Examination of Witnesses (Questions 40-59)
MR PETER
HOUSDEN, MR
CHRIS WORMALD,
MS HUNADA
NOUSS, MS
CHRISTINA BIENKOWSKA
AND MR
RICHARD MCCARTHY
22 OCTOBER 2007
Q40 Mr Betts: Do we have clear lines
of accountability, who is actually going to be responsible for
the centres when they are established?
Mr Wormald: Yes, through the regional
management boards.
Q41 Mr Betts: So they are not going
to be clear lines of accountability; they are going to be operation
by consensus are they?
Mr Wormald: In that we believe
that the fire and rescue authorities involved are perfectly able
to work together for the common good. I do not see that as a blurred
accountability as long as all authorities work professionally
together and everything we have seen so far suggests that they
will.
Q42 Mr Betts: Are all these boards
now signed up enthusiastically?
Mr Wormald: I would not say that
every single one is signed up enthusiastically.
Q43 Mr Betts: Some are still very
sceptical.
Mr Wormald: I do not think we
have many people who are now worried about the principle. There
are a series of discussions going on-rightly, actually-about the
details of how projects will work in practice. I think it is good
that it is getting the level of scrutiny that it is.
Mr Housden: The report that this
Select Committee undertook on all of this pointed to the two issues
in the early stages of the project which were difficult and which
may have been obscuring the level of effective support that the
programme now has. You pointed, amongst other things, to stakeholder
engagement and particularly the hard numbers in terms of a business
case and getting those out to be understood. Many of the people
who accepted the resilience argument did not like the numbers
or were not sure about exactly where they would come. Actually
I think the 46 fire and rescue authorities are getting a very
good deal from central government in terms of who is paying for
what in all of this. Chris's point is that we are now making good
progress in setting up the requisite companies so they have the
right government structures and they can manage these things in
an effective way.
Q44 Mr Betts: Finally, the extra
cost that has come in, that is being borne by central government,
is it?
Mr Housden: Yes. Principally about
technology procurement it just proved to be more expensive to
deliver the resilience we needed than we had originally estimated.
Q45 Mr Betts: Turning to another
select committee report you rightly gave us credit for, finding
holes in the previous department's case on FiReControl centres,
I think in another report on Decent Homes we raised a sceptical
eyebrow at the ability to achieve the decent homes target totally
by 2010. We were right to do so, were we not?
Mr Housden: Yes, and as we report
under PSA 7 and as Ruth Kelly said to Parliament in June last
year, we will be at 95 per cent by 2010.
Q46 Mr Betts: Then apparently it
has gone on to say that it is all down to ALMOs delaying their
inspections because they did not have time to get through them,
and it is due to the fact that improvement works are done separately
rather than part of the package. Is the Department not responsible
for any of the slippage then?
Mr Housden: Both of the factors
that you exemplify, Mr Betts, are certainly a part of these arrangements.
Richard McCarthy leads on this programme and he might want to
say something particularly about this.
Mr McCarthy: I think we have spent
£20 billion to date (£16 billion of public money and
£4 billion of private money) and we expect to complete this
programme by spending over £40 billion on our social housing
stock. That is a huge programme. Achieving 95 per cent spend by
2010 is a tall order in itself. Managing that process both from
central government and in local government and indeed in housing
associations has been a major task. The target will not be hit,
we recognise that. To achieve 95 per cent, may I suggest, will
be an outstanding record of delivery by local government in particular.
There are always tensions in a programme like this. There are
tensions around managing what residents want to do, how you make
that work; there are tensions around managing the different solutions,
achieving the necessary levels of quality standards before work
proceeds; how you work with the local authority where there perhaps
has been a ballot and tenants have rejected the achieving of decent
homes through a stock transfer. We are not casting blame. This
is a huge collective effort by central and local government and
I think one of which we should all be very proud.
Q47 Mr Betts: I would agree with
all that and I think it is a magnificent programme. I have thousands
of my constituents who are absolutely delighted with what has
happened, but one of the most important things that we have been
able to do so far is to say to them: "This is when your home
is going to be done" and then unfortunately we have some
slippage-which is government slippage-trying to scale back some
of the ALMO spending and indeed some of the round six ALMOs do
not even have a date when they can actually start. This is leading
to enormous frustration if you speak to some of them and their
tenants.
