they make more money out of one and two-bedroom flats. So, you are absolutely right.
I would not go the whole way, though, and say, “We welcome you.” We do at the moment at Hanover; 25 per cent. of the people who move in have sold their house. Actually, though, at Hanover, I want to get my hands on some of the money that those people have got from selling their property. Although it is nice that they want to give something to the kids and all that, I also think that we should have a shared ownership product for them, which would put at least a chunk of the money that they have received from their sale back into housing, where it is perfectly safe. That would be good for them in the long run.
I have talked to tenants who have moved in, having been home owners, and have not had the chance of buying into their property because we just offered renting. They have said things like, “Yeah, that would have been great. I wish that I had bought in because house prices have gone up in the 10 years since I sold mine.”
So, I am keen to collect money from people coming into Hanover developments. Some 72 per cent. of retired people are home owners. Many of them now have unmanageable properties and are lonely—they are affected by all the things that can mean it is time for a move that will be good for everybody, including the family that takes the home.
Q 181 Sir George Young: I have two questions, Lord Best. We live at a time when the major political parties are committed to deregulation. You are the second consecutive witness who has asked for more regulation, this time in connection with the private rented sector. Is there not a risk that if we over-regulate the private rented sector, we could go back to where we were 20 or 30 years ago when you and others were advocating reform in order to regenerate and revive the private rented sector, which has resulted in what we have now? Exactly what regulation do you want, and is there not a risk of overdoing it?
Lord Best: Those are fundamental questions. I definitely am part of a conspiracy that has been very quiet about the need for regulation because we have been so worried about the UK having the smallest rented sector in Europe, about encouraging people to invest, about saying anything about regulation and frightening the horses, and about 50 years of decline. So, I have always had to bite my lip and not say, “We should be regulating these rascals far more heavily.”
Those days are gone. Now, if we were to scare off a few people among the great wall of investors who are coming in, that would be good. They are amateurs and speculators, albeit perfectly honourable speculators—I am not saying that people who move their pension funds are dishonourable. But, total amateurs are coming into a totally unregulated sector. It would be good to scare some of them off, because not all the money has been very productive.
Q 182 Sir George Young: What do you want to do to them?
Lord Best: Just to finish my point, Sir George, on what the money has done. It has definitely had an impact on house prices. Some of the bubble that is about at least to deflate, if not burst, was created by the £120 billion of extra funding from those people. Remember, housing associations have raised only about £35 billion of private money. The buy-to-let people have raised £120 billion in about six years. When that much money chases the same number of houses that were there before, it is bound to have an inflationary impact.
There is also the problem that first-time buyers have been driven out. First-time buyers have dropped from 40 to 25 per cent. of the purchasers of new homes. So, scaring off some of that investment, which is not something that we would have dared to do for 50 years, would be great. To ease back on it would be a good thing.
As to how that could be done, I have just gone on to the council of the ombudsman for estate agents. New legislation means that, from April, a person cannot be an estate agent unless they belong to an ombudsman and redress scheme so that there is somebody to complain to. Estate agents must sign up with an organisation with whose judgment they must accord. If they misbehave in any way, they will be fined, and they can even be struck off. They will be referred to the Office of Fair Trading and could be told that they are out of the scheme. From April next year, if they are out of the scheme and neither the ombudsman or a redress scheme will have them, they have to take their sign down and not sell any more houses—they are out.
However, a letting agent—some estate agents are also letting agents, in a rather complicated way—can go and put their sign up now. They need no qualifications and they do not have to have done anything before. People can be a letting agent tomorrow and take serious sums of money in deposits and landlords’ rents. We do not have any regulation of letting agents.
Some of the taxi drivers use a letting agent to do the job for them, others do not. One whom I sat behind the other day said, “I am not paying 12 per cent. to some agent. I can get down there at least once a fortnight if the plumbing goes haywire or something.” But whether it is the landlord or the letting agent on behalf of the landlord, the starting point is that they need to be part of either an accredited scheme, or a professional body that has a code of conduct that it will apply. Martin Partington of the Law Commission advocates that in his report. I have discovered that the associations and federations that represent private landlords—they represent only a small number of private landlords because a lot of people will not join—believe in regulation, too. I chair the private rented sector policy forum, which is made up of landlord and tenant groups. The landlord groups agree with the tenant groups that you need some regulation to keep out the cowboys and to bring some formality into the wild west that is the private rented sector. An accreditation scheme does not need to be so frightening that proper investors do not actually prefer it to a system that is totally chaotic. We will see all kinds of problems now that some of this buy to let has unravelled.
Q 183 Sir George Young: I will need to be persuaded about that. May I ask you about something that you said in evidence a year ago to the Communities and Local Government Committee, when you said that housing associations were “second fiddle”? You have repeated that again today. Surely the local authorities have all the planning powers they need to avoid the scenario that we have heard just now about the housing association being allocated the worst plot on the site? If the local authorities wanted to, they could oblige the house builders to do all the things that you have expressed concern about. They do not need any more powers, because they have got them.
Lord Best: That is true in theory and increasingly in practice. Local authorities are getting cleverer, and the section 106 agreements are getting better—they are beginning to understand each other. However, a lot of local authorities are no match, in terms of negotiation, with high-powered house builders, who can run circles around them, frankly—they have highly paid and astute people who negotiate for them. You have some youthful planner who is working for the council, and it is not a fair match, so the deal is not always as good as it should be, although I think that things are getting better.
There is still a fundamental difference between that and, for example, the Joseph Rowntree Foundation buying a site, doing a master plan and deciding where it wants the children’s play area, whether to get people to walk to work by a certain route and where to put the cycle path and the trim track for joggers. In that case, the organisation involved will say, “We want 60 per cent. for sale now. Which house builders shall we use? These people seem to be rather good quality. We’ll bring them in, but they will have to compete with other house builders. If such a scheme is run by the agency that is responsible for the long-term management of the place—it is going to look after the rented housing and the communal areas for ever—it will set up a commonhold or equivalent scheme, in which the ground rents stay in the place and can be used for the maintenance of that place.
There is a little scam that is currently almost universal in the sale of flats. The ground rents are imposed by the house builders on the occupiers. The ground rents are then capitalised, bundled together and sold to an investor at 18 times the annual ground rent. That is a kind of standard practice. You choose a ground rent that is small enough to make no difference to the price you get for the flat, so the sale of the ground rents to somebody else—there is nothing in return for the ground rents, which are just payments—is just an extra little bit of bunce on the top for the house builder. If we were to collect up the ground rents, we would not sell them to somebody else, because they are there to pay for the grounds, the common parts of the building and things that happen. That is just a little scam that happens almost universally with flats.
It also makes it much easier to manage property if the agency is there to do the managing, where as the people building it might be gone tomorrow. Sometimes the builders think, “Where’s the next site to do? That is their problem. We have given them all £1 in a management company; they can sort that out for themselves.” Can they? I am not sure that they can or will.
Keeping the ownership of the place and getting the house builders to come as partners is fine. House builders are infinitely better than Rowntree or anybody else at building to exactly the price that they say that they are going to build to. Everything that I have ever built has always come in over the price that I first thought of, whereas the house builders always bring it in. They have skills that are not always matched by the housing associations. Use them for the things that they can do, but it is that way round in my opinion, rather than always being second fiddle.
Q 184 Mr. Raynsford: May we consider the regulatory regime that the Bill establishes, and in particular, three areas in which concerns have been voiced, not least by previous witnesses? The first is domain regulation. Clearly, Cave’s recommendation was for the introduction of a domain regulator. The Bill does not do so, and previous witnesses, particularly from the local government side and the Chartered Institute of Housing, recognised that there were formidable difficulties in defining a unified regulatory regime. Do you have any thoughts about how that problem can be best overcome?
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Lord Best: Yes. It is well worth trying to get more into the Bill and doing it now. The Secretary of State will say later, as she said yesterday, that she is definitely committed to the idea of local authorities and arm’s length management organisations coming within a regulatory system within a couple of years, so that commitment will happen at some later stage and it is well worth trying to get this Bill to provide for it. The final amendments will probably be tabled in the Lords in—I do not know—March? We have some time now. Professor Ian Cole has been given the job of chairing a little group that will examine how domain regulation could come to pass, and we have time to table an amendment that would introduce it early on. It is true that the regulatory system will be slightly different, but it already has to be different for those private sector organisations that provide social housing, so the regulator will already have to account for differences according to who is behind the social housing provision.
