UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1089-i of Session 2007-08

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

communities and local government committee

 

 

COMMUNITIES AND LOCAL government'S

departmentAL aNNUAL rEPORT 2008

 

 

monday 13 october 2008

MR PETER HOUSDEN, MR RICHARD MCCARTHY, MR DAVID ROSSINGTON,

MS HUNADA NOUSS and SIR KEN KNIGHT

 

Evidence heard in Public Questions 1 - 105

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 13 October 2008

Members present

Dr Phyllis Starkey, in the Chair

Sir Paul Beresford

Mr Clive Betts

John Cummings

Andrew George

Anne Main

Dr John Pugh

________________

Memorandum submitted by the Communities and Local Government to the CLG Committee for its inquiry on the 2008 Annual Report and Resource Accounts (AR08-01)

 

Examination of Witnesses

Witnesses: Mr Peter Housden, Permanent Secretary, Mr Richard McCarthy, Director General, Housing and Planning, Mr David Rossington, acting Director General, Communities Group, Ms Hunada Nouss, Director General, Corporate Delivery and Sir Ken Knight, Chief Fire and Rescue Adviser, gave evidence.

Q1 Chair: Good afternoon and welcome. Unless questions are directed specifically at one of you we are leaving it up to you to decide which one of you is the most appropriate person to respond. If I can start on housing and in particular the fact that the Government's target still remains to increase the rate of house building to 240,000 by 2010, there are arguments that even that is not enough but it is clear that the Government was not, even before the current credit crunch, on target to deliver that target. What is the reason why the Department has fallen behind and what steps were being planned to get the Department back on target in delivering that increased rate of house building? We will move on to the credit crunch afterwards.

Mr Housden: Just to begin, Richard McCarthy has been leading this area of work for the Department and may want to add to this. You are right to emphasise that the rate of household formation - 230,000-plus now - is at the heart of the Government's drive to increase house building rates and we have seen both in the social housing sector and in the private market an increase in both starts and completions prior to the advent of the current financial conditions. Our work over the last year or so in the period covered by the Annual Report has really been about accelerating that, creating the conditions through the planning system, through the availability of land to really enable that rate to increase steadily towards the targets that were set in the Green Paper.

Q2 Chair: So the 199,200 figure which is recorded in the Annual Report, progress had in fact started to move ahead of that.

Richard McCarthy: That figure was ahead of our trajectory. I would remind the Committee if I may that the target of 240,000 net additions a year is 2016 and not 2010. To have achieved that figure was ahead of our trajectory to get up to 240,000 by 2016. If you look at the rate of growth in 2001 we were significantly below that, about 130,000 net additions a year; you could see that we were safely, at that rate of build, on target to reach the 160,000 figure. I think in terms of the evidence that is relatively straightforward. Clearly there is the challenge about where that sits now, but I think it is important to recognise the evidence based on why that figure of 240,000 was selected and chosen.

Q3 Chair: The National Housing Federation actually challenged whether the Government was on target and suggested, talking about the bigger target of three million more homes, the that Government was behind target.

Mr McCarthy: There are three different targets as you look at the Housing Green Paper. One is the annualised figure which is to reach a net addition target of 240,000 by 2016. That is now very challenging but it is still eight years away. The other targets were the gross increase of provision from the base year of 2005/06 I believe to two million by 2016 and three million additional homes by 2020. Those two are extremely challenging. The National Housing Federation, you are right, has said publicly - as have one or two others, RICS as well - that they think that those numbers are under threat and in the context of the credit squeeze it will be fair to recognise that. Ministers have made it very clear that they know those gross targets are now very, very challenging. It is really important to start with the first target because that is built on an evidence base which is the ONS data on household growth. ONS tell us that households are anticipated to grow by 223,000 thousand households a year in the period to 2026. The fact is that we do need to provide the homes to meet that household growth. Clearly that is a challenge at present because of course, as you will know and is publicly available, we are building fewer homes than we would like at this point in time and there is a serious decline. We will be discussing with ministers if and when it is the right time to review those gross targets. We are in an extraordinarily challenging period. We are facing pressures and challenges and changes in the market place which are unprecedented and which flow directly from the credit squeeze. I would argue that ministers have been very clear; they wanted us to focus our time as a department and as officials on actually giving them the best that we can do with the resources available to do two things, one is to mitigate the immediate impact to the best we could of that credit squeeze; the second thing is to try to ensure that we do prepare the ground for the return of stable market conditions.

Chair: Right. Can we move then to measures that have been put in place to try to mitigate conditions at the moment?

Q4 Andrew George: Following the announcement on 2 September which actually added a package of measures further to the earlier announcement in May, I just wanted to find out first of all what the Department has estimated as the need either for mortgage rescue or additional assistance as was envisaged in either of those two announcements. How is the September announcement different from the May announcement and what additional money - or new money - is coming in both as a result of the May announcement and the September announcement?

