Examination of Witnesses (Question 180-196)
RT HON
HAZEL BLEARS
MP, RT HON
YVETTE COOPER
MP AND JOHN
HEALEY MP
29 OCTOBER 2007
Q180 Chair: Finally on this issue
about the housing market and HIPs, given that there are large
perturbations going on in the housing market to do with issues
such as the credit squeeze, the increased interest rates and other
factors, trumpeted, I noticed, on the front page of The Times—it
seemed to be the only newspaper that could make it gloomy that
houses might be becoming more affordable—saying that the
second home market, for example, was evaporating, how are you
going to detect whether HIPs have any effect on the housing market
given that you are measuring it against a baseline which is moving
because of all sorts of other factors? Is this actually an excuse
to go slowly because the Department is frightened of the press
and the virulent opposition to HIPs?
Yvette Cooper: No. I think we
have to make sure that we are just taking account of additional
variables in the market that might not have been there six months
ago. It is important that we do so. All the evidence still shows,
as you rightly say, that the overwhelming impact on the market
at the moment is coming from what is happening with interest rates,
with credit, with uncertainty as a result of Northern Rock, with
consumer attitudes towards the housing market, and so there are
all of those sorts of factors going on. In that climate, however,
we simply need to take more care about making sure we are getting
the timing right for the rollout in order to make sure that the
process continues smoothly.
Chair: I think we are not really any
clearer about the precise factors on the timing but I am not clear
we are going to get it from questions.
Q181 Mr Olner: This is just a point
I wanted the Minister to clarify. The principle is just the same
now as it was when we first started to talk about introducing
HIPs, and that was to give more protection to the consumer so
that they were not on this roundabout where they were continually
paying out money to solicitors and others for search after search
when a transaction fell through. Yes, the housing market is slowing
down, and I think that is a real problem perhaps for some of the
assessors, but the principle of trying to protect the consumer
I think is exactly as strong now as it was when we first envisaged
them.
Yvette Cooper: It is, and that
is why the policy remains the same. If you look at what we have
also seen over the past few months, as a result of, for example,
estate agents encouraging people to list properties early in advance
of the HIPs deadline coming in, you therefore have a transitional
impact on the timings of listings, and the housing market does
always have fluctuations in the timings of listings, so the housing
market is well able to absorb fluctuations in the timings of listings.
However, in order to just make sure that that process is smooth
it is important that we look at those issues and those transitional
impact issues in the context of the wider housing market. That
is all I am saying. I am not saying there is any big mysterious
process here. It is simply that the process takes a bit longer
to ensure that you have taken all the factors into account at
a time when the market is more uncertain than it does when there
is less uncertainty in the wider market.
Q182 Mr Betts: Just picking up a
point that Bill Olner made earlier—and I think there is
general welcome for the idea of involving local authorities and
ALMOs in the social house building programme, I think that has
generally got a lot of support across the country—I just
have a little bit of concern that maybe in order to squeeze a
bit of money out to give what is a much better settlement for
social rented housing in terms of the amount of money that is
going to be available, there has been a bit of pressure put on
ALMOs and others, who have already had indications of the allocations,
to scale back. Round 6 ALMOs, for example, have not even got indications
of the amounts of money they may be going to get, which causes
the Decent Homes programme to slip in order to fund some new house
building. Am I right to view it in that way?
Yvette Cooper: I think we have
been clear as part of the spending review that we have got a very
substantial increase in investment and new housing, and that is
£8 billion over the next three years, but we also have £2
billion for the Decent Homes programme, so we are continuing the
level of investment in the Decent Homes programme. It is certainly
true that effectively over the last 12 months, in advance of having
the Comprehensive Spending Review settlement in place, we went
through a process around contingency planning. We have also been
through a process in terms of some quite rigorous work and assessments
with individual local authorities on their ALMO programmes because
we know that there has been a history of slippage in individual
ALMO programmes. If we are advised of that slippage very late
in the process it makes it very difficult, whereas on the other
hand, if we can get a sensible profiling pattern from the beginning
of the process, it allows us to get more local authorities started
with their ALMOs as well. You, I think, will be well aware of
the background to this, which is that there have been more local
authorities coming forward with ALMO proposals than perhaps was
initially anticipated. There have also been some local authorities
which have put forward more expensive proposals than perhaps was
initially anticipated, and I think what we have been trying to
do is make sure that we can get all local authorities started
with their ALMO programmes to get them investing. The Decent Homes
programme has already lifted, I think, about a million children
out of bad housing as a result of the investment so far. We do
need to keep that programme in place, but I think what you are
probably reflecting is what was very sensible contingency planning
and work for us to do over the last 12 months, but we are, as
Richard McCarthy suggested in the evidence that he gave to you,
in a rather different position now.
Mr Olner: Madam Chairman, on a point
of order, is it right that members should be using hand-held devices
while evidence is being listened to, and should they not be used
outside the committee room instead of inside it?
Mr Hands: I think actually there was
a ruling last Thursday at the modernisation debate—
Chair: Greg, I am the Chair and I was
being asked, and I was about to make the point that it was. However,
I think it would be polite to give some attention to the evidence
that is going on.