It may be that the only new clause anybody can find the time and energy to produce in the time available is an enabling one, and it will need to be a constrained enabling one to get through the House of Lords down the other end. If the provision is too open-ended, people will become very anxious about it, but a constrained enabling new clause might still be enough.
Q 185 Mr. Raynsford: The second concern is the balance between ensuring effective action where necessary to deal with malpractice, and avoiding over-heavy regulatory controls. Concerns have been voiced that the direct line from the Minister, who is able to direct on standards through the regulator to registered social landlords, could compromise RSL independence and might even alter their status under the classification as non-public sector bodies. You are the chair of a major housing association and you have enormous experience of that territory, so do you have any thoughts on those issues?
Lord Best: We should not risk it. It would be better to work around some amendments. I am not sure whether the wording is good enough, and if there is any doubt, we should not risk it, because if some EU bureaucrat classified us as public bodies and everything that we borrowed became part of the national debt, I would not say half the point of having housing associations, but a major reason why we have promoted the option, would go out of the window. It would be a disaster, and we would have far less money for social housing. It is not worth the risk of getting the wording wrong.
The Secretary of State directing the regulator and then the regulator directing the housing association sounds too much like a chain of command. We could fall into the trap of being classified as public bodies. In a way, we are being asked to have faith that the civil servants have entirely got their heads round this, and that they have checked it out with the economists in Brussels or wherever, but I am not sufficiently confident that we have got it sorted. What we need are some gentle amendments, not so as to lose the power of the regulator to do the right thing but to make absolutely damned sure that the Bill is not an Exocet that blows apart what many RSLs are all about.
Q 186 Alistair Burt: While we were discussing the availability of rented property and the pressures on housing generally, we touched on an argument about the place of the rented sector in British society and the fact that over the years there has been pressure to see rented property solely as social rented property. That is in contrast to what happens on the continent, where people rent much more often and the supply is much more mixed. Do you have any observations on that situation? Is there anything in the Bill that might change the nature of housing in our society, which is so heavily concentrated on owner occupation, almost to the exclusion of anything else? Is there anything that you think would get back a slightly wider rented sector and allow us to return to the situation 20 or 30 years ago, when a larger proportion of those with higher incomes were prepared to rent?
Lord Best: There has been a remarkable growth in the private rented sector in recent years. The chart had reached about 9 per cent. and is now heading for 12 per cent. of the stock. There has been a major uplift in the quantum of privately rented properties—
Alistair Burt: From a very low base.
Lord Best: From a pathetically low base. Only one European country—Bulgaria or Romania, perhaps; you have to search pretty hard to find it—has a lower proportion of privately rented stock. There has been a turnaround in the value of that sector for the young, mobile and single or for childless couples. I do not advocate security of tenure for private tenants in the private rented sector, which Shelter might have been edging towards; there is no doubt that people would be unlikely to invest in the sector, because they would never know when they would be able to get their money back out again. That will not encourage the growth of the sector or its stability, which means that we have a sector in which there is unlikely to be security of tenure.
That does not matter too much if you are young and mobile—and nowadays, mobile, single and not settling down with a family takes you to about 33. In my day it was about 23. However, the sector is really not suitable for families with children who want to put down roots and need security. You want to send your children to a school knowing that you will not have to move them to another; you want to get settled in a community. For families, relatively long-term security is important and the private rented sector is not suitable to perform that task. Someone said that long leases are quite popular at the top of the market; there, you blur into home ownership.
We have done well in recent years in increasing the amount of ordinary rented housing for singles and mobile people. I have a son who recently left Manchester university, and he and his partner have been looking for a flat to rent in Manchester. I can remember the days when if you wanted to rent a flat you rushed to the phone box and tried to ring the landlord before anyone else, almost certainly to be told, “No, it’s gone.” My son and his partner were taken around in a car by the agent and shown 25 properties. It is another world. In the market they are going for in Salford quays and Manchester the cost is about £600 a month for the two of them, and they took one at £620, which is not a bad price.
We have pretty quickly created a new private rented market in those city centres that did not exist 10 or 12 years ago. That is great for people like my son and his partner, but later on they will want to buy because they will want a family home and not want the insecurity of being tenants. They will want the investment things that go with owning and eventually paying off a mortgage and having something for their children. That is just the reality of it, I think.
Lord Best: A really important part of that is whether, in the future, we build a mix of incomes into what we provide. The kind of ghettoisation of social housing has been almost criminal, has it not? People’s life chances have been diminished by the way in which we have done it. Large estates, where only poor people are allowed, or only people who have problems in many cases, have not been a good policy. We know that now, and the tide has turned.
On how to achieve that mix, sometimes the mix is totally artificial and slightly silly. Hanover has a block of 50 apartments at Imperial wharf, where the private sector is selling for an average of £640,000 a flat. The social housing is there, but it is actually just a mechanism for getting your hands on some land. We cannot really call it a mixed community when there are homeless families and the average price is £640,000. But for the generality of new schemes, we will try to ensure that there is a jumble of people, some of them in the middle between the owners and tenants and no one quite knows, and that tenants have the opportunity not to be tenants by buying some shares and moving up the ladder.
We have got to get better at allowing people to staircase down, as we call it; a lot of shared owners will get into problems when the interest rates go sneaking up in the next few months, their early offer is over and they have to pay more for their mortgages. We will have to be clever in allowing people to staircase down rather than make them homeless, so that they stay there as tenants, which they can afford, not as homeowners, which they no longer can. You are absolutely right to ring the warning bell.
Might builders rush out there and do it all again? I think that the answer is probably not. Probably the lesson has been learned and we will create things that are sustainable as communities, not just a bunch of houses.
Q 188 Paul Holmes: You touched earlier on the Secretary of State, through the regulator, being able to tell RSLs what to do, and that they might therefore become public bodies. What specifically do you think of the idea of the regulator being able to tell housing associations that they should deliver healthy living policies, or get people back into work, or other such things? They are not receiving public money to do that; they are receiving it specifically to build houses.
Lord Best: I think one has to be a bit careful with using the regulator for that purpose. It is one thing to be sure that you are protecting the existing and future tenants and that their interests are being well served; it is another to use the regulator as a tool of public policy because there is something else on your agenda. “Antisocial behaviour? Let’s get these people, for free, to do a lot of the work that might have been done by other agencies.” On worklessness, housing associations, at least the good ones—the RSLs vary on a spectrum of nought to 100, even though there is a lot of regulation and you would have thought that they would all be standard by now—are getting really good at tackling worklessness issues. I am so impressed. The Housing Corporation has a gold award scheme, and for the third year I am a judge. This year a prize goes to the one that is doing most to get people into jobs on the estates and in the area where they are working. Some are doing really fantastic things. However, to get the regulator to step in and insist that such policies be carried out would be totally counter-productive. Hackles will rise.
There are boards of housing associations; they are responsible people—15,000 people are on the boards of housing associations. By all means give them incentives and bright ideas and use the good will that is there, but we ought to back off from using regulation. Some modest amendments will probably be necessary.
The Chairman: Lord Best, we are very grateful for your time. You will have heard us say earlier that the Hansard report of this sitting will be published. If there is written information that you would like us to have, please let us know.
May we have the next witnesses?
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Thank you for joining us, ladies and gentlemen. In the interests of speed and efficiency, I will indicate who is now with us: the Minister for Housing, Yvette Cooper; the Under-Secretary of State, who has left us to join the hunted, Iain Wright; Philip Cox, the director of the Homes and Communities Agency implementation team; Peter Ruback, the deputy director of the affordable housing division; and, Anne Kirkman, the deputy director of the decent homes, housing finance and mixed communities division. We are very grateful to you for joining us so, without further ado, we would like you to go into bat and we will bowl the first question at you.
Q 189 Alistair Burt: Minister Cooper, when talking about the use of surplus land to build eco-homes and eco-towns, you seem quite confident that 200,000 new homes can be built on surplus public sector land by 2016. That has been said by the Department. If you are confident of that, is there any reason why you have taken compulsory purchase powers for the new agency?
We have had some discussion already about the agency’s powers, and I think that it will be an important issue in our scrutiny of the Bill. Could you just help us out on the issue of why compulsory purchase powers are needed, when there appears to be sufficient surplus land to do the job?
