Examination of Witnesses (Questions 40-59)
SIR BOB
KERSLAKE
18 FEBRUARY 2008
Q40 Chair: How is that different
from what the Housing Corporation and English Partnerships have
been doing already in relation to the Thames Gateway?
Sir Bob Kerslake: I think the
difference that the agency brings is its ability to look at all
of the resources in the round that are going into the regeneration
of an area and get more out of those resources in the way they
operate. I take it back to an experience as a local authority.
What you typically have is a whole series of conversations: one
with the Housing Corporation potentially on affordable housing;
with English Partnerships on site-based regeneration; with the
Government Office and with central government on decent homes,
housing market renewal and so on. I think what the new agency
can bring is an ability to combine those different conversations
and resources into a single conversation that is flexible to the
needs of individual places. That, coupled with strong delivery
expertise, I think will be what makes the difference here.
Q41 Andrew George: Getting the balance
right between coercion and the enabling role that you see the
HCA performing, of course, the Secretary of State will have the
power to designate an area in England for the HCA to actually
make planning policy or to become the local planning authority.
As far as Parliament is concerned, any Order going through Parliament
which is subject to negative resolution is one which is relatively
easily driven through Parliament. In what circumstances would
you see a wish to override local authorities, given your background?
You are saying that you would not want to use coercion but you
always want to take the enabling and supportive role to actually
improve the capacity but it is quite clear that the Government
takes the view that there will be local authorities which need
to have their planning powers removed from them. Can you envisage
any circumstances in which you would want to encourage Ministers
to pass an Order through Parliament in order to have those powers?
Sir Bob Kerslake: I think the
first thing to say obviously is these powers are powers that exist
in English Partnerships, so this is not a new power. As I said
earlier, I think it would be in the most exceptional circumstances
that you would contemplate using it. Let me just give one example
of how you might envisage using it. If you had a situation where
a particular initiative straddled a number of local authorities
and one key part of that initiative fell within an authority;
let us say you had five authorities and four were absolutely up
for the initiative and 10% of the initiative was in another, fifth,
authority that was not brought into this, then you might envisage
in absolute extremis that you would require to bring in the powers
involved here, but you would only do that if you have been through
a whole series of conversations beforehand. So it may be as part
of securing a wider outcome that you have to go in for that situation
but I think, as I say, it is going to be very, very rare.
Q42 Andrew George: So it will be
very much a last resort. You only envisage it in circumstances
where you have a large scheme which covers a large number of authorities.
Sir Bob Kerslake: I am giving
that as an example. You asked me whether I could think of examples.
I am giving you an entirely hypothetical one. I am not thinking
of a particular scheme here but you can hypothetically think of
a situation where a very important initiative, 90% of which is
in four authorities and a critical 10% is in a fifth that is not
on side with the change, where you might envisage using the powers.
I am giving that as a hypothetical example.
Q43 Sir Paul Beresford: Every authority
is going to be sitting there thinking you have your shotgun in
your bag.
Sir Bob Kerslake: No is the answer
to that because that is not the way the agency is going to work.
Q44 Sir Paul Beresford: But that
is the reality if you are having a conversation: "This is
the way we are going. I hope you like it. If you don't like it..."
Sir Bob Kerslake: I suppose the
question I would ask is, if that were the case, do people now
think that English Partnerships have a shotgun behind their back
when they have a conversation with them? I do not think they do
because of the way English Partnerships operates, and I am saying
this agency will operate in very much the same way as English
Partnerships and Housing Corporation in terms of working closely
in collaboration. So the fact that you have these powers potentially
available to you in exceptional circumstances I do not think would
mean that people will feel that there is always that shotgun behind
the back.
Q45 Chair: What about if the local
authority does not have the capacity, if there is a huge amount
of regeneration going on and the local authority just does not
have the capacity to deal with things?
