Examination of Witnesses (Questions 184
- 195)
MONDAY 15 JANUARY 2007
MR BERNARD
GALLAGHER AND
MS DEBORAH
MCLAUGHLIN
Q184 Chair: Can
I thank you for waiting in the back and apologies for over-running
so you are being called a bit late. Can I start by taking up the
concept of "marginal owner-occupiers" which is mentioned
in your submission. What factors do you think are those which
drive these "marginal owner-occupiers" to move into
social rented accommodation? How significant do you think the
risk is that there might be some more of them if interest rates
continue to increase?
Mr Gallagher: We represent a forum,
and the example cited was from a colleague in Oldham. For us,
marginal owner occupation is around people who may be eligible
for shared ownership, low cost of ownership initiatives. We are
very concerned that there seems to be too much pressure applied
to people to see that as a tenure of choice as opposed to the
normal social rented tenure, so we are slightly concerned about
that.
Q185 Chair: Do
you believe the numbers in that group will increase significantly
if interest rates continue to increase?
Ms McLaughlin: Yes, that is one
concern, but more fundamental our concern was if the shortage
of supply of social rented continues, by encouraging people into
shared ownership and low cost home-ownership they may well be
getting themselves into a position of greater debt than they would
otherwise. They can just about afford it at this stage but an
increase in interest rates would be detrimental to their position.
The concern was if the choice of social rented was limited and
we encouraged people to go into low cost ownership they could
not cope with it in the longer term. Sometimes people do not always
take into account the maintenance costs and the ongoing costs
associated with home-ownership.
Q186 John Cummings:
Would you tell the Committee to what extent do HomeBuy schemes
have a role to play in housing provision?
Mr Gallagher: I think they had
a significant role to play. We think there needs to be as much
choice extended as possible. Across the North West region we have
done quite a lot of work in trying to understand market conditions
better. In the Regional Housing Statement we identify three sorts
of different markets in operation: dysfunctional markets, as they
were crudely described, which have been addressed in some part
through the Housing Market Renewal Pathfinder exercise; unbalanced
markets; and thriving markets. What we are trying to do is link
very closely, as we have tried in our arguments that we proffered
in the Regional Housing Statement, and see housing as an integral
part of the economic growth of the region. We think this is a
very important aspect. I would add that at the moment Government
is looking at extending something of the order of 100,000 units
through the Low Cost Home-Ownership Scheme over the next five
years. It has gone from 13% in 1988 to 30% and the view is it
is going to be 40-plus. We feel that is too prescriptive coming
down from Government, and what we would like to see is more local
decision-making around low cost home-ownership initiatives where
clearly there is a case for further choice.
Q187 John Cummings:
Do you agree with the criticism that the monies used to support
shared ownership is going towards existing stock rather than new
stock and that is having a consequential effect on increasing
demand and prices?
Mr Gallagher: I can only speak
for NWHF, but I do not agree with that. In my experience, shared
ownership has been very much towards new provision and has not
been towards existing stock. If you are looking at initiatives
to try and entice people who are in the social housing sector
at the moment, I think we are short of one or two initiatives.
One proposal is returning to the DIYSO approach, "do it yourself
shared ownership". No, I do not agree with that.
Q188 John Cummings:
To whom should these products be targeted?
Mr Gallagher: I think it should
be open to most. One of the issues we have found when looking
at key workers, graduates, indeed people from BME communities,
is something like 16% have taken up shared ownership in our part
of the world compared with 5% which is the norm in owner-occupation
across the country. It should be another tool and an opportunity
for people to look at some alternative to social rented.
Ms McLaughlin: Can I add a point
on that issue about the huge economic regeneration which has been
successful in some of the big cities in the northern region. A
HomeBuy option for the next generation of people who are benefiting
from economic growth will be a really good option for some people
to enable them to stay in the same area, so there is a local connection
as well; for people who might want to stay in the locality, who
have got aspirations, and are more economically active than perhaps
the previous generations. To be able to generate some HomeBuy
schemes within areas that are predominantly social rented would
be a very positive choice for some people.
Q189 Chair: One
of the suggestions which has been made for the Housing Corporation
to think about communities rather than just providing housing
is that it should invest in other services such as neighbourhood
management, childcare provision, work around financial inclusion,
other than just straight providing social housing. Given that
you are arguing there is a shortage of funding for social rented
housing, do you think investment in non-housing services can be
justified in those circumstances and, if so, how?
Mr Gallagher: I think it is a
classic competing priority for a lot of housing associations just
to consider where you have got pressure on looking at replacement
properties, which is what we are talking about primarily in the
North West, rather than just adding to the existing stock because
some of the stock is inappropriate. I think there are lots of
good examples, and the National Federation did some work on this
which has shown that a lot of work that associations have done
in community initiative type areas, which you describe, has had
a very, very strong effect on retaining and sustaining communities
and also has been very useful in terms of not being a drain on
the public purse. The real argument is whether tenants should
be paying for some of this initiative or the taxpayer, and that
is a real dilemma for us when associations are being expected
also to contribute, sweat their assets I think is the common term
which is now being used, to regenerate and provide new provision.