Yvette Cooper: May I say that it is a pleasure to be here, Mr. Gale? This is the first time that I have given evidence to a Committee in this format and I hope that you will guide me on procedure. I also draw the Committee’s attention to the written ministerial statement that I made yesterday, which includes some provisions that have relevance to the Bill. As and when such questions come up, I will refer to it, but I wanted to make sure that everyone was aware of it.
Q 190 Alistair Burt: I am sure that you would confess to a little disappointment about the Government’s performance over the past 10 years in delivering the sort of housing record that you would like to have achieved by now. It is quite clear that you are setting quite a lot of store by the agency to deliver a step change in the number of houses to be built. It is one of the great master plans for the future. Why do you think that the agency can deliver when, up to now, the record has been relatively poor?
Yvette Cooper: House building is at its highest rate since 1990, and there has been a significant increase over the past few years. Significant work is under way, particularly in growth areas.
Some local councils are still resistant to additional homes. It is important that every part of the country recognises the need for more homes. The HCA—and we have not had this before—brings together public sector land and public sector grant for housing. We are therefore bringing together procurement money for new and additional housing and public sector land. In addition, we are bringing housing and regeneration together more effectively.
Traditionally, housing was seen as the role of the Housing Corporation, and the role of English Partnerships as more about regeneration, although recently it has become more about land for housing. It is important to link housing and regeneration functions effectively, particularly in the light of the John Calcutt review, which made some interesting proposals on the potential for using land previously assessed as low-value brownfield land, and increasing its value to use it to support more housing. Bringing together those land and housing functions and the land regeneration and procurement functions gives the HCA considerable potential.
Q 191 Alistair Burt: Sounds good. Do you think in that case that you would follow the recent recommendation of the Public Accounts Committee and give the Thames Gateway to the HCA to run?
Yvette Cooper: Clearly the HCA plays an important role in the Thames Gateway, because we are talking about procuring substantial numbers of homes and affordable homes there. There are also land issues in the Thames Gateway, and there is a series of areas where the functions of English Partnerships and the Housing Corporation are relevant. That, too, is part of the HCA’s remit. There are other areas where we have consulted on growth area functions, the decent homes work of the HCA, and other issues where we think there are strong reasons for the HCA to play a role. We will confirm our views on precisely what will be covered by the HCA in time for you to have those debates in Committee. You will appreciate that we are hoping to make an early appointment of the chief executive of the HCA. As part of that programme we would like to set out the other things that will be covered by the HCA. That gives us an opportunity to look at its role regarding the Thames Gateway, too. Clearly, many growth area functions and Thames Gateway functions are similar.
Q 192 Alistair Burt: Let me press you on that. The capability review of the Department was published in December 2006. It identified the Department’s weakest area as delivery. Bearing in mind the performance of the Department on the Thames Gateway over the past several years, what gives you any confidence that it is any better for the Department still to run it than the agency? Why can you not say that you are going to give it to the agency?
Yvette Cooper: The Department’s record on the Thames Gateway is extremely strong. Look at the changes that have taken place in the Thames Gateway. Even over the past 12 months, we have seen the go-ahead for Crossrail, including the spur down to Abbey Wood, in which the Department has been very closely involved. It includes the channel tunnel rail link and the progress on the London Gateway, including the new port. It also includes the go-ahead for the Ebbsfleet planning permission, which was possible only as a result of close working between the Thames Gateway team in the Department and the Department for Transport. We have also pulled together the delivery plan, which has involved a lot of cross-Government working to agree budgets across Government Departments.
I agree that we are now moving into a different phase. Having got that cross-Government delivery plan and the budgets in place, we need to move on to the practical delivery implications, which means a much stronger role for the HCA. As I have said, however, we will set out its final functions in advance of your detailed consideration.
Q 193 Alistair Burt: I am grateful for that. Finally, you slightly surprised me with your praise for the performance of the gateway over the past year or so. If that is the case, why has the chief executive been sacked?
Yvette Cooper: You will appreciate that it is not appropriate for me to comment on departmental staffing arrangements, which are a matter for the permanent secretary. Judith Armitt, who was the chief executive of the gateway, is still an employee of the Department. Those are internal civil service staffing matters.
Alistair Burt: I don’t think you will be able to get away with that for long, but thank you for your answer.
The Chairman: Order.
Q 194 Sir George Young: I wish to raise other issues later, but I would like to follow up what Mr. Burt’s question about compulsory purchase order powers. As you said, the HCA is a merger of English Partnerships on the one hand and the investment wing of the Housing Corporation on the other. English Partnerships has CPO powers and planning powers, but the Housing Corporation does not have either. Do you think that the English Partnerships-type powers—planning and CPO—of the new, merged body will move across to the conventional housing function discharged by the Housing Corporation, or do you think that those powers will continue to be used mainly in relation to scenarios where English Partnerships would intervene? That is a matter of enormous sensitivity to the local authorities. Have I made the question clear?
Yvette Cooper: Not entirely. Would you give me an example of the kind of case to which you are referring?
Q 195 Sir George Young: At the moment, there is no question of CPO powers or planning powers being exercised by the Housing Corporation in relation to a straightforward housing scheme, because it does not have them. When English Partnerships moves in on a major infrastructure scheme, it needs CPO and planning powers. Is it your intention that when the HCA is confronted with what I would regard as a straightforward housing scheme it should use the CPO and planning powers and take them away from the local authority, or would those powers continue to be discharged, as they are at the moment, by the local authority?
Yvette Cooper: We would expect the local authority to use its planning powers and to play a strategic housing role. We want the local authority to lead on the appropriate development of housing, the appropriate sites for housing and the need for affordable housing. The HCA will have a series of roles, including the distinct roles of existing bodies. The Housing Corporation’s role is one of funding. It does not undertake the delivery of housing schemes in the middle of Wakefield, Gloucestershire or wherever; it funds them. It provides funding to housing associations or developers conducting those development programmes. We would expect there to be a whole series of areas where that relationship pertained. There might be an application for funding from a housing association, from a council, or from a joint venture for funding, and the HCA will provide that funding. In other cases, English Partnerships would previously have been the developer of a piece of public sector land, or would hold the ring and deal with development plans for it. Now, the HCA will lead the development.
The real gain is that the agency is more than the sum of its parts. It can operate as a partner in support of local government. Local government will take the lead, and draw up what it wants to achieve in its area, such as the development of an old coalfield site on which the HCA is working, or the development of areas where direct funding is available. There will be huge potential, as local government can work with the HCA and draw on its skills. There are some areas where local authorities have excellent skills and are extremely good at delivering development. For example, in Greenwich, there are lot of skills within the relevant department. However, other areas have much weaker skills, and it is an added advantage that they can ask the HCA for help, advice and expertise on how to take forward some of those programmes.
Sir George Young: But if you want to work in partnership with the local authorities against that background, you would not want to take away their planning powers and vest the planning powers for a particular project in the Homes and Communities Agency.
Yvette Cooper: No, you would not expect to do so. There is only one example of planning powers being vested in English Partnerships, and that was done in close partnership. The decision to give English Partnerships development control powers was made in partnership with Milton Keynes council. We have always envisaged that this is about building supportive relationships and working with the local authority in the lead, which will provide flexibility. Special arrangements can be put in place in the unusual circumstances that apply in Milton Keynes.
Q 196 Mr. Raynsford: In describing the role of the Homes and Communities Agency on previous occasions, you have emphasised the fact that it would carrying forward the powers of the Housing Corporation to ensure delivery of the Mayor’s strategy in London. It is fine to work in partnership with authorities that want partnership, but there are obvious issues about what happens when individual authorities do not perform, or when the Mayor is concerned that they are not delivering satisfactorily. How do you think that the agency can balance the two separate roles of working in partnership yet being able to intervene when necessary, if there has been a failure to deliver by the local authority?
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Yvette Cooper: The primary starting point is the planning system, and in the obligation of local authorities to ensure delivery under that system. There are issues on what happens when cases go to appeal, if local authorities do not do their job through the planning system. Equally, we think that there are special arrangements for London, which were set out as part of the revisions associated with the Greater London Authority Act 1999. The Mayor has a responsibility to deliver his overall strategy. The Act contains specific additional powers that recognise that and allow the Mayor to step in where there is under-delivery against the strategy on the housing and planning sides.
