Examination of Witnesses (Questions 1-19)
YVETTE COOPER
MP AND MR
RICHARD MCCARTHY
9 OCTOBER 2007
Q1 Chair: Welcome to the first evidence
session after the recess, minister. We are hoping to be able to
explore with you every aspect of the Green Paper. Perhaps I could
start with a question about the target of three million new homes.
Of that three million, how many are already in Regional Spatial
Strategies? Where are those not in the Regional Spatial Strategies
going to be built?
Ms Cooper: Thank you, Chair. We
have not done the further modelling between 2016 and 2020, but
we have produced figures between now and 2016. We have said two
million homes are to be built, three million by 2020. If you look
at the figures up until 2016, the locations for 1.6 million homes
are already set out in the current Regional Spatial Strategy plans,
and that includes 650,000 new homes in growth areas, including
Thames Gateway and Milton Keynes and so on. In the current round
of RSSs that is underway at the moment—and those are at
different stages in the process—we would expect a further
150,000 to 250,000 to be emerging; however, we have also said
we are going to need a further round of mini-reviews and updates
to those Regional Spatial Strategies to make sure the numbers
reach the full two million. We have also set out in the Green
Paper the fact that we are expecting 100,000 extra homes in the
45 towns and cities that make up the existing 29 new-growth points;
we would anticipate a further 50,000 additional homes coming from
new, new-growth points, including, for the first time, in the
North of England; and somewhere between 25,000 and 100,000 further
additional homes coming through proposals for the eco-towns. That
is what we set out in the Green Paper. You will be aware that,
since then, we have also gone further in terms of the number of
eco-towns we are looking to support and encouraging bids from.
The eco-towns obviously are not currently part of the Regional
Spatial Strategy process, they will still need to go through the
planning system, so those will be additional homes on top of what
is currently in the Regional Spatial Strategies.
Q2 Chair: Of those extra homes, what
proportion will be before 2016 and what after?
Ms Cooper: We have tried to set
it out as clearly as we can in the Green Paper. On page 7, in
the Executive Summary: "Of the two million new homes that
will be delivered by 2016 it will include the following ... "
and that sets out where we would expect those homes to be drawn
from and the process of identifying the locations for those homes.
Q3 Chair: It does not identify all
the locations where these extra houses would be.
Ms Cooper: That is why it says
that 1.6 million homes are already in the Regional Spatial Strategies.
The current round of Regional Spatial Strategies, we expect to
increase that broadly, probably, to about 1.8 million. A remaining
200,000 locations still need to be identified, and that is where
we have said we need a further round of mini-reviews of the Regional
Spatial Strategies, on top of what is currently going through
the system at the moment, and the two big factors that will be
going into those mini-reviews will be proposals for eco-towns
and new, additional proposals for growth points, particularly
in the North of England as well.
Q4 Chair: Could you clarify who is
going to initiate the firm proposal of where exactly the eco-towns
or the new growth points or the other houses leading to that additional
200,000 are going to be? Is that going to emerge from the individual
Regional Spatial Strategies or is there going to be a degree of
direction from government? If they do not emerge from the Regional
Spatial Strategies, how are you going to ensure that they are
included somewhere?
Ms Cooper: This is a process of
iteration. Wherever the homes go, it needs to come through the
planning system, and so, as we have said, we are already getting
a lot of those proposals coming through the planning system but
we do need to go further. At this stage on the eco-towns we have
asked for expressions of interest from local councils, communities
and developers, for them to come forward with expressions of interest
and with proposals for eco-towns. In terms of instigating mini-reviews
and the next steps of the Regional Spatial Strategies, regional
assemblies can obviously do that but so too can the Secretary
of State, in terms of triggering proposals for mini-reviews, so
we have a range of options. We are clear that we need to get to
this figure and we need to get these figures going properly through
the planning process so that there can be proper sustainability
analysis, proper planning consideration of where the homes should
go, and therefore we are working with the planning process to
make sure this happens. We have said we will do the mini-reviews
where they are necessary and where they are needed to support
that.
Q5 Chair: The South East Regional
Assembly, for example, is actually going in the opposite direction.
It is suggesting that the outcome of the Inspector's report is
too high. What measures are the Government contemplating to insist
at least on what the Inspector has agreed and maybe to nudge the
assembly into pushing up the targets further?