Sir Bob Kerslake: One other circumstance
might be that a local authority says or a group of local authorities
say "We would want you to take on a role because of the scale
of the challenge." That is a possibility. There may be that
situation but in the case of capacity, it may be much more about
giving them support in their authority to enable them to deliver
or establish a joint partnership, something that Sheffield has
done very successfully through the urban regeneration company.
That was a voluntary partnership with the council, English Partnerships
and the RDA, Yorkshire Forward, an extremely successful partnership,
that has made a big change in the city centre. A key part of that
was bringing capacity in. Even there, where capacity is an issue
for a local authority, there are potentially other ways of securing
that capacity that do not involve you taking the planning powers.
Q46 Andrew George: Can I ask you
for an example where the targets which have been set by government
may in fact be in conflict with the best interests of what the
local authority are trying to achieve? One of the targets is the
delivery of 2 million homes by 2016, 3 million by 2020, and of
course, there are a lot of authorities around the country where
in fact simply heaping thousands more homes does not necessarily
improve or address problems of affordability. If you are trying
to enable, through coercion, development in areas which actually
desperately need affordable housing rather than expensive market
housing but in order to meet your targets and to satisfy the targets
set by government you need to use some coercive powers, you are
not necessarily responding to the best interests of what that
local authority is trying to achieve.
Sir Bob Kerslake: What I am saying
is that the agency, by virtue of covering a range of funding and
activities, has quite a bit of leverage at local level in its
conversation with them. So a local authority may have issues about
housing growth but it will almost certainly want to be securing
affordable housing, renewing estates, and renewing commercial
properties and sites. What I am saying is in that single conversation
there will be things that a local authority are very enthusiastic
about and there may be some they are not as enthusiastic about
but you can have that rounded conversation about the range of
things. I am saying that leverage that comes from the funding
and the expertise that you bring potentially has a lot more purchase
on it than coming in with a big stick and saying "I've got
powers of coercion if you don't co-operate." I am only going
from my personal experience and, as I said earlier, that has worked
far better than somebody saying "We will use coercion."
Q47 Andrew George: In paragraph 19,
the conclusion of your supplementary memorandum, you say that
the primary focus will be on delivery, yet in the list it talks
about supporting others to deliver, so in fact you are not delivering;
you are enabling others to deliver, so you still have that tension
there, even though the language you use is one of delivery. In
those circumstances, how will the HCA be structured to reflect
its role very much as a facilitator rather than a direct provider
of homes? It does seem to me that there is a tension within the
conclusion itself between wanting to meet government targets but
on the other hand merely facilitating. Of course, that involves
lots of local decision-making which may not add up to the targets
which the Government is setting.
Sir Bob Kerslake: You are right
to raise the point of the tension in the system. I am not suggesting
the conversation with individual local authorities is simply a
facilitative conversation. It is not just saying "What would
you like to do? We will help you do it." It is saying "What
would you like to do? What do we need to achieve? Where is the
common point of reference?" So it is an active conversation.
I do not know if that comes across clearly enough but that is
exactly what I am trying to describe here. If all we do is help
local authorities and we do not secure the national targets, that
is not going to be good news for me. If I come in and say "The
only thing I'm interested in is national targets. Do as I say,"
that is not going to work. It stands to reason that success is
going to come here through an active conversation that tries to
marry my ambitions to deliver national targets and local ambitions
to improve their place and secure more housing at a price people
can afford. The skill of this and the test of success of this
agency will be how well it can do that with authorities and groups
of authorities. This point about delivery: what I was seeking
to say here is that this agency will have delivery expertise about
how you do deals, about how you make financing work, about how
you set up joint ventures, all of which, in my view, is part of
the delivery task. That is what I am trying to say.
Q48 Andrew George: It may well be
that the targets set by government, these broad-brush targets,
may over the next 20 years be proven to be ill-conceived. It may
well be that your work at a local authority level, working with
local authorities, may in fact satisfy the needs within each of
those local authority areas without necessarily meeting national
targets. In those circumstances, would you feel that you have
done your job well, even though you had not satisfied Ministers
that your national targets had been met?