It is right that the Homes and Communities Agency should be tasked with delivering that strategy for the Mayor. Additional things can be done, for example, with public sector land and by direct work with housing associations in areas where the council or borough is not doing its bit to support housing. The Homes and Communities Agency will be able to ensure that there is work to try to make progress on homes in relation to land, with housing associations and, in London, particularly with the Mayor.
Q 197 Andrew George: It may be that I am catching up with others, but I just want to be clear about any residual powers of English Partnerships for the delivery of industrial space, workshops and other things for which it has provided in the past. I also want to be clear about whether those powers will be transferred into the new, amalgamated body. If I am right that the powers will indeed be transferred, then given your statement that the new body is a housing body, to what extent will that mean that either the past powers of English Partnerships to make proposals for industrial infrastructure and workshops will be suppressed by the activities of the new agency or the new agency will be diverted into that territory? To what extent can those functions be balanced?
Yvette Cooper: We have to address regeneration, as well as housing. Work such as the coalfields programme—part of English Partnerships’ work—has been extremely important as a regeneration role. As I said previously, we underestimate the potential of linking regeneration towards delivery of housing. Regeneration is critical in its own terms, but it will not be possible to deliver all the homes that are needed unless there is that link.
We have referred specifically to the Homes and Communities Agency rather than just the homes agency. The expectation is that all the regeneration roles of English Partnerships will be carried forward into the Homes and Communities Agency. Yesterday’s statement discussed the Homes and Communities Agency being able to look at low and mixed-income communities and what can be done among existing communities. That is about regeneration and linking housing and employment and so on.
Q 198 Andrew George: Does that mean that Ministers will provide indicative budgets and suggested silos on the proportion of the Housing and Communities Agency that is directed towards housing and the proportion that is directed towards other regeneration functions? Or will you leave it entirely to the agency itself to determine those matters?
Yvette Cooper: Clearly, funding priorities and similar matters need to be set out at a ministerial level, but we take advice from a range of bodies and organisations. For example, yesterday we set out the regional housing pot based on advice from regional housing boards. That includes the funding for new affordable housing, and funding that will go on private sector renewal, much of which is about regeneration.
At this stage, we cannot be precise about exactly how the budget for the new agency will be set—how much will be prescribed, and how much given as flexibility. We need to look carefully at where we can get synergies between the budgets for the different organisations and what the flexibility will be. The huge potential gain is being able to look at those budgets together, but it is probably too early for us to specify precisely on that.
Iain Wright: Following on from what the Secretary of State was saying, I draw the Committee’s attention to clause 2, which lists the objects of the HCA. It states quite clearly that they are
“(a) to improve the supply and quality of housing in England,
(b) to secure the regeneration or development of land or infrastructure in England, and
(c) to support in other ways the creation, regeneration or development of communities in England or their continued well-being,”.
That is not “either/or”; it is “and”. Linking in with what the Secretary of State has said, it is the role of the new chief executive and his or her board, when they move forward, to decide upon allocations.
Q 199 Andrew George: But if the rationale and drive behind it is the target of building 3 million homes or whatever it happens to be, will that not mean that the economic regeneration roles, the residual roles of English Partnerships, will be very much a second priority and will be lost in the development of the agency?
Iain Wright: No, absolutely not. I am very clear on that. As the Minister has already said, it is clear in the name—the Homes and Communities Agency—that the relationship between housing and regeneration is absolutely key. My personal feeling—my boss will tell me off if I am wrong—is that if we plonk 3 million homes in a field in the middle of nowhere and then pat ourselves on the back, it would be the wrong approach. We must have integrated sustainable communities with viable, regenerative and economic bases, which is what the agency can do.
Q 200 Margaret Moran: Forgive me if I am wrong, but looking at the powers of the HCA, I could not see anything relating to an equality duty. Perhaps I have missed it, but if it is not there, why not?
Secondly, there is a great deal of interest in community land trusts. Perhaps you can clarify your definition of them, as there is a momentum to include something along those lines within the Bill. Perhaps you will also clarify your advice on the pilots that are being formulated at the moment.
Yvette Cooper: I have asked one of the officials to respond on the equality duty and the detail of the legislation.
We are clear that community land trusts have considerable potential in terms of providing more affordable housing, and we strongly support them as a model that can be tried in different areas. We have 14 pilots under way—seven in rural areas and seven in urban areas. The interesting question is whether they can be made to work if the land is not gifted in for free. If the land is gifted for free, they are clearly a successful way of providing affordable housing.
We are using the pilots to look at how they can be made into viable models—we think that that is possible on the basis of some of the work that comes forward through the models and some of the proposals that are currently under way that look at different ways of doing that. It is something that is currently being supported. English Partnerships is involved, but the main engagement with the community land trust at the moment is through the Housing Corporation, which funds some of the pilots. The agencies have the ability to do that within the existing framework. They are actively doing it, and we would like to see them do more. The HCA already has the powers to promote community land trusts, and we expect it to do so.
Philip Cox: I would need to check, but I think that the Homes and Communities Agency would be a public body and, therefore, governed by the usual requirements of equality set out in other Acts of Parliament. That is where the equality duty comes in.
Q 201 Grant Shapps: I want to turn your attention to targets and local delivery.
It is a fact that the Department has had a problem with delivery, which has been recognised in a variety of reports. In particular, we have already heard about the Thames Gateway, which both the NAO and the PAC criticised for having a lack of direction. Delivery there has been a problem.
The Bill’s approach seems to be to create high targets and expect them to be delivered. Yet the history is not favourable. In the past 10 years, about 146 housing units a year have been delivered, as opposed to 175 in the previous 18 years. We know that fewer social housing units have been delivered every single year in the last 10, than under any of the 18 years before. Am I right in thinking that your analysis is, therefore, that a more powerful central body is required to get this delivery through, which would be the HCA?
Yvette Cooper: Nice try, Mr. Shapps.
As we are clear, the level of house building has increased substantially over the last few years and is now at its highest level since 1990, which is important. It is also the case that we have seen substantial increases both in the level of investment in new social housing, and also in the level of delivery in new social housing.
It is certainly true that the cost of social housing in the early 1990s was much lower and, therefore, the cost of procuring and building social housing for the public sector was much lower at that time. That was, however, as a result of a quite devastating housing market crash triggered by the Conservative Government at the time. Perhaps the lesson on housing delivery from previous Conservative Governments is not one that we should learn from or should be citing in the Committee’s discussions today.
However, there is a question about how to move forward and achieve increased housing delivery in the future. It is right that local councils need to take some responsibility for that. It is unfortunate that a series of, particularly Conservative, local authorities have been strongly resisting housing delivery and, indeed, attempting to frustrate such delivery in their areas. That is clearly of concern to us, and I hope that it concerns Conservative Front Benchers as well. We want to see all local authorities responding to the need to deliver more homes in their area and we think that the HCA is the right way to help them do so. I am slightly puzzled by Mr. Shapps’s reference to targets in the Bill. I wonder to which sections of the Bill he was referring when he was talking about targets.
The Chairman: Order. We are here to discuss the Bill. I appreciate that we are in a party political arena and that the witnesses on this occasion are politicians, as are those on the Committee, but it is as well that we all remember that the purpose of these Committees is to seek to improve the legislation through genuine questions and genuine answers. I am not certain that seeking to score party political points, either on the part of the witnesses or of members of the Committee, will serve any useful purpose. Perhaps you could bear that in mind.
Q 202 Grant Shapps: I quite agree, Mr. Gale. The point here is to dig down to what is below the surface. The Bill is, after all, the upshot of the Green Paper, which is specific about the targets. I understand—perhaps you will correct me if I am wrong—that the HCA is the delivery mechanism for the targets that were discussed in the Green Paper.
Yvette Cooper: Certainly, we expect the HCA to work very closely with local authorities in order to deliver the extra homes that we need. Mr. Shapps’s initial question suggested that the Bill was about setting targets, and I was not sure which clause he had in mind when he made that reference.
Q 203 Grant Shapps: If you are clarifying that the Bill is not designed to deliver the targets discussed in the Green Paper, that clarifies a significant area of interest, because many of us feel that the HCA has merit and can do some good things. It would be really interesting to understand the motivation for framing legislation in that way and that is why this sort of witness investigation is a proper process for understanding the direction of the Bill. To what extent do you believe that the failure to deliver the Government housing targets over the past decade has been the result of a lack of central control and central power, in appropriate circumstances, as you see it, to ride roughshod over local communities?