Mr McCarthy: There were announcements both in May and July. What we did there was, using use our existing envelope and existing allocations on a year by year basis for the spending review period, we announced more money for advice to focus on trying to help people not having to see their homes re-possessed (£10 million additional was put into providing additional advice services). We also put money, along with other parts of the Government, into increasing court desk coverage, so we have now added court desk coverage at our cost at 40 county courts. Nearly 90 per cent of all county courts now have court desk coverage. This is important; it means that if you turn up for re-possession and you have no legal representation you get immediate assistance. That does help to reduce repossession numbers. That is work very much targeted at that end of the advice and support services we can give people. The other thing we did which I think is worth saying in the period of May and July was that we announced that we would spend initially up to - and then we said beyond if necessary - £200 million of our existing Housing Corporation Programme to buy completed homes from house builders which they are unable to sell and which would provide good quality, affordable housing. Over the summer it became clear that the scale of decline in the market, the scale of the credit conditions that we face, was continuing to deteriorate and deteriorate at some pace. It was agreed with ministers (not just in our Department with out ministers but with the Prime Minister and with colleagues at the Treasury) that we needed to take further action. That action involved bringing forward funding into this year and next from year three of our spending settlement. In total £700 million has been brought forward from our mainstream housing programmes and £300 million has been brought forward from what was originally the programme of funding for the regional development agencies. That latter £300 million will fund what is called HomeBuy Direct which will do two things: it will help more first time buyers access an equity loan which will enable them to buy a home on a low cost, sustainable basis and at the same time it is directed again at completed house builders' stock which is not perhaps appropriate for us to buy through housing associations but is ideal for first time buyers. Therefore we use the RDA money for that purpose because it clearly helps industry as well as individual first time buyers. Then £400 million was brought forward to supplement our affordable housing programme for social housing. It seemed to us right now that what we should be doing is everything we can to maximise the provision of social rented housing in these difficult times. A total of £300 million goes to fund two elements of mortgage rescue. One element is to help up to 6000 households directly by either taking an equity share in their home or by buying their home and renting it back to a housing association where they are facing repossession and it is anticipated that they would then have to be picked up as homeless through our statutory homelessness obligations and they are rehoused in the social sector. It makes sense for the individual family, families with children and other vulnerable households, to do it in that way. The second element which we think may prevent up to 10,000 re-possessions is the extension of ISMI (Income Support for Mortgage Interest) welfare benefit where two changes take effect next year. One is to increase the level of loans at which ISMI can take effect from £100,000 to £175,000; the second element is to actually speed up access to that assistance from 39 to 13 weeks. We have put £100 million to contribute towards that cost. What we have done there is to bring forward that money to achieve a real impact on people's lives in the short term to reflect those immediate pressures which exist.

Q5 Sir Paul Beresford: That is a lovely phrase "brought forward", but what does it mean? Where does that money come from and what was it to be used for originally?

Mr McCarthy: £700 million will come from our Housing Programme in 2010/11. The Treasury has said that we can now spend that money this year rather than in 2010/11. £300 million comes from the ring fenced RDA budget which sits on the Department's balance sheet if you like, again from 2010/11.

Q6 Chair: So there is not actually any new money.

Mr McCarthy: It is money brought forward. We have always said that.

Q7 Anne Main: There has been some criticism from local small businesses who have said that this money has been taken away from business development through the RDA and that it is not the best use necessarily when you are trying to re-generate an area to deprive businesses of what was money they were expecting to have and put into housing. Can you justify that? What research was done on that?

Mr McCarthy: I can understand that concern and I can assure you that ministers took that decision very carefully and with some degree of reluctance. It was a decision taken in consultation with the Prime Minister and with John Hutton as well as by ministers in our Department; it was not a unilateral decision.

Q8 Anne Main: Businesses have seen it as a political tick to try to -----

Richard McCarthy: I understand, but let me just finish by saying that of that money £275 million comes from the 2010/11 budget from RDAs from £25 million from 2009/2010 programme, so it is about future expenditure. Faced with the pressures that we have at the moment, an industry that has experienced the greatest impact is the house building industry. Therefore a conscious decision was taken to fund an initiative which would bring real benefits to the house building industry because that money is all about buying their completed stock as well as helping first time buyers who cannot access a home at the moment. I think that despite it being difficult and painful for ministers, it does something which helps industry and helps first time buyers now.

Q9 Anne Main: It helps house builders which are a very, very powerful lobby group, but there have been complaints. The 6000 houses where you are going to buy them up and rent them back for mortgage share equity or whatever, what value are you going to take on their home at what level? What valuation are you going to take on them?

Mr McCarthy: The acquisition will always be based on a proper valuation of their home by a chartered surveyor. Where possible we will simply seek to buy an equity share rather than buy the home outright if simply by taking an equity share out you can get the income of the household in line with their ability to pay their mortgage, clear their arrears and get them onto a stable position. In some cases we will find that the only way that we can help and the only way that that household wants us to help - ultimately it will be their decision - will be to buy their home. They have to consent; we cannot impose it on them. It will be there as an offer with advice independently given and it is for them to accept that offer. If they do not then they will have to face the potential consequences of repossession. It is an offer of additional support for those people.