Ms Cooper: I think it is very
disappointing that the South East Regional Assembly have argued
for cuts in the level of housebuilding in the South East at a
time when the level of housing demand is so clearly growing, when
there is a huge pressure from first-time buyers. It is simply
a betrayal of first-time buyers for them to argue for this. I
honestly cannot anticipate the next stages in the planning process
because those decisions need to be taken properly by ministers
but, in general, the panel report comes to the Secretary of State,
the Secretary of State can then put forward proposed changes—just
as happened in Yorkshire and Humberside, for example, a couple
of weeks ago: the proposed changes were put out by the Secretary
of State which increased the level of housing benefit for Yorkshire
and Humberside—and that then needs to be consulted on before
final decisions are taken by the Regional Spatial Strategies.
For the south east of England there is still a series of changes
that need to be gone through. There is the `proposed changes'
stage, further consultation and then the final conclusion. In
addition to that, there is the possibility to do a next stage—either
a full RSS or a mini-review of the RSS—depending on the
need and depending on the proposals that come forward, perhaps
for eco-towns or for something else.
Q6 Anne Main: I have to take you
back, Minister, because the Chair did ask you what you were going
to use to "nudge" people who were reluctant to come
up with the housing totals which you had agreed upon. I notice
you say that for eco-towns developers come forward with proposals.
Does that mean that you are separating those targets or figures
from the totals that you may be imposing, so they would be in
addition to them? Areas, like my own, which have concerns for
the totals they are being asked to deliver for various good environmental
reasons as well as many others really, do need to know how much
nudging or how much leverage will be put upon them by central
Government.
Ms Cooper: There is a process
through the planning system: the regional assembly puts forward
proposals, the Inspector considers those proposals and the Secretary
of State considers the proposals from the Inspector. We will go
through that system in every region in the country. We have said
that we want proposals to come forward for eco-towns. At the moment,
other than Northstowe and Cranbrook near Exeter, there are no
clear proposals working their way through the planning system
for eco-towns; so clearly the proposals for eco-towns will be
additional to what is currently in the Regional Spatial Strategy
process or is going through the regional plans. Clearly those
will be additional.
Q7 Anne Main: I am sorry to interrupt
you, but you need to clarify perhaps for us what you will do if
there is an impasse between what the local area wishes to deliver
and what the Government has a vision to deliver. What will happen?
Ms Cooper: We have a regional
planning system. We have had that for some time. Then we have
a local planning system in which local plans need to comply with
the Regional Spatial Strategies. That process is underway. There
will be different stages through that. There will be the Inspector's
report and then the Secretary of State's proposed changes. That
is what happens. Local authorities then need to determine what
is the best location for the new homes that are needed—and
it is unacceptable, frankly, for local authorities simply to say,
"We don't want any more homes around here and we think they
should all go somewhere else" because every community needs
to take its responsibility for the fact that we have an ageing
growing population with more people living alone. It is a betrayal
of first-time buyers and people who are on council waiting lists
if we do not ensure that every community responds to rising demand
and builds the homes that children of the future will need.
Q8 Anne Main: The community cannot,
then, set a target agreed with you that is somewhere between your
figure and theirs. It has to be your figure.
Ms Cooper: It is a process that
works its way through the planning system.
Q9 Anne Main: I think I have my answer.
Ms Cooper: That is the process
that we have and that is the process that we will work to. It
is important that local authorities recognise their responsibilities.
They also need to look at where within their area the best location
of the homes should be. But all of these processes are tested
through the planning system. This is not simply about what the
Government says; this goes through a process of independent testing
to look at issues around sustainability, infrastructure and so
on. We are also, because we think this is important, introducing
a Housing and Planning Delivery Grant, because we think it is
right that those communities and local council areas that are
doing their bit and that are responding to the level of new homes
that are needed should get more support and should get additional
resources because of that—not simply resources for infrastructure
but resources on top of that—and we have set out £500
million over the next three years to reward those councils that
are doing their bit.
Q10 Emily Thornberry: What role does
housing need have in the decisions that need to be made on how
many homes are to be build? It is not just a matter of what a
local community says it needs and the impact it will have on the
environment and so on; presumably all local authorities have their
own housing needs survey. What impact will that have on any final
decision being made on how many homes can be built?
Ms Cooper: The housing needs assessments
are an extremely important part of the process, and of the planning
process. Those need to be done in every local community and they
need to feed into both the decisions about local development frameworks
and local planning decisions but also into the regional debates
as well. Those housing needs assessments are critical and they
do demonstrate very high levels of need, and it is important that
both local councils and regional assemblies respond to those high
levels of need when they are drawing up their proposals in the
planning system. It is of course also something that the Secretary
of State will take into account when responding and it is also
something that the planning inspectors will take into account
when they independently test the proposals that have come forward
from the regional assemblies.