Yvette Cooper: I am not sure which targets you have in mind when you say they are not being delivered, because the current targets that are in regional plans across the country are more than being delivered. At the moment, local authorities are delivering more than the targets in the current regional plans. We believe that by 2016 they should be delivering 240,000 homes a year, which is an increase from the previous target of 200,000 a year by 2016. This far, there has not been any under-delivery against the targets that have been set for 2016, because, as I recall, it is not yet 2016.
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Q 204 Grant Shapps: You said 200,000 houses by 2016, but I understood that it was 240,000.
Yvette Cooper: Yes, that is the new target. As I have said, we have set the target of 240,000 homes a year by 2016, up from the previous target of 200,000, but, of course, it is 2007.
Q 205 Grant Shapps: At the moment, the Government are missing the house building target that they have had up to this point. For example, we are nowhere near the 200,000 figure.
Yvette Cooper: Also, as I understand it, we are nowhere near 2016.
Q 206 Grant Shapps: No, but 2016 is 240,000, not 200,000.
Yvette Cooper: I shall say this very slowly: the previous target was 200,000 homes a year by 2016. Today is 13 December 2007.
Q 207 Grant Shapps: Was it your intention as a Government to build fewer houses every single year under this Administration than under the last?
Yvette Cooper: I am happy to return to a discussion of house building under the previous Government, if you will allow me, Mr. Gale, but I do not want to try your patience any further.
The Chairman: Order. I am not sure that I will.
Yvette Cooper: Let us be clear: we have set a target of 240,000 homes a year by 2016, which will require a lot of local councils across the country to support considerably higher levels of house building than they currently are.
Lyn Brown: My question is not on this point, Mr. Gale.
The Chairman: Briefly, Mr. Burt, on this point.
Q 208 Alistair Burt: The evidence given by Sir Simon Milton of the Local Government Association indicated concern about the whole area of taking planning powers away. He stressed the point that councils want a greater involvement than that on the face of the Bill. Will you publish any guidance about precisely how or when the agency will step in and take powers away? How can we reassure councils that that is not going to be an arbitrary process? How can we deliver for the LGA across the country some certainty about when decisions will be made?
It is one thing for a community to say, “Look, we really do not think that this is right for our area,” and quite another thing for the Mayor of London to say that he does not want affordable housing on the development site at Victoria station, even though the local council does, and for legitimate expressions of local feeling to be overridden. How is that difficult judgment to be made, and are you going to publish some guidelines to let councils know how that will be done?
Yvette Cooper: Let us be clear: we would not expect the HCA normally to be the planning body, and English Partnerships, as we speak, is only using that power in one area of the country, and that is in close partnership with the local authority. There are potential partnership arrangements that you might envisage. We have also simply tried to replicate the existing powers from English Partnerships and the other organisations that are effectively being pulled together in order to have the same flexibility to do that kind of thing.
So, there are also provisions in the Bill about the circumstances under which the Secretary of State must take the decision. It is not a decision that the HCA can take. The Secretary of State must take the decision under particular circumstances, which includes making the designation orders. A whole procedure must be gone through there, which includes local authority consultation. It is all set out in clause 13. Did you want to add something, Iain?
Iain Wright: I want to take Mr. Burt back to precisely what Sir Simon Milton said on Tuesday. It was in direct answer to one of my questions, in which I was saying that in the era of a London mayoral system and of multi-area agreements, a local authority may be dragging its heels. He answered:
“You painted a scenario in which one authority was seeking to drag its heels. In those circumstances, I would wish to understand why that local authority felt differently from the other local authorities in the agreement and what obstacles and blockages were making it feel that more housing was inappropriate—it would almost certainly be because of a lack of necessary infrastructure in that area. In those circumstances, I would expect the HCA to act positively to remove those blockages”.——[Official Report, Housing and Regeneration Public Bill Committee, 11 December 2007; c. 9.]
I see that as the relationship between the HCA and the local authority as well. It is a one-stop shop; a repository of good talent and skills to allow local authorities to step up to the plate in order to ensure that their housing needs are addressed.
Q 209 Alistair Burt: That is helpful. It gives us a sense that, if those powers were to be used more than rarely, then something would have gone wrong. Is that your intention, Mr. Wright?
Iain Wright: I certainly believe that the relationship between the local authority and the HCA is crucial, and it must be a proactive and positive relationship. It cannot be a top-down imposition. It needs to be a constructive, positive relationship in which the agency says to the local authority, “How can we help you? What are the blockages”—to use Sir Simon’s term—“in terms of infrastructure? How can we help to remove those?”
Yvette Cooper: I do not think that anyone would regard Milton Keynes as a situation in which something has gone wrong. The arrangements were put in place because it was felt generally to be best and was worked out with the local authority, given the history of Milton Keynes as a new town.
Q 210 Alistair Burt: So your clear defence is that this is almost last resort stuff, and that if the powers are used extensively to take planning powers away from local planning authorities, something will have gone wrong?
Yvette Cooper: I do not think that in Milton Keynes it was viewed as a last resort. So I think that those are not what you would expect to be the usual arrangements. They were used in Milton Keynes because there are unusual circumstances there, due to the nature and scale of the development, the ownership of the land and the history of Milton Keynes. The right way to see it is that it would not be expected to be the normal arrangement that the HTA became the planning authority, but there may be specific arrangements, such as those for Milton Keynes, for which it might be appropriate.
Q 211 Lyn Brown: In the evidence sessions and on Second Reading, people have noticed certain omissions in the Bill, such as overcrowding, the review of the private sector, and houses in multiple occupation. Yesterday, when you made your statement, you talked about a review of the private sector and also indicated a review of the statutory overcrowding standards. Does that mean that you will look at multiple occupation in housing, because that would certainly be welcome in my constituency? I also wonder what the time scales might be, and whether there might be Government-backed amendments to the Bill to deal with those issues.
Yvette Cooper: I will deal with the issues of overcrowding and the private sector. Our view is that there are already powers to increase the overcrowding standards, and we took them, I think, in the Housing Act 2004. The children’s plan sets out our intention that we need to increase the overcrowding standard to the bedroom standard. Yesterday, we set out an overcrowding action plan, which will work with 38 local authorities that account for about 60 per cent. of the overcrowding problem. We would expect those local authorities immediately to start operating to the bedroom standard, because they are getting extra funding to work on the issue, but we will work with them to look at the costs and time scales and to determine the appropriate timetable for moving to the bedroom standard right across the country and for using secondary legislation to raise the overcrowding standard to achieve that. That is the point on overcrowding.
On the private rented—
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Sitting suspende d for a Division in the House.
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On resuming—
The Chairman: Order. In her opening remarks, the Minister referred to a speech that she made yesterday. The text of that speech has now been circulated to all members of the Committee and you should find a copy of it in your place. If there is a further Division, I shall terminate the sitting. We are allowed only 15 minutes of injury time, so if there is a Division within the last five or 10 minutes of that time, it would be pointless to bring everyone back again. That is the state of play as I see it. I ask Lyn Brown to pick up the questioning where she left off.
Lyn Brown: Minister, you were saying that there was no need for primary legislation on the statutory overcrowding standards. I think that you were going on to speak about the private rented sector, and I hope that you will address HMOs and the point raised in these evidence sessions that that debate should be not about property, but about the number of people occupying space.
Yvette Cooper: In yesterday’s statement, I said that we wanted to conduct a wide-ranging review of the private rented sector. The Housing Act 2004 included a series of measures on HMOs and other matters in the private rented sector. It is right to review the workings and implementation of those measures and to have a more wide-ranging review of the private rented sector. We will set out terms and conditions in the new year and give a bit more detail about it. We do not anticipate making any further changes to this Bill linked to the private rented sector, as we do not want to pre-empt the work of the review, which will look at the private rented sector as a whole.
Lyn Brown: May I push you on the time scale?
Yvette Cooper: We expect it to report during the course of next year. We have not set a time scale, but we will do so early in the new year.
Q 212 Mr. Love: Minister, I am sorry to take you back to your answer to an earlier question about community development trusts—I had hoped to get in before now—but you have said that one of the central problems in making it all stack up is the disposal of land. There has been quite a lot of discussion about what is in the Bill in relation to “best consideration” for land. Has any thought been given to a more appropriate wording, which might help in situations concerning community development trusts and other circumstances within the public sector when “best consideration” might not be the most appropriate way to ensure the development?