Q183 Mr Betts: So basically local
authorities are not being asked to cut back on their ALMO programmes
where they are able to deliver on the lines that they initially
committed to? Have we got a date when the round 6 ALMOs are going
to have their bids confirmed?
Yvette Cooper: No. Now that we
have the Comprehensive Spending Review settlement in place we
hope to be able to set out, and rounds 2 to 5 are continuing the
rounds that are already under way, what their budgets will be
for the next two years and then also the timetable for round 6
starting. I think one of the round 6 ALMOs has achieved the two-star
rating. Some of the others do not have their two-star rating assessment
for another 12 months, and so there will be a varying timetable
as to when they are able to begin their programme of investment,
but we do want to make sure that all the ALMOs can get their information
as rapidly as possible over the next month or so.
Q184 Mr Betts: Can I just come back
to the point about getting ALMOs and local authorities in the
building process? One of the issues that comes up over and over
again, and we have discussed it before, I think, is the problem
of the housing revenue account, which is an awful constraint on
getting any sensible accounting process at local level between
what a housing authority does and what its tenants actually receive.
Is it the Government's position now that in principle you would
like to basically scrap the housing revenue account and that the
only issue is trying to find a sensible and practical way of doing
so?
Yvette Cooper: I have to confess
I am not a fan of the housing revenue account in any way. Every
dealing I have with the housing revenue account from every different
angle seems to just raise problems with it. However, it was set
up as a system to try and establish fairness between different
areas and also to recognise the complex relationship between rents
and housing benefit and so there are complicated issues there,
and also the fact that there has been a different history of the
way in which homes have been financed across the country makes
it quite difficult. Some areas therefore find that they are in
a relatively wealthy position in terms of their housing stock;
others find themselves not only with high levels of debt against
their stock but also with high levels of repairs being needed
as well. The housing revenue account is an attempt to deal with
that. However, it does make it hard for local authorities to do
long term planning and manage their assets effectively for the
long term. The operation of the housing revenue account is one
of the constraints that we have had to deal with in terms of making
it easier for councils also to be able to build more social housing,
so we are looking at ways in which you might potentially even
be able to dismantle it for the long term, and certainly look
at ways to reform it, look at what you might be able to replace
it with, but because of the redistributional nature of the housing
revenue account it is not a simple process. You, I know, are well
aware of the housing revenue account pilots that we are doing
to see whether we can take councils out of the housing revenue
account altogether. I think that would be great if we could find
a way to effectively dismantle it over the longer term but we
have to be honest about some of the practical difficulties that
we face in trying to do that.
Q185 Mr Betts: But while it exists
we do not want a situation, do we, where the Treasury would pocket
surpluses from the overall housing revenue account system, which
is possible if we look at it over the next two or three years?
As more authorities get into surplus we could find a situation
where some of the poorest people in the country were subsidising
the Treasury and that would not be right, would it?
Yvette Cooper: The housing revenue
account has been in deficit over a very long period of time and
all the resources end up being recycled, but certainly there is
an issue about how we try and get to a system for the longer term.
Ideally you want a system where every local area feels more sense
of a clear relationship between what is happening with the management
of the stock, with the rents that are being raised and the way
in which investment is taking place in that area. That, I think,
would be a much more desirable position to be in, but getting
from here to there is not a simple process.
Q186 Martin Horwood: If I may move
on to sustainability, there is quite a concern growing in environmental
organisations that the kind of policy that seems to be emanating
increasingly from DCLG does not really seem to be putting environment
at the heart of policy planning. We have got the Planning White
Paper which has the national statements of need and so on without
very clear environmental mechanisms, we have got the sub-national
review that you were talking about earlier, where there is an
awful lot about economic growth and economic development, but
that seems to come from a kind of pre-Stern report world where
economic growth and economic development were right for their
own sake and environmental damage was a price worth paying, and
not from the new world where we know that environmental damage
itself will have huge consequences further down the line if we
do not adapt to and mitigate climate change, and that that in
itself will have economic consequences that are extremely serious.
How do you respond to that?
Hazel Blears: I am very grateful
for the opportunity to reassure the whole Committee that our approach
in relation to the major reforms in the planning system that are
taking place is to try and make sure that we have integrated objectives
around economic development, the environment and the social objectives
that we have got. In fact, just last week we hosted a round table
with all the environmental NGOs and the three of us were there
with them, together with the Secretary of State for Defra, when
we had a very wide-ranging, challenging, good discussion, I think.
I am absolutely at pains to say that this is not emanating from
our Department, a kind of headlong rush towards economic development
at the cost of everything else. Integrating the environment and
the social objectives that we have got are absolutely integral
to everything that we have on our agenda, whether it is our house
building programme and the eco-towns, and not just the zero carbon
homes but shops and pubs and everything else in eco-towns; our
new planning guidance on climate change; all the work that we
are doing on the sub-national review. There is a feeling around
that somehow we have got this headlong obsession with economic
development at the expense of everything else. I am delighted
to have the opportunity to put on the record that this is about
integrating our objectives.