Q11 Emily Thornberry: Will there
be times when the housing need will override other considerations?
Ms Cooper: You always need to
take account of things like environmental sustainability. You
always need to take account of things like infrastructure and
so on. It is important that in the planning system you take all
of those things into account, but the level of housing need is
hugely important—and it is not simply about housing need,
it is also about rising demand for housing as well. That is why
we have set up the Housing and Planning Advice Unit, to provide
independent advice to local and regional planners about the implications
of the decisions they take for affordability in their area.
Q12 Emily Thornberry: I want to ask
you some questions about tenure mix. Amongst the three million
affordable homes that the Government is proposing should be built,
what proportion is it expected will be family homes (in other
words, three bedrooms plus) and what proportion is it anticipated
will be social rented?
Ms Cooper: Let me deal with those
two questions separately. On social rented, we have not set out
a proportion of the overall two million to three million, because
obviously these homes will be built over a long period of time—up
until 2020—and the proportion that are able to be built
that are social rented will also depend on the resources available
and government resources which are available for this and therefore
it is important that we take into account the proposals and resources
as part of the spending reviews. We have said the proportion of
homes that we think should be social rented over the next three
years; that is that it will rise from 30,000 new social rented
homes a year to 45,000 new social rented homes a year by 2010.
Our aim is to rise to 50,000 beyond that, but we have not set
a figure which goes beyond that in terms of the overall figures
by 2016 or by 2020. In terms of family housing, this obviously
will vary from area to area. We have said that we want to see
an increased proportion of social housing be family housing. I
also think it is important that we have a higher proportion of
low-cost home ownership that is family housing, because there
has been a tendency to provide what are effectively starter-homes
for people, the one and two bedroom flats for shared-ownership
homes, but you will have people living in those properties who
then want to move into a bigger home, who still cannot afford
to buy a whole home. They currently own a share of a flat, they
want to move into a family house and there are not so many of
those opportunities, so we need to expand that as part of the
low-cost home ownership scheme. We have also said that we think
there should be more emphasis on family housing in terms of the
market as well. This will vary from area to area but it is important
that local authorities do use the new powers they have as part
of the new planning rules that came in in April, which put much
greater emphasis on family housing, in particular housing for
children including things like gardens, parks and play areas.
Local authorities should be monitoring the fact that if they have
areas where they are only getting smaller properties being built,
then they need to make some adjustment to that in the planning
system and the way that they respond.
Q13 Emily Thornberry: Could I ask
you about the role of the private sector when delivering affordable
housing: could you explain to us what role you envisage the private
sector taking? Some people are slightly alarmed by the idea of
private developers bidding for social housing grants. What kind
of housing do you expect the private sector to be building?
Ms Cooper: That is underway. They
have been doing that and they are delivering and there are developments
where there is new social housing being provided alongside market
housing in new developments as a result of the work that private
sector developers are doing. My view is that we need as many people
working on this as possible. We need housing associations doing
more to provide more affordable housing, we need the private sector
doing more to provide affordable housing and we need the local
councils doing more to provide affordable housing. The more that
we have a greater mix of providers, the more opportunity we will
get. We need to lever in as many resources as possible to do that.
Where the private sector is able to bring in some of its own resources
but also, potentially, because of the nature of development, build
those homes more cheaply than might otherwise happen if they do
different separate contracts with housing associations and so
on, then we should make the most of those potential economies
of scale and make sure that we get the affordable housing coming
through. There is regulation in place to ensure quality and to
ensure that they are meeting the standards that the Housing Corporation
sets, but I think this is about levering in as many resources
as possible to get the homes we need.
Q14 Emily Thornberry: Is there not
an argument that the private sector is not going to be regulated
in the same way that housing associations will be regulated on
new-build? Why do we not have just one regulator, who regulates
all new building under the three million affordable homes that
are going to be built?
Ms Cooper: It is true that they
are regulated in different ways and will be regulated often through
contract rather than through an existing regulatory framework
for registered social landlords, because registered social landlords
obviously operate in a different way and have a different status.