Yvette Cooper: The wording used in the Bill refers to the previous bodies; for example, English Partnerships’ consideration includes the same “best consideration” language. Similar wording applies to housing associations and to local authorities, too. It allows you to look more broadly than simply at money and the market value. On the basis of my detailed discussions with our legal advisers, I believe that the explanatory notes are not accurate, as they simply refer to the market value, when it seems to me that “best consideration” goes considerably beyond that. It allows you to take market value into account and might also include other issues such as the public benefit, and so on.
That is our view about the legislation, which simply replicates the current arrangements under which English Partnerships is already allowed to operate. That was our intention. We are happy to look at it further, but that remains our view about the best arrangement at this stage.
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Q 213 Mr. Love: A witness from the Chartered Institute of Housing suggested that we consider
“new investment frameworks in which the state can look at investments rather than grants and see a return on its investments over a period of time.”——[Official Report, Housing and Regeneration Public Bill Committee, 11 December 2007; c. 23, Q34.]
It would be an entirely different way of looking at it to consider the investment return rather than saying, “One person’s grant is another person’s cost increase.” Is there any possibility that we could have not only a nuanced shift but a substantial shift in order to try to create the opportunity for greater development?
Yvette Cooper: Interestingly, I think that English Partnerships already takes a long-termist view when it is looking at the returns from its land, at how to dispose of its land and what to do with public sector land in the public sector interests. For example, the wave of NHS sites that were transferred over in the past few years have been used to build homes under a first-time-buyers initiative, where you effectively get deferred receipts as part of those schemes. There are a range of ways in which English Partnerships already operates in a sensible, long-term framework for getting the best benefit for the community, for the public interest. The legal framework within which it operates seems to allow it to do that.
We are happy to keep looking at this issue further because the CIH have raised it with us, but our view at the moment is that English Partnerships currently has a good framework, and that we should transfer that to the new HCA. Part of this debate has been triggered by the fact that the wording used in the explanatory notes is rather different and does not reflect the text of the Bill itself.
Q 214 Sir George Young: Can we move on to social mobility? Notwithstanding the devastating attack on my stewardship as Housing Minister, I recognise that much that this Government have done in housing is good. However, one of the failures has been on tenant mobility. In 1997, the Government inherited a national mobility scheme and social tenants, be they local authority or RSL, could move to other parts of the country because somebody was operating a centralised scheme. That collapsed, but this is not the time for a post mortem. The Government had known for some time that that scheme was going to collapse.
I was reading what the Minister said yesterday, and I find it a very disappointing response indeed. Apparently, all we are getting is that the Government will be working with the Housing Corporation, key social landlords and authorities across the country on how they can start to build a national programme to give people better choice about where they can move to. Do you agree that, given where we were four or five years ago, we do not seem to have got anywhere since I secured a debate on the subject a few months ago?
Yvette Cooper: I think that there is a problem about mobility around the country. There is also a problem about mobility even within areas. Even the national system that existed did very little in terms of transfers, and there were a series of problems for some time. Part of that was about the fact that we need more social housing, which is an underpinning theme, but it was also about reduced mobility even within local areas. There are three issues: one is mobility within a district or a local area; the second is immediate cross-border mobility and being able to move within a sub-region; and the third is the national one.
The choice-based lettings schemes, which have proved effective, provide a format for supporting greater flexibility. It gives people a chance to choose, rather than a system of allocations, where you are told by a housing officer, “Right, it’s this one, that one or you’re out” and there is no other choice at all. You actually have more chance and choice to bid, and that provides an opportunity to have much greater flexibility within areas. That is why we said that we want to change the reasonable preference categories, particularly to support those people who want to move from larger properties into smaller ones.
There ought to be much greater flexibility across local authority boundaries. Within the sub-region, they ought to be able to operate sub-regional choice-based letting schemes. That would give people much greater mobility within the sub-region, which is where a lot of moves—in particular, a lot of family moves—take place. That will be supported by the £3.8 million that we announced in the statement yesterday. That should allow all local authorities to be part of a sub-regional choice-based letting scheme by 2010. That would give all tenants the chance to be able to move within the sub-region. You are right that that is not enough. You have then got to have the national arrangements in place, but it seems to me that choice-based lettings, rather than the traditional national model, are a better way. You still give tenants a bit of choice. If they want to move from London to Wakefield, for example, or Wakefield to London, you actually give people choice. Unlike in the previous mobility arrangements, you build it into the choice-based lettings system. That seems to me to be a more sustainable long-term arrangement than the things that have been attempted over the last few years. That is the arrangement that we want to build on. We have work under way at the moment with the Housing Corporation, but what we have not done—I agree with you—is to set out a final framework that solves the problem in any way.
Sir George Young: I will not pursue this because we will be able to do so in Committee, but I just make the point that 10 years ago we had a national scheme. By 2010, all we will have is a sub-regional scheme. I regard that as a disappointing step backwards. I think that the Government will have to come up with a better strategy for dealing with tenant mobility than the one that they have at the moment.
Q 215 Margaret Moran: I am afraid that we are co-conspirators, having served on the homes board for many a year. What evidence base have you for suggesting that the choice-based lettings scheme, even on a sub-regional level, will do some of the things that are at the heart of the Bill, such as encouraging more employment and employability, sustainable communities, and so on? Where is the evidence base, compared with the home scheme, for example?
Yvette Cooper: The choice-based lettings scheme alone will not attempt to do everything in terms of giving people access to employment.
Margaret Moran: No, but mobility is about that.
Yvette Cooper: Mobility is about a series of things. Some of it is about being able to get priority. As well as changing the reasonable preference for older people who want to move to smaller properties, we want to consult on changing the reasonable preference schemes for people who want to move for work reasons. That is about the legislation and the legislative framework, not about the service that underpins it.
What the choice-based lettings scheme does that is different to the previous scheme is that by 2010 you will be able to go into what is effectively just like an estate agent and look at homes across the sub-region. A choice-based lettings unit has just opened in Castleford in my constituency. From the outside it looks just like an estate agent. You have all of the pictures in the window of the different houses. That is a very different way of choosing where you want to live. With that kind of mobility linked to it, there will be a much stronger emphasis on choice and on what it is that tenants want. To give tenants that kind of choice within the sub-region seems to me to be very valuable. That is not something that they had through the old scheme.
I agree with you, however, that what the old scheme did provide was much more national mobility than is currently provided, because of the events that we saw in the past 12 months. You and I can have a more detailed conversation about that, because there were a series of particular problems. The potential of getting this right is that we can build on the choice-based lettings approach and on the idea of tenant choice, rather than people having somebody else making the decisions for them. Empowering tenants should be at the heart of increasing mobility within the sub-region and at national level.
Iain Wright: The precursor to all of this, which I am going to have stamped on my head, is that we need to build more homes. To ensure that the jigsaw works, the first point is whether we have suitable accommodation for older people. Will they have the bungalows, the adapted accommodation or whatever, in order to be able to move from that three-bedroomed property that might help a family? Local authorities are key in helping to assess those needs with their strategic housing role. As we move forward, the agency will be important in helping them step up to the plate.
Q 216 Andrew George: I want to come back to what is perhaps my obsession with English Partnerships and its industrial workshop role. This is really supplementary to the answers that I received earlier. My experience of English Partnerships from my part of the world is that it develops workshops, particularly in areas where the private sector would not otherwise provide them. Given its clear priority and the budget priority of providing housing and addressing housing concerns, to what extent will this agency be able to provide any kind of attention to economic development issues and workshop development? I appreciate what Mr. Wright said—they were warm words and they were sincerely expressed—but is it possible to set out a notional proportion of the overall budget that will go towards industrial and workshop development in the next few years? Do you have any idea what proportion of the available money will be directed towards activities that are not directly related to housing? Of that money, how much will go towards workshop development?
Iain Wright: I reiterate what I said to you about clause 2 about regeneration activities, although perhaps we can tease this out more during the detailed, clause-by-clause deliberation. I hope I can give you some comfort by saying that English Partnerships regeneration programmes will be continued in the new agency. I cannot give you a reassurance in terms of a precise proportion, but this will certainly be an important part of what the agency does.