Sir Bob Kerslake: I would not
want to go down that hypothetical path, I have to say.
Q49 Andrew George: It may be reality.
Sir Bob Kerslake: What you can
say though is that really, the debate about supply and demand
is actually an issue about a structural imbalance. I think the
evidence is pretty clear from Barker and other sources that there
is an imbalance between supply and demand. The challenge for the
agency is that, obviously, there are government targets on absolute
numbers but it is the rate of build that is the key issue here
over time in order to get a closer balance between growth of demand
and growth of supply.
Q50 Chair: This Committee, of course,
is on record as saying that the Government's targets are too low,
not too high.
Sir Bob Kerslake: Indeed. That
is one of the things that comes out of the national unit's[2]
work, as you will know. I think fundamentally you can argue details
on these numbers but I think the intellectual case about the imbalance
between supply and demand now is very compelling, I have to say.
Q51 Andrew George: I was not actually
making any assumption about whether those numbers were too high
or too low. I was simply making the point that in fact local need
is best met by a proper understanding of need within that locality
rather than applying blanket national figures.
Sir Bob Kerslake: My point is
that I do genuinely believe, otherwise I would not have gone for
the job, that we can secure most, if not all of what we want to
achieve by strong delivery capability and an active conversation
with localities about their ambition and what we are trying to
achieve nationally. I think you can go with the grain of local
ambition and also achieve national targets. Time will tell but
I think we should start with that as our ambition.
Q52 Mr Betts: If I can just follow
through on this issue of trying to get the rate up and clearly
government is interested in getting more social housing. It is
interested in local authorities and others having a role in that.
Some of us are rather concerned that the mechanisms to achieve
that may take some time to put into place, for example, the housing
companies which one or two authorities are looking at are going
to take time to actually be created, and maybe different local
authorities are working independently on creating what may end
up being very similar vehicles, or we are relying on local authorities
putting land in for free to make housing development stack up.
One or two London boroughs may be able to do that but it is probably
not true outside London on any great scale. How do you see the
agency resolving this conundrum of actually getting in place fairly
quickly the wherewithal for local authorities to actually engage
in this process and start the building programme?
Sir Bob Kerslake: You are right
to say what we are seeking to achieve here and what we should
be measured by is outcomes. If they are achieved through RSLs,
fine, and they are the current largest supplier. If you can achieve
more affordable housing through ALMOs, we should look to that
and explore that as well. If you can secure more affordable housing
through local housing companies, that is another route, so I am
open to exploiting every opportunity and avenue there is to achieve
different outcomes. I think the question you are asking though
is how we get this moving with some pace. This is the point you
are raising. For me, that is about developing strong regional
teams with the agency who can work with local authorities and
help those who want to move down this path move down it quickly.
If you can combine that with sharing across the piece with a national
agency, then I think we have some prospects of success here. My
personal experience of making these things happen is that the
way you make them happen is to apply intense resource and expertise
in that early period. You invest the effort and time in that,
get a number up and running, and then you use that learning to
share it out across the place, across other places, if you see
what I mean. My personal view is: get a number of these up and
running, learn from them and then rapidly move on.
Q53 Mr Betts: And we will get them
up and running, what, in the next 12 months?
Sir Bob Kerslake: I certainly
think we will see some local housing companies happen and that
some of the ALMO options are going to move forward in that kind
of period as well.
Q54 Sir Paul Beresford: Where do
you see the private sector house builders in this?
Sir Bob Kerslake: Clearly, they
are absolutely critical, and this agency needs to have a strong
relationship with the private sector house builders as well, and
particularly moving forward that is going to be a part of the
agency's role. I want to have an agency that has as strong an
understanding of the private sector market as it has of the—
Q55 Sir Paul Beresford: So the link
with the private sector is all in the future then?