Andrew George: I did ask originally whether you had made any kind of estimate of the need - an up-to-date estimate - and assuming that you have and that you know that the schemes that you brought forward will be in a position to meet that need, I wanted to find out how you are going to target the resource in order for it to be the most effective, and how you are going to target it geographically as well as to those groups that perhaps you might argue are most vulnerable and in need.

Q10 Chair: Just before we get into the targeting bit, can we find out whether you have any data on response thus far on even the mortgage rescue scheme or HomeBuy Direct?

Mr McCarthy: They are still at different stages of development. The mortgage rescue scheme is a whole new scheme and is not without its complications. We have a project team in place at the moment involving representatives from the lending industry as well as other stakeholders, including the LGA. We expect it go to fully live in January next year; we have always said that. We are about to start the process of selecting our Housing Association partners. On HomeBuy Direct, on the first of October we invited house builders to bid, to take part in HomeBuy Direct. We hope to have allocations either out in November or December so that we can start that programme this year.

Q11 Chair: What bids have you got?

Mr McCarthy: I cannot tell you, but the Housing Corporation has invited bids and is waiting to receive them against an agreed timescale. I cannot comment in detail on that. On the numbers, first of all the question of repossessions, as you may well know, the Council of Mortgage Lenders is predicting 45,000 repossessions in the current year and at least the same potentially - they have not confirmed this yet - the following year. We think that about 9000 of those households over this year and next year would be likely to be rehoused through homelessness provisions. So 6000 out of the 9000 seems to be a reasonably well targeted response to that particular group. The key thing is that the money will go where the needs are. I think it is very important not to try to divide it at this stage. We will let the resources follow the need as we work with individual housing associations and local authorities. Local authorities will be at the front end; they will make the assessment as they normally do for homelessness provision.

Q12 Andrew George: The court desk coverage is not universal, is it?

Mr McCarthy: There was a significant increase of 74 additional court desk coverage achieved in the last two months. This leaves some ten per cent left where there is a mixture of partial coverage and where we hope action by ourselves and the Ministry of Justice will extend to a hundred per cent coverage.

Q13 Andrew George: Regarding the Housing Association purchase of private sector stock, it is my understanding that very little of that stock actually meets housing association standards. Is that right?

Mr McCarthy: A relatively small proportion will meet all of the standards, for example Code Level 3 on the Code for Sustainable Homes. The Housing Corporation have said to the housing associations that they will be flexible on standards as long as the housing associations accept and themselves check that those standards are suitable for the long term. That is why the HomeBuy Direct scheme is about individual first time buyers buying homes direct. So there is a balanced approach to clearing unsold completed homes, some by housing associations using the £200 million and some direct by first time buyers.

Q14 Andrew George: Could I move to another aspect of the credit crunch which is the banking collapse and the impact that that is having on local authorities? Will the Department assist those local authorities who are faced with short term difficulties following the collapse of those banks? Has the Department had any discussions with the Treasury regarding any kind of rescue or at least support arrangements for those local authorities?

Mr Housden: We are working very closely of course with the Treasury on this first of all to ensure that deposits are recovered as quickly as possible from those banks that are in administration in the UK, those Icelandic banks. It is worth emphasising of course that this is money that is at risk rather than lost and in these situations in the past it has certainly been possible to recover a good proportion of assets. You will be aware of course that the Chancellor of the Exchequer last Wednesday froze the assets related to one of the banks, Landsbanki, and a team of Treasury officials were in Iceland on Friday talking directly with those authorities there on a constructive basis. We have worked particularly with the Local Government Association to understand the scale of the impact across local authorities in England and that work is on-going. John Healey and his colleague Ian Pearson at the Treasury met Local Government Association last Thursday to be sure that that work was going in the right direction. The Local Government Association have made an interim assessment thus far which they are hoping to complete within the next couple of days. You will appreciate that authorities are in very different positions in terms of the range of their exposure and their size, so you have very large local authorities such as Kent down to very small district councils, and of course the exposure and the risk can be different. What the LGA is asking is any authority that is facing significant difficulties to let them know straight away. We have agreed with the LGA that as soon as that analysis is available we will sit down with them and on a case by case basis see what would help those local authorities to manage essentially cash flow types of issues. That is where we stand at the moment. I think over the next two to three days that position should mature and we should have a complete picture.

Q15 Andrew George: You mention those local authorities that find themselves in particular difficulties, but in your discussions with the Treasury is there any indication at this stage about whether the Government is able to actually offer any additional assistance or mitigation measures?

Mr Housden: We have experience of these types of situations in the past - if you remember BCCI - and from time to time individual local authorities will have, through an investment that has gone wrong or some other circumstances, not dissimilar challenges to face. There are a range of responses to be made. Their own bankers - bear in mind that local authorities do bank with a range of institutions - are often able to tide them over difficulties and in circumstances where the Government is needed to help there are a range of devices, including extending the borrowing approvals of a particular council if that needs be. One of the things that we want to make sure as well though is that particularly the smallest councils have access to appropriate financial expertise so we do have specialist people, our own and those in the LGA, willing to go and help them get to the bottom and to devise a particular strategy.