It is a real dilemma and is one we have got to consider very seriously.
Q190 Chair: Can
I pick up on something you said? You said in the North West you
are largely in the business of replacing properties which are
inappropriate. In what way are they inappropriate?
Ms McLaughlin: A lot of the properties,
particularly in the Market Renewal of Pathfinders, the pre-1919,
two-up, two-down, pavement terraces, are in poor quality and most
in the private sector had very, very little intervention or repairs
over time and are economically expensive to run because of energy
efficiency problems, so a lot of those properties are obsolete.
It is not that there is no demand for stock but it is demand for
quality stock which is affordable to live in which has been one
of the challenges for the Pathfinders in the North.
Q191 Chair: Is
it your experience that the Market Renewal Pathfinder Programme
has been successful, very successful or partly successful?
Mr Gallagher: Quite frankly, I
think it is too early to say. They have done some very, very useful
work. We have taken a lot of time and effort in looking at master-planning
and addressing some of the issues which Deborah just referred
to. These are ten to 15 year programmes and it is going to take
time to turn things around when you intervene in a market situation
where you have had collapse. I think some very good examples of
master-planning and resident involvement, to mention two, have
been extremely useful in building a platform for successful markets
in the future.
Q192 Chair: Can
you point to one or two particularly successful Pathfinders in
your region?
Ms McLaughlin: I work at Manchester
and I would argue that the Manchester/Salford Pathfinder has been
very successful. When we originally started work on Pathfinder
the market had absolutely been depleted in lots of areas in both
Salford and in the Manchester City Council area. We have had a
lot of work, a lot of investment has gone into the area, and the
market has picked up. There are particular schemes which are well
worth looking at that have really brought people into areas who
perhaps would not have wanted to live in those areas before and
have helped the economic regeneration of the area as well. What
has happened is the economic regeneration has been so successful
that the housing market does not yet match everywhere, the properties
are not there for people to want to move into, so both the economic
regeneration, as well as restructuring the housing market to match
the new demands, have been successful. Again, as Bernard said,
it is early years but there is evidence on the ground to see.
Q193 Chair: Would
you support social housing providers being allowed to invest in
private sector accommodation if that would help to develop mixed
communities and help regeneration?
Ms McLaughlin: I think what is
important is the outcome and developing mixed communities, and
we should look at all possible options to be able to give us the
outcomes that we require. If we just restrict ourselves to one
tenure type, as we have made the mistakes in the past, that is
not helpful for an area. We have got a number of schemes using
PFI monies as well as housing market renewal monies which have
resulted in mixed communities and have been successful on the
ground. I think we should look at all options to produce the right
outcomes, provided they do offer value for money, and perhaps
some of the value-added things which Bernard referred to that
the social rented sector offer in the communities, so neighbourhood
management and picking up early signs in the community, which
act as preventative measures, which save public money later on
down the line. For example, early intervention with neighbourhood
youth, anti-social behaviour and those sorts of things help to
sustain areas.
Q194 Emily Thornberry:
Would you understand why people from the London area find it difficult
to understand how it can be justified that northern England is
going to get a larger share of resources for housing, particularly
when you are spending the money pulling down what would seem to
be perfectly good housing and building more when we simply do
not have enough at all?
Ms McLaughlin: As you would probably
appreciate, that is an oversimplification of the housing market
in the North. If you think of Cumbria, we do have rural affordable
housing issues there, and equally Cheshire has got the same. The
Pathfinders are a very small part of the North. One of the issues
we as a Forum have to contend with is the diversity of the housing
market. We have got hotspots of affordability, and we have had
hotspots of lower demand which are now shifting. What I think
is really important is that the economic growth of the northern
region is not slowed down by the lack of housing choice and the
right housing choice. We have done so well in economic regeneration
that if we can get a housing market which complements that, that
would be very beneficial to the North. There is a lot to do with
such a diversity: it is doing the right thing in the right place
and recognising the diversity, and having the right intelligence
so that we know what is happening in the housing market to make
sure that we put the investment in the right place, because it
is so different. It is a challenge to the Regional Housing Board.
On the one hand, one priority is affordability and, on the other
hand, it is low demand, and it is getting those priorities right.
Yes, from perception from the outside it perhaps looks strange
but the reality, I think, is different on the ground.
Q195 Emily Thornberry:
We could fit three Islington families into a two-up two-down if
we were just given a few!
Ms McLaughlin: We do have issues
of homelessness, and our recent affordability issues in the northern
region have focused our priorities on looking at homelessness
and how we deal with it.
Chair: Can I thank you very much indeed.
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