Sir Bob Kerslake: I think there
are already strong linkages with the private sector with the existing
agencies and I want to make them even stronger in terms of the
future.
Q56 Mr Betts: There is this issue
which the Committee explored some time ago that is always contentious,
always hotly denied by the house builders about land banking.
Do you see that as a key part of the role of the agency, to actually
unlock the land bank and get houses built on land rather than
it sitting in the reserves of the builders' accumulating extra
value?
Sir Bob Kerslake: Yes, the short
answer is we must find ways of encouraging development of sites;
private sector house builders must be part of the issue, and that
in turn means we need to understand the reasons why they are not
moving it forward, and therefore knowing the market and knowing
why it is taking the decisions that it is is a critical part of
this agency's success. Clearly, if there are opportunities that
are not being progressed, that should be a conversation with the
developers to understand the reasons why they have not moved them
on.
Q57 Andrew George: There are many
parts of the country, as Clive quite rightly says, where local
authorities have a five-year supply of land but it is land-banked,
it is very much held back by the private sector. You have the
potential coercive powers that you can threaten local authorities
with—I am sure that is not language that you would welcome—but
you do not appear to have commensurate powers to put any pressure
on private land owners or private developers. Is that something
which concerns you?
Sir Bob Kerslake: I think you
have potential leverage with the private sector. Obviously, to
some extent they have also got to think about how long their planning
permission lasts. That is one factor for them. That is not what
we are doing but what the local authorities are doing, they have
to think about that. They may be seeking some investment to enable
the development to happen, so you have leverage there to say "Are
you going to move it on?" If it is a piece of land they do
not own—of course, we are talking here where they do—you
can put the question back to them, "Are you going to move
on this or not?" and if not then look to others to take the
site forward. Sometimes—it does not always work—the
kind of power of a conversation with them makes a difference.
What I would say is—and this is potentially the power of
the agency—there may be one place where they are holding
a piece of land and you do not have any levers on them; there
may be somewhere else in the country where you absolutely have
a lever in relation to, say, public investment. Your ability as
a national organisation is to look across a range of sites and
say, "You are looking for our help here but we are
not seeing much movement from you there." It is that
kind of leverage that makes the difference, to be honest with
you.
Q58 Mr Betts: You mentioned RSLs
and their presumably currently almost total role in the delivery
of social housing apart from 106 agreements, and they clearly
will have a major role in the future. One of the potentially beneficial
aspects of the current regime is that the Housing Corporation
gives out funds for development but also regulates the performance
of RSLs as well. I have been quite critical in the past that they
never seem to connect the two together; a badly performing RSL
management can still get funds to develop. What is your relationship
going to be with Oftenant in terms of ensuring that, when funds
are given out to organisations they are not given out to organisations
whose track record in management is somewhat less than desirable?
Sir Bob Kerslake: Although these
are two separate agencies, and I understand the arguments why
that has been done, there has to be a close working relationship
between them. I would envisage a clear memorandum of understanding
between the HCA and the regulator, and part of that would be about
understanding the circumstances in which the agency would take
a view about investment decisions guided by concerns and issues
by the regulator about performance. So although they are two separate
bodies, they must work collaboratively. We will need to draw heavily
on the knowledge and understanding that the regulator has about
a particular RSL.
Q59 Mr Betts: So there is a particular
clear message going out there to all RSLs or indeed any organisation
involved in managing social housing that if they come to you for
funds in the future, you will be taking a careful look at their
past track record in terms of their management and the way they
operate?
Sir Bob Kerslake: Clearly, in
any sense, with any organisation, when you put funding in you
look at their performance across the piece. You do not just look
at, for example, how good their balance sheet is; you are interested
in how they have been managed and how they have delivered. The
regulator will be a key source of information on that.
2 Note by witness: Meaning the National Housing
and Planning Advice Unit. Back
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