Q16 Sir Paul Beresford: The question has to be asked, why did they not take the warnings? Most local authorities took the warnings, why did these not? Did the Government give them warnings? The Treasury?

Mr Housden: As you know, Sir Paul, the financial conduct of local authorities is a matter for them. With the Treasury we offer guidance and their financial dealings in this area are governed by guidance which advises them, when thinking about investments, to think not only about return but also about risk and about spread. Yes, local authorities had access to the credit ratings as any other investor would have and made their decisions on that basis. The LGA have said that they have no evidence of any recklessness on behalf of the local authorities thus far.

Q17 Sir Paul Beresford: But the rating of these banks dropped quite dramatically a few months ago, would that not be warning enough?

Mr Housden: Again local authorities need to make their decisions on the basis of the range of information that is available to them.

Q18 Chair: Would this be a matter that Audit Commission might look at, if a council were felt to have been reckless?

Mr Housden: Yes they did, and in fairness after the BCCI and those types of issues that has been for the Audit Commission and people working for them; that is exactly the type of thing they would look at.

Chair: Can we move on then to eco-towns?

Q19 Anne Main: Why has the announcement of sites for eco-towns been delayed from this month until next year?

Mr McCarthy: There is a two stage consultation process and we will be shortly publishing the next stage of consultation which will include a draft planning policy statement and a draft sustainability appraisal. When the process started earlier in the year this was explained. The reality is that we had a very strong response to the first round of consultation and therefore we have been taking some time to properly consider those consultation responses so we are a little later coming out with the next round of consultation than originally anticipated. We are reaching the end of that process of analysis and I hope that fairly shortly ministers will be able to publish that draft planning policy statement and draft sustainability appraisal. That is absolutely essential. That will mean that the announcement of locations identified as being suitable for eco-towns will now occur next year and not this calendar year.

Q20 Anne Main: What is a strong response? What do you mean when you say you had a strong response?

Richard McCarthy: I cannot tell you the numbers off the top of my head. We will have to write to you to tell you how many people responded.

Q21 Anne Main: Are you saying they responded positively or negatively?

Richard McCarthy: We had a mixture of responses actually. We have a coalition of 22 external organisations formed in favour of eco-towns. I think there is quite a mixed response out there. There is some anxiety amongst local communities and it is important to recognise that. The process of concluding the sustainability appraisal is a complex one and we need to make sure, quite rightly and properly, that what we come out with is in a strong place and can then result in a successful second round of consultation.

Q22 Anne Main: Three of the original applications have now been withdrawn. Do you still anticipate having ten eco-towns?

Mr McCarthy: The position, as has been stated for some time, is that we hope to have up to ten eco-towns. That is the current position we are in.

Q23 Anne Main: What about the five eco-towns by 2016 and ten by 2020? Do you think you are still on target for that?

Mr McCarthy: At this stage the indications are that five could be significantly in construction with significant homes built by that date and up to ten in total by 2020, but we need to go through this carefully.

Q24 Anne Main: Why was the maximum number reduced down from 20,000 to 15,000?

Mr McCarthy: I cannot answer that in detail. I can write to you to clarify that. The target is roughly 5,000 to 15,000 and that is our stated position.

Q25 Anne Main: Apparently in the progress report of the Department in July the maximum number of homes was reduced.

Mr McCarthy: As far as I recall, but I will be happy to clarify this, that reflects the scale of indications from individual participants. It is purely a reflection of what people are saying to us, but I am happy to clarify that.

Q26 Anne Main: People are saying they would like smaller eco-towns?

Mr McCarthy: I believe the range we have is from 5,000 to 15,000.

Q27 Chair: It would be good if you could clarify that point.

Mr McCarthy: Of course.

Chair: Can we move on to Decent Homes?

Q28 Mr Betts: I have a general question to begin with. What is going to follow decent homes and when will know, because there are some real difficulties? The Committee has identified, in response to last year's report, a success story for the Department which it could be proud of and indeed there are many councils and housing associations that can be proud of their work as well. However, to take my own example of Sheffield, Sheffield Homes has the maximum star rating, ALMO, over a number of years but is now laying off at least 100 staff, the Decent Homes work is now falling off. There is still an on-going need for improvements and maintenance but ALMO is looking to the future and realising they cannot keep people on in the hopes that something may turn up.

Mr McCarthy: You may be aware that this year Yvette Cooper, when she was Housing Minister, announced the review of council housing finance, a extraordinary complex piece of finance rules and regulations and as part of that review we will be looking at what should replace the Decent Homes standards going forward beyond the 2010 figure. The intention is to try to create a finance system that is sustainable and that recognises the costs of managing and maintaining stock owned by local authorities either within ALMO or directly controlled by local authorities themselves. That review is the place where we are thinking about the long term standards and long term funding of what has been a very special programme involving already £29 billion of expenditure and likely to end up in excess of £40 billion of expenditure, dealing with a huge backlog of repairs and improvements required to local authority stock. We are doing that work now but it is not easy, it is complex, it is tied to the whole review of the housing revenue account. That work is happening right now.