Q187 Martin Horwood: Okay, so if
we take one of the examples we were talking about earlier, which
was these new integrated regional strategies, are those going
to be signed off by the Sustainable Development Commission or
even by Defra to make sure that they are sustainable in terms
of climate change and the measures that we need to adapt to it?
Yvette Cooper: You mean the regional
strategies?
Q188 Martin Horwood: Yes.
Yvette Cooper: We have to do all
the sustainability assessments as part of the regional planning
process and so on, so, of course, they would need to do that.
Q189 Martin Horwood: So they will
be signed off by Defra or by the Sustainable Development Commission?
Yvette Cooper: The planning process
has a whole series of different sustainability things.
Q190 Martin Horwood: I know that,
but that has been a mixed experience at regional level, certainly
in the south west. There was not very much sustainability at all
in the regional economic strategy before people argued it in.
Yvette Cooper: Exactly, all the
reasons for linking them together. We have very clear requirements
in the regional planning process about looking at sustainability
in the wider sense, and we are actually going to strengthen those
as part of the new planning statement on climate change, so all
regional spatial strategies—and that will include the new
regional strategy—will have to comply with the new planning
policy statement on climate change which will go much further
in terms of requiring regional planning bodies, regional development
agencies in due course, regional and local planning authorities
and so on to take much greater account of issues around climate
change and the need to cut carbon emissions.
Q191 Martin Horwood: For instance,
extreme flooding, like the floods we experienced in Gloucestershire
in the summer, we know the Environment Agency says with climate
change is going to be happening on a much more frequent basis,
so places like Cheltenham, where I live, where we have got hills
on three sides, become particular targets for flash flooding,
and we have got others on the flood plain which are clearly very
much at risk, as Tewkesbury and Gloucester saw in the summer,
and yet still the regional strategy seems to be handing down these
housing numbers which do not seem to be being reviewed in the
light of these new environmental circumstances which are likely
to become more extreme with climate change. How does that work?
Are those numbers going to be reviewed or not?
Yvette Cooper: The whole point
about the new planning guidance on flooding was in order to give
a much greater role to the Environment Agency, both in terms of
regional plans but also in terms of local plans, and in the end
in terms of individual decisions, so all of the discussions that
we have had, for example, around potential new growth points for
eco-towns and so on are very much involving the Environment Agency
at a very early stage in the assessment. There are different ways
in which we can respond to some of the mitigation against climate
change. There will be some areas where we should be building fewer
homes. There will be other areas where you can build homes but
you need different kinds of mitigation strategies or defences.
Martin Horwood: And yet the numbers in
Gloucestershire are going up, not down.
Chair: Last week with the officials I
think we went round this circle at that point and we seemed to
get to the point, quoting from Mr McCarthy, that the regional—
Q192 Martin Horwood: That was at
the micro level but the Minister has quite rightly addressed the
macro level as well, which is what is responsible for handing
down these very large numbers, but the numbers appear to be going
up, not down, for an area that was hit by this flooding, so where
is the logic in that?
Yvette Cooper: You appreciate
that, given where we are in the regional spatial strategy process,
it would not be appropriate for me, or for any of the ministers,
to discuss an individual proposal in a particular area as part
of the regional spatial strategy.
Q193 Chair: Can you generalise—
Yvette Cooper: In terms of doing
it in general—
Q194 Martin Horwood: On the area
regional policy we ask you and you say it is down to the regions.
We are the regions and—
Yvette Cooper: No. Ministers have
to take decisions on regional spatial strategies.
Q195 Chair: Martin, you are about
to get the hypothetical answer, which would then give you what
you want and would allow the Minister not to go beyond her planning
role.
Yvette Cooper: What we are clear
about though is that the Environment Agency needs to play an earlier
role in terms of the planning for housing; and the new planning
policy statement on climate change does go into greater detail
around things like looking at mitigation issues as well as looking
at what you need to do to prevent carbon emissions and so on in
the first place. In terms of some of the issues specifically around
flooding, if the Environment Agency's assessment changes, for
example (and it may well be that the Environment Agency's assessment
in particular areas will need to change as a result of climate
change, so it is not necessarily the framework that is a problem;
it is simply that within that framework the Environment Agency's
assessment will change as we have greater information about the
consequences of climate change), that will be one set of circumstances
that we will need to better take into account. The second is that
we have done a lot of work around looking at traditional flood
risk areas and seeing flood risk areas as part of PPS25, and have
got stronger advice than ever in terms of the role of the Environment
Agency there, but I think there is probably more work that we
need around issues like drainage, so there is a presumption around
sustainable urban drainage systems as part of the new planning
guidance but some of the lessons that we had as a result of the
flooding that took place earlier this year are probably around
a need to look further at issues around drainage across the country
as well, and so that is obviously one of the things that could
be looked at as part of the review.
Q196 Chair: Thank you very much,
Ministers. I am sure we will be able to see you on several of
these issues further at subsequent meetings.
Hazel Blears: I have issued a
letter to the Department in terms of our priorities and I wonder
if the Committee would like to have sight of that letter. It may
well be helpful.
Chair: That would be extremely helpful.
Thank you very much.
| 