Mr McCarthy: I understand that
point entirely and we do recognise the time it has taken to inform
round six ALMOs. I know you were particularly concerned last year
as a Committee that we were maybe in a position where you felt
we would have to force local authorities to re-profile their programmes.
I have to say that to some extent we have been proved right, that
there has been natural slippage in those programmes. We have not
forced anybody back. In rounds two to five of our ALMOs slippage
has occurred. Some of that is about delays in getting inspections;
some of it is about people not achieving the necessary two star
standard. That slippage has occurred as we predicted it would,
not because we held people back but because it is a complex process.
That now puts us into a much clearer position where I hope we
can now move forward in our discussions with the round six ALMOs
and with rounds two to five to confirm their commitments over
the next period. We hope to confirm by the end of the calendar
year certainly the position on the next stage of funding for rounds
two to five. I very much hope it will not be that much longer
before we can confirm round six.
Q48 Mr Betts: Do you have a timeframe?
Mr McCarthy: That is a ministerial
decision and that is something we have to engage in and we are
engaging with our ministers at present.
Q49 Mr Betts: There is no round two
to five ALMO who wanted to keep to their original allocation they
were given who is not able to do that if they so wish.
Mr McCarthy: I am not aware that
we have held anybody back against the programmes we agreed.
Q50 Mr Betts: There was no encouragement
though, was there? "Can you help us a bit?" I think
is the way you phrased it.
Mr McCarthy: Let us be clear,
people asked us for more money than we were able to give them.
Q51 Mr Betts: In total?
Mr McCarthy: Yes, in total. Then
we committed to people in two-year blocks. I am not aware that
we have forced anybody to change the commitment we gave them.
Yes, there was a conversation; there was some discussion with
local government about whether it was necessary, would it be possible
to re-profile. Most of that was about us saying, "We think
your plans are too ambitious and we think there may well be some
slippage". What has occurred, I have to say, is that by and
large that slippage has been realised not through our efforts
but because it is complex and it is difficult.
Q52 Mr Betts: You also agreed that
it has created a little bit of leeway to start funding the programmes
for new house building, did you not?
Mr McCarthy: We have not used
the ALMO funding; we have not used decent homes funding to fund
new programmes. All we have done is take some of the slippage
from some years and move that back to fund decent homes expenditure
in later years.
Q53 Chair: There seems to be an internal
inconsistency there. Were you not saying that you were not able
to fully fund some of what the ALMOs were asking for which is
why you either asked them to slow down or were extremely grateful
that they did slow down? Now you are saying that actually you
had other money that you were slipping into something else.
Mr McCarthy: No. Let us break
all those issues down. Perhaps unwisely I went back to talk you
through the bidding process. There is a bidding process with ALMOs
and we scrutinise bids, we challenge them, we negotiate and we
agree allocations on a two year timeframe. We have not changed
those allocations that we have given to places but a number of
locations have struggled to keep up with the profile of expenditure
that they told us. We expected that to happen and we challenged
a number of places and they were more confident than we were that
they would achieve the profile of spend. We have found that in
some cases that expenditure is not kept up. We have done everything
we can to protect that money for the Decent Homes programme so
rather than us looking at the Decent Homes programme and trying
to take money from it to fund other things, what we have done
is if there has been an under-spend in years we have tried to
hold that under-spend by spending it on something else one year
so we could have it back the following year.
Q54 Mr Betts: Another way of looking
at it is if the authorities had not slipped themselves then you
would have had to take some action because there would not have
been enough money then to deliver the programmes that you had
agreed with authorities. In other words there never was enough
money in the programme, given the number of authorities which
opted for ALMOs, to fund decent homes by 2010.
Mr McCarthy: It is a challenging
programme.
Q55 Mr Betts: That is right, is it
not? More authorities opted for ALMOs than you had originally
forecast.