Q29 Mr Betts: I think it is a bit glib to say, you know, restructuring and recapitalising commercial banks can be done in a weekend but obviously a review of the housing revenue account takes slightly longer to resolve. That is another related issue I accept. Sheffield has 200 staff laid off presently. Their problem is that they cannot plan for the future when suddenly their revenue position changes by £6 million over the next couple of years because of the effect of the housing revenue; it is nothing to do with our expenditure or income. Are we really going to get a solution to this within the near future so we can get some certainty and forward planning, otherwise we are going to have houses that are not maintained properly?

Mr McCarthy: All I think I can say to you is that that review is on-going; it is due to finish in the early part of 2009. The outcome of that review will be presented to ministers who will then need to consider it. They will need to reflect on the outcome, the evidence and the proposals that flow from that review in the context of the total pressures on the public sector in terms of its resources. I think it would be foolhardy for me to say anything beyond that at this particular stage and you yourself fully recognise that. Whilst I welcome the challenge to do everything over a weekend, actually this is a very, very complex piece of work and we have to try and get this right.

Q30 Mr Betts: Can I just raise one particular issue then which is that I see the figures about the number of new central heating systems that are put in, but I think one thing the Committee was critical of when we did our initial report into Decent Homes a few years ago was that there were not really any standards in terms of insulation set to a particularly high level. That is an issue we wanted to come back and look at, the whole question of heating and insulation. In many ways that seems a much bigger and more important subject for people now and the issue that social housing tenants face is that if their heating system actually works and delivers heat but is probably 15 years old you find that they are not being repaired under the Decent Homes programme and while an owner/occupier or private tenant can go to Warm Front if they are on the appropriate benefits and actually get a new heating system put in because it is more efficient and reduces their household bills, the same is not true for social housing tenants. There seems to be a gap in policy here. Is there any attempt to try to at least do something about the immediate problems while the bigger, longer term review is taking place?

Mr McCarthy: The work to homes has improved in many cases their performance. If we look at the SAP ratings for social housing stock owned by local authorities there has been a real improvement through the Decent Homes programme. I know and recognise that the Committee and others have challenged whether higher standards should have been introduced but I think we need to be careful. There has been an improvement in the environmental performance of buildings through this programme. The fact is, what we can do is limited by the resources available to us and that is all ministers have available. It is a very challenging programme. If you remember the figures I used earlier, it started off with a £19 billion backlog but then just to reach the standard you may not regard as high enough it would cost some £40 billion plus. That is, I am afraid, a piece of the reality that we face. Where we can we encourage landlords to go higher than the minimum standards. I do not have the SAP rating improvements immediately to hand but I am happy to share that with the Committee if that would be helpful.

Q31 Chair: There is an issue here about joined up government. Quite reasonably with the fuel price rises the emphasis on improving energy efficiency has moved up the agenda and yet because of the lack of restructuring at the HRA at the moment some councils are faced with actually paying money into a central pot. I think what we are asking is that there should be more urgency to re-evaluating the Decent Homes programme and the HRA review in the light of the need to improve the energy efficiency of council homes, many of whose tenants are amongst the poorest in a given area.

Mr Housden: I think we completely accept the logic of that. The complexities of the review, as Richard has explained, I think mean that it is unlikely to conclude earlier than its early 2009 timetable. What you have in parallel, of course, is the work that is being led by Defra following the other summer announcement about a stronger programme of energy efficiency in local areas and we are working with them to understand how that can best be played out and the role of local authorities in that scheme.

Q32 Sir Paul Beresford: So we can expect more large sums to be brought forward and a desert left behind in two or three years' time.

Mr Housden: I think that the spending review is going to be a challenge for us and for ministers really. Mrs Main made an important point I think about the RDA. The original disposition of funds in a spending review allocated a certain quantum to regeneration through the RDAs and ministers had a prolonged examination of the balance of advantage of taking some of that money, bringing it forward and using it in the way Richard described. These are not easy choices and if the situation is able to settle down then ministers will be able to look at that and see what the next phase of public expenditure in the spending review and beyond should look like.

Q33 Mr Betts: In your discussions with officials in Defra is it possible to look at the area where private tenants and owner occupiers are eligible for certain grants to improve the efficiency of their homes, but council tenants, often living next door in the same conditions, are excluded?

Mr Housden: I think that is an important equity issue which is on the table.

Q34 Anne Main: Picking up on what you said about the difficult decisions and choices to be made, can you also see that people do feel a lot of this is spending the same money twice? This has been a concern that has been raised to me, that money that has been promised for future developments such as businesses is actually now being spent in a completely different way and yet we have not really had an analysis of what this means, this sort of bringing forward money, or mortgaging the future as Paul might put it. Does the Department take that on board or does it just think that that is what we have to do?