Q 217 Andrew George: But would it not be better to separate out those functions and find a more appropriate agency through which they could be delivered, so that this body could establish its primary priority, which is housing? The important work that English Partnerships does in providing workshops in areas where the private sector cannot do so could therefore continue and would not be lost in the overall objectives of the HCA.
Iain Wright: No, I do not agree with that. I have mentioned the agency and the local authority, but another part of this key governance arrangement—this almost triangular relationship—will be the RDAs, with the sub-national review and the importance of local authorities in pushing economic development. The agency will play a crucial role in that and will take over the English Partnerships role. How that will be reconfigured as part of the new governance arrangements under the sub-national review is something that we will see as we move forward.
Q 218 Grant Shapps: Moving on to another issue, a question that has come up repeatedly is whether the Bill deliberately tries to redefine social housing and affordable housing. For the sake of absolute clarity, I will read the definition in the Bill, because it appears to change the definition that has made sense to the housing industry for the past three or four years. Under the heading “Basic principle”, clause 67(1) states:
“In this Part ‘social housing’ means...low cost rental accommodation”.
That is further defined in clause 68, which says that such accommodation
“is made available for rent...the rent is below the market rate, and...the accommodation is made available in accordance with rules for eligibility designed to ensure that it is occupied by people who cannot afford to buy or rent at market rate.”
So the Bill defines social housing as affordable housing is defined today. Can we clarify whether that is the intention in the Bill or whether it is a drafting error?
Yvette Cooper: Eh?
Grant Shapps: Do you want a bit more clarity on that?
The Chairman: Order. I think the Minister would like a bit more clarity.
Q 219 Grant Shapps: At the moment, when we talk about social housing, people understand what we are talking about, do they not? If you talk about affordable housing, you are talking about all kinds of housing, including registered social landlords, housing associations and so on. Clauses 67 to 69 appear to redefine all housing as social housing, and that matters, because it would confuse the current understanding. Are you clear? I understand why it is difficult.
Yvette Cooper: Let us be clear about the intention that we have set out. The idea is simply to capture what social housing is and to write it down; it is not in any way to change the definition of social housing. We have been very clear about the amount of social housing we expect to provide. My colleague, Mr. Wright, has already said that the definition in clause 68(c) should be clarified because it talks about the accommodation being made available
“to ensure that it is occupied by people who cannot afford to buy or rent at market rate.”
There will, of course, be people who might be able to afford to rent in the private rented sector, but who might need social housing because they have other kinds of problems. They might need the stability that they cannot get in the private rented sector. That is the first area where we think that there should be an amendment to that clause, so that it refers to people whose needs are not met in the market. I think your concern is that we are somehow merging the definitions of low-cost home ownership and social housing.
Grant Shapps: Yes, exactly.
3.45 pm
Yvette Cooper: We are clear that there is low-cost rented accommodation and there is low-cost home ownership, but that they are different. We have set different targets for them. Under the comprehensive spending review, we will deliver 45,000 low-cost homes to rent and at least a further 25,000 low-cost home ownership homes through the Housing Corporation’s budget for the third year by 2010. As I said, we think an amendment is needed to clause 68(c) to clarify the fact that there are two different kinds of housings. If further amendments are needed to clarify things, obviously we are happy to look at that, but our intention is simply to write down in the Bill, for the purposes of regulation by the regulator, what already takes place and what is already defined as low-cost rental and low-cost home ownership accommodation provided by registered social landlords.
Q 220 Grant Shapps: That is very helpful. So you do not intend to change the definitions?
Yvette Cooper: No, not at all.
Q 221 Mr. Love: Martin Cave, in his report, recommended “domain-wide regulation”, yet the Bill suggests a two-year delay for local authorities. When representatives of the Local Government Association came before us, they suggested that the LGA would support immediate regulation under Oftenant, saying that if there is a delay it would prejudice its ability to influence the way in which Oftenant developed. Even more surprisingly, they suggested that some of the onerous regulation that comes through Oftenant would be acceptable to them. Given that they are anxious to be in at the beginning and they do not seem to be concerned about the onerous nature of some of the regulation, would it not be sensible to bring it forward?
Yvette Cooper: I made some comments on this as part of the statement to the House yesterday. I was surprised that the LGA was keen to adopt the powers as set out in the Bill. Obviously, local authorities have a different performance management framework. In my view, it has always been important to work through in detail the interrelationship between the different governance structures. There are different governance structures, and local authorities, which are democratically accountable, have a different arrangement from not-for-profit housing associations. Getting this right in a way that does not make it more difficult and burdensome for local authorities in terms of their relationship with the performance management framework, but equally allows effective and parallel regulation, as applies to housing associations, would take some time. If the LGA is keen to have that kind of framework, it is obviously something that we could look at again, but my feeling is that it would be quite difficult to do.
We have therefore worked on the assumption that it would not be acceptable to the House simply to take enabling powers as part of the Bill and try to do that through secondary legislation, because the enabling powers would be too broad. We should therefore complete domain-wide regulation as part of a second piece of primary legislation, which we hope will follow as fast as possible. We are setting up a new task group, chaired by Ian Cole, to look at getting the precise detail right, so that we can then consult on it with local authorities, and try to get the follow-up piece of legislation as fast as possible.
Q 222 Mr. Love: Can you provide any reassurance about the concern, with which I have some sympathy, that if the LGA is not in at the beginning, Oftenant may be set in its ways by the time that it comes in? Is there some way of involving it so that it has an influence?
Yvette Cooper: That is why we are keen to get on with it as rapidly as possible. Let us bear in mind the fact that Oftenant will not start until April 2009. Clearly, there will be a transitional period when everything is put in place, but if, alongside that, we are consulting on the detail of the revised provisions to include local authorities, and if there is a clear framework and everyone is content with the direction of travel in the second phase and its extension to local authorities before the new regulator begins its work, that will allow the regulator to begin its work with a clear view about the direction of travel and about what still has to be added. The local authorities and the LGA can then be involved in work to establish the regulator from the beginning. That is our intention, and that is why we are accelerating the work now.
Mr. Love: Can I move on—
The Chairman: Just a minute. Mr. Burt, do you have anything to say on this point?
Q 223 Alistair Burt: I just want clarification. We discussed the matter with Iain Wright in the margins of our discussion on domain. He indicated that there would be flexibility, because if progress was made while talking to councils, an amendment could be introduced in the House of Lords rather than in the Commons. Are you saying that, even with the best will in the world, you genuinely do not think that the pace will be sufficient to do that satisfactorily, that you are thinking of separate legislation and that there is no way in which we can include the matter in the Bill, which was what people would have liked?
Yvette Cooper: If there were consensus on the matter and everyone felt that we could get far enough fast enough, we would obviously be happy to look at amendments later down the line. Before we published the Bill, we looked at the possibility of enabling legislation and dummy or open-ended clauses, but we thought that that would not be right for Parliament. Had we done so, the Committee would be pulling us apart, because we had not worked through the detail. If there is agreement between everyone on how we can do it fast enough, that will save us from drafting a second piece of legislation. However, I want to be honest with the Committee about whether that is realistic. It seems complicated to get it all resolved fast enough to be confident about the Bill, but we remain open-minded.
Q 224 Mr. Love: Can I now turn to—
The Chairman: Order. I am sorry, I am trying to bring in everybody and our proceedings may be curtailed by a Division.
Q 225 Mr. Love: My question is still about regulation, Mr. Gale.
Previous witnesses have said that the use of the phrase, “the Government will direct Oftenant”, and the possibility that Oftenant will direct registered social landlords, have led to concern about the status of RSLs as independent voluntary bodies, with connected concerns about funding issues. Can you offer some reassurance, or will modest changes be made to clarify the status of RSLs under the new regulatory regime?
Yvette Cooper: While it is true that the Bill provides for the Secretary of State to be able to direct the setting standards, it does not provide for the Secretary of State to direct the regulator on intervention. The regulator has to make his own decisions about intervention.
“Objective 10 is to regulate in a manner which—
(a) minimises interference, and
(b) is proportionate, consistent, transparent and accountable.”
The regulator’s compliance code is quite detailed about being the ability to avoid burdens. That framework should bring reassurance to housing associations. We have looked at the matter closely. I do not think that anyone has any interest in changing the status of housing associations. It is important that they should continue to be private sector bodies that can borrow and raise funds in that way—that is their status, that is how they have operated and that is how they must continue to operate. Clearly, if people table amendments we shall examine them, but that is our strong intention and we continue to consider the matter.