Mr McCarthy: You are trying to
ask me about something which did not occur. It is a demanding
programme. It started with a £19 billion backlog if you remember
for 1997. We are going to spend over £40 billion in total,
over £30 billion of that will be public expenditure by the
time it is completed. That is a challenging programme. In some
places the Decent Homes programme has led to a transformation
or will lead to a transformation of localities. It is not surprising
that there are fiscal pressures at a time when they are fiscally
tight on all programmes. Equally, knowing and having some experience
within the team about previous expenditure profiles, we expected
that there would be some slippage which would enable us to confirm
the round six ALMOs. That slippage has occurred; we are not forcing
anybody to cut their programmes at this point in time. We do not
expect to have to do that and I hope we will be able to confirm
round six allocations shortly. We have said to you as we have
said to Parliament that regrettably we will not hit the 2010 target
and expenditure will flow beyond that.
Q56 Mr Betts: One final question
then about the future. Has the Department now started thinking
about the post-Decent Homes programme? You can see the finishing
line even if it is a year or two beyond that which was originally
forecast, because having got the housing to a decent homes state
they are not going to stay there unless more work is done. I just
wonder whether we are now seriously thinking about the things
that ALMOs in particular will need in terms of the housing revenue
account and borrowing powers. Otherwise we are going to simply
stultify the situation and we will end up with a backlog of disrepair
if we do not watch out.
Mr McCarthy: I think that is a
very good question. I have to say that in the early stages you
may know that in stock transfers we require people to do a detailed
thirty year business plan, so the stock transfers have built into
them programmes of continuous renewal. The local authority finances—which
we have debated in here before and no doubt will debate again—are
challenging from that respect. We are very much at the starting
blocks of what we do post-decent homes but I recognise the question
and its importance.
Q57 Anne Main: Moving onto home information
packs, you will have to forgive the public's perception that this
has not been the finest hour for the Department. Indeed, the level
of confusion over it does lead people to ask what has been learned
by the Department about the way this was introduced.
Mr Housden: I think the long term
benefits of the home information packs will not be visible at
this stage.
Q58 Anne Main: I do not think that
that is what I have asked. I am asking about the process of introducing
them, leaving aside the benefits or not.
Mr Housden: I think in process
terms there are two things that have been important for us in
reflecting on this recent past, firstly whether we could have
done more to take particularly industry stakeholders with us.
You will recall that one of the reasons for the delay beyond June
in the implementation was a judicial review in the name of the
Royal Institute of Chartered Surveyors but backed by a number
of other important players in the industry. Our conversations
with them suggest that what was behind that was not simply the
question about energy performance certificates and their longevity,
but a profound discomfort with the policy and its effectiveness.
We have reflected upon that and Yvette Cooper is now working with
a stakeholder panel including all of those interested and also
consumer groups like Which? to actually examine the evidence
of HIPs as they are coming through but within the context of a
wider reform of housing buying/selling. Secondly there is a technical
matter but important for us was about whether we were close enough
to the number of trained and available domestic energy assessors
coming through the system. These things interact and I think the
difficult publicity and stakeholder hostility made a good number
of energy assessors in training hold back from their final accreditation
and thereby their readiness to do energy assessments. When we
looked at the position for June this year we could not be sure
that either the total number was sufficient to deliver or that
the regional split was adequate. Those two things took us to that
delay. Happily we are now in a position where we have a very healthy
supply of energy assessors nationally and regionally.
Q59 Anne Main: So we can hopefully
look forward to energy assessors being available when they are
needed but do you not think it was rather last minute when there
was this sudden realisation that we did not have enough energy
assessors? Given the fact that it was so suddenly announced that
it was not going ahead as scheduled, did you not have any awareness
that the number of energy assessors, much earlier on than you
expected, would not be there? I am really talking about timescale,
it was cancelled at such short notice and you did not seem to
see it coming.
Chair: We are going to have to break
now for ten minutes for the division.
The Committee suspended from 5.20pm to 5.30pm
for a division in the House
Mr Housden: The Department does
take responsibility for this and the problem that you described
about suddenness and notice is exactly right. Ministers were in
a position where, the first of June having been set as the operative
date, what we needed to have done but did not do effectively was
to be closer to the process of people going through to qualification.
To simplify this quickly for the purposes of this conversation,
people went through training first of all, then they had to do
five practice assessments that were marked to make sure they could
do it in the real world, and then they had to become accredited,
they had to pay a fee to one of the accrediting bodies. What actually
happened, we are pretty sure, is that at both those stages people
deferred because they were not sure that actually the policy was
going to be introduced. Because of the noise in the media and
opposition people did not undertake their five practice assessments
quickly enough or if they did they held off paying the fee.
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