Mr Housden: I think the circumstances we faced were exceptional and indeed have grown the more so since those decisions were actually taken. From my point of view as accounting officer it was very important that the measures that the Government took in the summer individually and collectively represented proper value for money and were likely to achieve the outcomes for which they were intended, and I am confident that they were. Similarly it is not quite as absolute as it might be painted that once it was going to be spent on economic development now it is going to be spent on housing because the links between housing investment and the prosperity of an area I think are well understood, similarly the building and construction industry and all the allied trades that go with that are a very important part of our economy, so actually doing things to maintain the momentum there, to keep people in employment, to keep factories open was the logic behind ministers' decisions to do this. What I would not do is to do this Committee the discourtesy of suggesting that that was an easy thing to do or that there is not a down side, and that RDAs would not have spent the money well on other areas. That is not the contention, but ministers had to make that choice.

Q35 Sir Paul Beresford: Can you send us a list of those funds that have been brought forward into this financial year?

Mr Housden: Yes, of course; I would be happy to do that.

Chair: Can we move on to Home Information Packs?

Q36 Dr Pugh: It seems impossible to judge, with the strained state of the housing market at the moment, whether HIPs are actually gumming up the works or facilitating house sales by more than ever before. According to research only seven per cent of buyers found them useful; 76 per cent of them said to the NAO that they had no impact whatsoever on their decision to buy. On the basis of that research could it not be said that the results are not promising. Although we cannot judge HIPS, at the moment it does not look as though they are having much impact, if any.

Mr Housden: I think the research covers the time period in the early days of Home Information Packs but I think you do make an important point. At that stage it was certainly true that the profile of Home Information Packs in the house buying and selling process was not high. The evidence was that estate agents were not bringing forward this material to prospective purchasers in the way that we had intended. This drove quite a bit of targeted investment in terms of terms of awareness raising at people who were in the house buying/selling process and on estate agents themselves. We have been working steadily over that period - they have now been successfully introduced, over 800,000 of them have been issued - to lift their value to the consumer. There are two interesting dimensions of this. We are seeing that the very fact of Home Information Packs being a requirement has driven first of all reductions in things like the cost of local authority searches on property but also innovation in the sector, so you have seen solicitors offering all through services, HIPs included. Some of the intentions that ministers had about making house buying and selling more progressive and easier for the consumer I think are being realised. We are looking to continue to build upon the usefulness of that and we are out to consultation at the moment about the usefulness.

Q37 Dr Pugh: The usefulness only exists if people actually find a use. You are spending £4.9 million impressing people with either their usefulness or telling them about their existence, but that will only be money well spent if you are able to show that the people who need to know about them not only need to know about them but they are getting something from them and at the moment would it be fair to say that there is not very much evidence to suggest that people are recording these benefits on either side arguably, the vendor or the buyer?

Mr Housden: I think ministers would agree with you that there is more to go in terms of consumer usefulness. What we have seen is that our stakeholders in the wider house buying and selling industry are now very actively engaged with the Department in looking to realise more value from that requirement.

Q38 Chair: Can you rephrase that into clearer English?

Mr Housden: You will remember probably the last time we talked about this - or certainly the time before - Home Information Packs were hotly disputed so you had people like the Royal Institute of Chartered Surveyors, the National Association of Estate Agents who were against them.

Q39 Dr Pugh: They probably still are.

Mr Housden: Whatever their inner views they are collaborating very effectively with us now to increase the effectiveness of Home Information Packs going forward.

Mr McCarthy: Just to pick up, if I may, where we have seen some real benefits, search costs are down by an average of £30 a search. Connells, the estate agents, say that it is now reducing the speed of time from people starting the process to completing the purchase of their home, so there is some indication of (a) some positive impact and (b) some innovation now occurring within the market. That is one of the reasons why there was a recent consultation which closed on 30 September for example for something called a Property Information Questionnaire completed by the seller to see what can be done to improve, at very low cost, the quality of information provided. Some are now starting to prepare HIPs that are ready for mortgage approval. So that innovation is going on out there.

Q40 Dr Pugh: Obviously search costs you would expect to go down, but equally on the other side, the cost of keeping the pack up to date and all that goes with that is going to be there and was not a cost beforehand. Are you convinced that the total transaction cost, if I can put it like this, and whether it falls on the vendor or whether it falls on the buyer is actually going down?

Mr McCarthy: Most buyers are sellers and most sellers are buyers so there is an issue about the timing of the information you provide.

Q41 Chair: Sorry, with respect, Mr McCarthy, I think that is avoiding the questions. On a given sale there is one vendor and one buyer and if the argument is that on a given sale the transaction time down is down and the cost to the buyer is down it is a legitimate point: has that cost merely been transferred from the buyer to the seller?

