Select Committee on Communities and Local Government Committee Minutes of Evidence


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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