We have been looking at the regulatory regime as a result of the
work that Martin Cave did around registered social landlords,
so there are potential changes in this area, but I think the key
thing for us is, first of all, to make sure that we are doing
as much as possible to get as much investment in and, secondly,
that we ensure the standards are met. I do not want to see us—and
this applies to the work in response to the Martin Cave review
as well—spending a huge amount of resources designing the
perfect regulatory scheme that might be where you might start
if you were starting from a different place from here which could
come as a distraction from, frankly, the important business of
getting the new homes built—obviously to quality standards—but
also getting the investment in as well.
Mr McCarthy: To make it absolutely
clear, the standards for the buildings that are provided are absolutely
the same, so there is no difference at all in the quality standard
that is expected. Also, you should be aware that a number of the
developers are actually making partnerships with housing associations
and in some cases with ALMOs who will then go on to manage the
housing, so we are seeing some interesting and constructive partnerships
developing.
Q15 Emily Thornberry: I presume that
if the private sector does it by itself, it will be simply building
houses that will then be for sale. I find it difficult to imagine
the private sector becoming a registered social landlord that
would then start renting out accommodation. We are not talking
about that, are we?
Mr McCarthy: At this stage, some
are bidding to provide social rented housing but are then passing
the management on to other bodies such as ALMOs. But no one is
precluding that, in terms of the future provision, subject to
people meeting satisfactory standards. At this stage, private
sector developers are either providing the housing for shared-ownership
sale or shared-equity sales or social housing, where it will be
managed by other bodies, such as the ALMOs and the housing associations
we referred to.
Q16 Mr Hands: Thank you. Perhaps
I could, first of all, congratulate you, minister, on your elevation
to the Cabinet. Many of us welcome that as a sign of increased
attention to housing as an issue. Looking at the Housing Green
Paper, it says—and I am not sure if I am quoting it directly,
but this is in our briefing—that the Government considers
that its first challenge in addressing the affordability gap between
house prices and wages is to increase the supply of homes to rent
or to purchase. Which of those two do you think will have most
impact on prices: providing more homes to rent or more homes to
purchase?
Ms Cooper: What we need to do
is to build more homes. We need to build more homes overall. There
will then be market factors that will determine in particular
areas how many of those homes are home ownership and how many
of those are private rented sector. What is unclear in your question
is around how far you are asking about homes for private sector
rent and homes for social rent. We have been clear that we need
more new homes for social rent, we need more new homes for low-cost
home ownership/shared ownership, and then we need more market
homes. Those market homes will obviously then be divided into
homes that go into the private rented sector and homes that go
into home ownership.
Q17 Mr Hands: If you are setting
out as an objective—which appears to be your objective in
that sentence—to do something about rising house prices,
you must surely have some idea of which sort of home provision
is going to make the biggest impact on house prices. In any particular
area, if you provided 1,000 new homes as social housing for rent,
or 1,000 new homes as private sector to buy, which of those two
would you expect to have the biggest impact on house prices, which
is your initial objective?
Ms Cooper: You are separating
out social homes for social rent from homes that might be for
private sector rent. The homes which obviously are built for private
sector rent and in the market, whether they are for rent or home
ownership will overall have an impact on house prices.
Q18 Mr Hands: Will those have a bigger
impact than providing social housing for rent?
Ms Cooper: That will depend on
the impact on demand, because, if you are providing more social
homes for rent, you will be providing homes for people who will
be able to go into social rent and who will not therefore be looking
for private accommodation. The impact will be complex, but it
is clear that we need to build more market homes if we are to
have an impact on private sector affordability. That is absolutely
clear. If you are asking me for a precise formula as to how they
interrelate, there will be feedback mechanisms within that formula
so there is not a simple answer.
Q19 Mr Hands: I am surprised that
there has been no modelling of that effect. If your objective
is to do something about rising house prices, I am extremely surprised
by what you appear to be saying—that it is a complex thing
where you do not have a formula—that there has been absolutely
no modelling of producing new homes and what effect that will
have on rising house prices.
Ms Cooper: No, you are asking
for a simple answer in the course of this Committee. I can tell
you that we have done extensive modelling as part of the impact
on affordability of building additional homes, so we are very
clear that if, for example, we carry on simply at the current
rate of housebuilding, as we have, say, over the last 10-20 years,
then over the next 20 years we will see affordability for two-earner
couples drop, so that whereas currently around 50% of them might
be able to afford to buy their own home on the basis of their
earnings, that figure would drop to 30%. That modelling looks
at all sorts of issues around affordability and looks at the impact
of building market homes. Clearly if you build market homes, that
will have a bigger impact on market prices. It is wrong, however,
to suggest that building social rented homes has no impact on
the overall market, because quite clearly it will.
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