Mr McCarthy: Yes, and hence my point actually. HIPs are costing between £200 and £300 a time, including the energy performance certificate which we have to provide anyway, as you know, in terms of the EU directive. Of course, if you just completely compare that cost of cheaper searches (which strikes me as a benefit which would not have occurred, I do not think, without HIPs) against that cost, it is obviously much smaller, but given that you do not have to get that search yourself, the provider of the HIP as the seller does not then have to obtain that information when they are trying to buy, which is in most cases. You need to be very careful about understanding the total impact of someone involved in the chain. You must remember the benefits for the first time buyers who find it most difficult to enter; they are actually saved significant costs when they enter the home buying/selling process.

Q42 Chair: If you stripped out the costs of the EPC -----

Mr McCarthy: That is included in the cost.

Q43 Chair: Yes, I know it is, but the EPC was an additional requirement for very good reasons, but there was obviously an additional cost. If you strip that out of the thing, what would be the additional cost of the HIP minus the EPC?

Mr McCarthy: The cost of the search.

Chair: I think we would quite like to see that data. Anne?

Q44 Anne Main: Given that the housing market is now taking a long time to sell, some people are not having any visible date for a sale, have you evaluated the shelf life of HIPs and the fact that people have to commission HIPs to put their house on the market but by the time the house has been sold the HIP is considered to be outdated by both the people wanting to buy the house and also those lending finance on the house?

Mr McCarthy: Those are quite different matters. First of all the HIP has no bearing at all on the way the market works in terms of the scale of challenge that we see in the sharp reduction in transactions.

Q45 Anne Main: But is having HIPs worthwhile? People will wonder why they have to have it when it becomes redundant after a certain period of time.

Mr McCarthy: This hangs on the central issue that you want to improve the information provided to the consumer at the beginning rather than part way or at the end of the process. What the HIP does is that it puts more information in front of the consumer earlier and if you are choosing to buy a home yourself in whatever form in the market that is uncertain, that strikes me again that there are clearly some benefits that may derive from giving you that information earlier rather than later.

Q46 Anne Main: Only if you find a purchaser for the property within a reasonable period of time.

Mr McCarthy: Clearly the action the Government has taken to seek to stabilise the banking sector and hopefully over time unlock credit will actually hopefully have the impact that we all want to see, I am sure, which is to see the market moving again.

Q47 Anne Main: The buyers and sellers that you mentioned earlier on, it is as if they are all coming to the party at the same time and at the moment they are not. Particularly in a housing market where people are being obliged to put their house for sale because of financial problems themselves, they will then have to buy this thing which only seven per cent of people say is valuable and it is therefore going to start ticking its sell buy date, and the purchaser is still out there waiting for things to fall a bit further to get a better deal. I would say, at this moment in time, HIPs to me seem to be a completely redundant thing to be having.

Mr Housden: I think the ministers' intentions in introducing them were to rebalance, if you like, the transaction in favour of the purchaser, to provide that individual with a better picture of what they are about to buy, not only for consumer protection but also to prevent chains collapsing when new information surfaced part way through. I think that ministers evaluated that that actually would work, that the potential benefits to the consumer were worth the additional costs.

Anne Main: That was then, this is now.

Chair: I think we will have to pursue this with ministers. Clive, just one question.

Q48 Mr Betts: Have you got any information about anyone actually including a Home Condition Report as part of HIP and whether that has had any impact or effect on the process of the transaction in those cases?

Mr Housden: There are a relatively small number. I am afraid I do not have the information with me, but it is a relatively small number of HIPs that have voluntarily opted for a Home Condition Report. If I can come back to you on that I will.

Q49 Mr Betts: Is there any thinking about re-visiting the issue of mandatory Home Condition Reports in the future?

Mr Housden: In the discussions with the industry stakeholders that has been debated and there are those people who are in favour of it and there are those people who are not. At this stage ministers have not decided that it should form part of a reform.

Q50 Sir Paul Beresford: Are you considering dropping it altogether as part of your reform?

Mr Housden: That has not been considered as an option at the present time.

Chair: Can we move on to flooding and the Audit Commission review?

Q51 John Cummings: Is it the view of the Government that there has been too much development on flood plains?

Mr Housden: I think that the Government's view reflected in planning policy statements in the remit to the Environment Agency is that the geography of this country requires in essence, and has done over many centuries, that settlements will be built on flood plains. Secondly, where new developments are to be considered it needs to be a very careful decision. Local authorities are obliged to receive advice from the Environment Agency to help their planning decisions go forward. Each case does need to be considered on its merits and our planning policy statement has recently given some further force and shape to that.

Q52 John Cummings: Can you tell the Committee what are the emerging results of your examination as to how PPS25 is working?

Mr McCarthy: What is interesting is that under the PPS25, since it came into being (there were only a relatively small number of schemes approved against Environment Agency advice) the numbers have dropped very, very significantly.

Q53 Chair: But there are still some then.