Q 226 Mr. Love: Without wishing to appear anti-European, there has been some concern that, in the past, English Partnerships has been caught up in state aid rules and differences of interpretation between Europe and the UK. That is floated just as a throwaway line, but are we sure that, the way it has been framed at the moment, not only the UK authorities but any others that might have a locus on this would agree to the continued independence of the RSLs?
Yvette Cooper: The state aid rules issue is new to me. I am not sure; all kinds of bodies can be caught by state aid rules.
Q 227 Mr. Love: Yes, absolutely. It is a complex matter, but I know that the gap funding that used to exist got caught in state aid rules and nobody could quite understand why there was a difference in the views taken. I am worried that somebody might take a different view, while the UK authorities are satisfied. That might be something that we can tease out later.
Yvette Cooper: I am happy to look at that further.
The Chairman: Just before we proceed, so there is no confusion, I am going to extend the sitting until 4.15 pm under Standing Orders, or until a Division if there is one before that. If there is a Division, the knife will fall.
Yvette Cooper: While you are clarifying things, Mr. Gale, I think that I claimed earlier that it was 14 December. It is actually 13 December. I got the date a day wrong; I think Mr. Shapps got the date about seven years wrong.
The Chairman: All right, we have got the message.
Q 228 Paul Holmes: The biggest problem for me with the Bill is not so much what is in it, but the gaping hole of what is not. About 2 million social tenants are with RSLs, and about 2 million to 2.5 million are with councils because they have voted not to stock-transfer. Most of the Bill and the funding for the next three years is about RSLs and operating through them. The Bill seems to say that the housing needs of the 200 authorities that have not stock-transferred are less vital and urgent than those of the others. How do you justify that?
Yvette Cooper: I just think that that is completely untrue. Look at funding for existing homes through the decent homes programme—we announced yesterday £2.4 billion for council homes, to the ALMOs across the country, over the next three years. That is a substantial investment in existing council homes. On new build, housing associations operate in every district in the country, so new homes are being built by housing associations right across the country. We want that to continue.
Both as part of the Bill and part of the Green Paper, we have said that as well as housing associations building homes—we want them to build more homes—we want councils to be able to build homes. Not all councils will want to do that or have the skills and capacity, and it will not be right for all of them to do so, but wherever they can we want them to be able to bid to the Housing Corporation as well. That is why we have already made some changes that we were able to make without legislation, so some bids have come forward to the Housing Corporation already from councils, but we want to make it possible for more to do that. That is why we have made some changes to the housing revenue account—to make it much easier for them to do so.
Q 229 Paul Holmes: I will ask about the housing revenue account shortly, but on the private venture companies that you want councils to set up—there are 14 hand-picked experiments—the impact assessment for the Bill states that that will be about 2,500 extra houses.
Yvette Cooper: Are you talking about local housing companies now?
Paul Holmes: Yes.
Yvette Cooper: I think that that is different from councils building council homes.
Q 230 Paul Holmes: Then in terms of the money for the next three years, your written statement yesterday said that £8.4 billion would go to the RSLs, £2.4 billion to the ALMOs—only 60 of 64 authorities that still run their own houses—and the 140 authorities that are directly managed would get a share of less than £2 billion along with the private sector. Clearly the weight of funding and intent is still against the half of the country where people are council tenants and most of the social housing is provided through the council.
Yvette Cooper: The budgets that you are describing do different things. The £8 billion is about new build—it is about building new homes, and as a result of the changes that we have made, for the first time local councils can come forward to bid for that money for new build. A lot of that money will be going to housing associations building in the areas where councils still own the stock, so there will still be new social housing in those areas for people in those local communities, whether it is being built by councils or by housing associations and whether or not they have transferred their stock or have an ALMO. They should all be able to benefit from that £8 billion new build money.
The £2.4 billion ALMO money is for refurbishing existing homes to bring them to the decent homes standard, so that is a different budget and will go directly to ALMOs to refurbish their own stock, not to housing associations. It is going directly from the taxpayer to ALMOs for their refurbishment.
It being Four o’clock , The Chairman , pursuant to Standing Order No. 83C(11) (Programming Sub-Committees) , deferred adjourning the Committee.
Q 231 Paul Holmes: The ALMO refurbishment, therefore, still totally excludes the 140 authorities that are not ALMOs. Are you saying that at the end of next year and the years after that, when we look at the £8.4 billion that has gone to RSLs, we will see that it has been evenly spread across the country and not focused on the areas where the RSLs have most of their housing stock already?
Yvette Cooper: You would not expect there to be any relationship between the funding for new build and the issue of whether local authorities have done a stock transfer, because the funding for new build ought to reflect the priorities of the regional housing boards with regard to their advice about low-cost home ownership and how much social housing there should be. Sometimes, they will also set priority areas and we would then expect bids to come in from all areas, regardless of what decisions the councils have made about their own stock and whether they are ALMOs. We also want more councils and ALMOs to come forward with bids, so that gives them greater flexibility than they have had before.
Q 232 Paul Holmes: Well, that is one to watch over the next year or two. Clause 269 of the Bill will give the Secretary of State the power to alter how the HRA works and, as you have said in other statements and on Second Reading, the intention is that there will be some pilots around 2009 to 2011—there are some paper pilots at the moment—and hopefully that would start to roll out around 2010-12. Therefore, there is not much for the next three or four years for the direct management authorities, but a hope of something further down the road.
Let us say that 75 per cent. of directly managed councils are in positive subsidy. That is to say that they are losing rent money to the Government to spend elsewhere, as Chesterfield does. If, after 2011, those experiments have worked, councils can then start to keep their rent money and their right-to-buy money. That, as you have argued every time we have talked about it, would obviously have a big impact on the 25 per cent. of directly managed authorities which are in negative subsidy and which get money from the rest of the councils. What will you do to plug that gap in four year’s time when those pilot studies come into wider use?
Yvette Cooper: What is actually happening with those pilots and with the work on that is considerably more complex because you have to take account of some of the wider, redistributive issues embodied in the HRA at the moment. The benefit of the HRA is that it encompasses redistribution and takes account of the complex history of the way in which council homes are funded in different areas. There are all kinds of aspects of financing and historical debt arrangements. There is also different need across the country. So the upside is that the HRA tries to capture that. The downside is that it makes it difficult for local authorities to take sensible, long-term decisions about the management of their stock.
That is why we have been doing those pilots and the approach so far has been to see whether a situation could be envisaged in which areas could effectively opt out of the HRA bit by bit and whether an arrangement that was fair could be worked out so that, as they did so, all the areas that benefited simply opted out and all those that lost ended up being inside and lost out further.
We think that the results of those pilots raise even more complexities and that might not be the right way to do it and that is why we have set up the overarching review of the HRA to look more widely at the whole thing. That was part of the statement that I made yesterday. We want to keep the pilots moving forward, because we think that that might be one way to do it, but you need to take account of the long-term interaction with other areas and whether or not they should be contributing or need additional support in order to do so. I realise that that was not a completely clear answer.
Q 233 Sir George Young: Following Mr. Love’s point, have you shown the Office for National Statistics the Bill and asked whether the Bill will keep the housing associations in the private sector? They are the custodians of the rules.
Yvette Cooper: We have had considerable discussions with the Treasury. I have asked about potential arrangements for taking advice from the ONS in advance of the Committee stage, as opposed to the normal approach in which the ONS gets asked afterwards. It would be helpful to have its advice in advance, and I have asked for it.
Q 234 Sir George Young: Not half. Finally, when will you appoint the shadow chief executive and the shadow board of the HCA?
Yvette Cooper: We intend to appoint the shadow chief executive as soon as possible, and we will let the House know as soon as we are able to. We want the shadow chief executive to set up what will effectively become a transition team to draw up more details. We have not taken a final decision on when the board should be established, but there are considerable advantages to having a shadow board up and running some time before the agency is in place from April next year.
The Chairman: We are heading towards a Division. Minister, I thank you and your team for coming and giving evidence this afternoon. We have not run out of steam, but we have just about run out of time. I thank members of the Committee for their courtesy and attendance, and may I wish all of those whom will we not see before, a happy Christmas.
Further consideration adjourned.—(Liz Blackman.)
Adjourned accordingly till Thursday 10 January at Nine o’clock.

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