Mr McCarthy: Two have just gone through a public inquiry and taking on balance the different views and evidence presented to the inspector the inspector I think in those two cases recommended to the secretary of state and the secretary of state agreed that development should take place. That was the point of the direction that was introduced with PPS25 which is actually any major development proposed in areas of high risk of flooding opposed by the Environment Agency the secretary of state would consider whether to call in. That is having a very real impact. What it did not say is that there would never ever be any development of any kind on an area at risk of flooding, but clearly what we would expect is people to properly build in appropriate flood protection within their scheme, but the extent to which any development takes place opposed to Environment Agency advice was extraordinarily small and has got much small since PPS25 was introduced. You will remember in the Pitt Review the Government was applauded for the improved guidance and planning policy in terms of preventing flooding in new developments.

Q54 John Cummings: In view of what you said, what steps are being taken to ensure developers are making an appropriate contribution to flood defence measures?

Mr McCarthy: When you are developing a site there may very well be mitigation that you have to put in place to bring that site forward for development and that would be covered within section 106 planning agreement. That will often include in areas of risk contribution to flood protection. Developers should take that into account when buying the land on which they hope to build a development.

Q55 John Cummings: That is the position now; do you intend to change that position, to strengthen it, to give more protection?

Mr McCarthy: We are not intending to strengthen it, having received external applause that we seem to have got it about right; there is no intention at all from ministers to weaken the position on flooding in our planning policy at all. We have recently issued good practice guidance to make sure that people have good evidence of good practice in other parts of the country that they can follow in their locality.

Q56 John Cummings: Who would police the good practice?

Mr McCarthy: It would be down again to the Environment Agency that has to be consulted as Mr Housden said on new developments in areas of flooding risk and if there are any attempts to approve schemes against Environment Agency advice then it gets referred to ministers. So there is quite a strong policing built into the system.

Q57 John Cummings: Can you tell the Committee, how are those buyers, especially of new properties in flood risk areas, currently made aware of the risks?

Mr McCarthy: I now that in some cases under the HIPs regime individual providers of HIPs are starting to include in some locations advice in areas at risk of flooding to make sure consumers are aware of the fact. It is very much down to the evidence collected by the consumer and through the search evidence that they collect.

Q58 John Cummings: Are you saying that that information will be included in HIPs in the future?

Mr McCarthy: I do not think we have intended to provide specifically for that other than for it to be in in the normal way.

Q59 John Cummings: Have you made a decision on that? I understand it is under consideration at the present time?

Mr McCarthy: We have not made a decision.

Chair: Anne, would you like to move on to the coordination of the flood recovery programme?

Q60 Anne Main: How effective was the CLG in coordinating the cross-government response to the flooding?

Mr Housden: In terms of the immediate issues, Mrs Main, we had a good response from the public and from local authorities as they sought to help their populations - 48,000 households, 7000 businesses - and we were able to support local authorities with some unringfenced - to use the jargon - funds from CLG that they could use to meet whatever priorities they felt were right on the ground immediately and then to bring into play a whole series of other government departments whose grants and finance were important in terms of the overall recovery work of schools and other facilities needing to be repaired. We are still concerned obviously that there are - happily now a relatively small number - a number of people who are not yet back in their homes for a variety of reasons.

Q61 Anne Main: How many?

Mr Housden: At the end of June there were 3400 people who have yet to come back to their homes for a variety of reasons. Some of this is simply about the time it takes for particular types of construction to dry out. Other people have chosen actually to wait for a local builder that they know and trust to be available to do the work on their house rather than one nominated by their insurers.

Q62 Anne Main: That was June; what about the beginning of the year? What progress has been made say from January to June?

Mr Housden: I do not have the details with me.

Q63 Anne Main: Can we have the figures to show how, hopefully, the numbers are declining?

Mr Housden: Yes, indeed.

Q64 Anne Main: How many is that number in households, do you know?

Mr Housden: No. Let me send you the figures.

Q65 Anne Main: There is a list of recommendations which "set out clearly the duties and responsibilities of its lead department role in the recovery phrase, and explain how it will work in partnership with other government departments and regional and local bodies". What steps have you taken to deliver that strong recommendation?

Mr Rossington: The final Pitt Review was published in June this year and we are currently working with the lead department Defra on the implementation of the recommendations which will be made in the autumn. All the recommendations which relate to our Department will obviously be monitored very closely with others.

Q66 Chair: In a month or so you mean, not next autumn.

Mr Rossington: The plan is this autumn.

Q67 Anne Main: I thought it was autumn now. When does autumn end?

Mr Rossington: It ends November/December time.

Q68 Anne Main: Going back to the people who are still out of their homes, what arrangements have been put in place for the publication of summaries of progress of the recover phase? Are there any public documents that have been put in place for sharing that in future recovery programmes so that others can learn from it?

Mr Rossington: That is certainly something that we will take into account and consider. I am not aware at the moment that those figures are being published regularly.

Mr Housden: The other thing in terms of understanding the lessons from this flooding is precisely the stuff of the Pitt Review to which we are expecting the Government's response shortly.

Q69 Anne Main: A lot of people were obviously very upset by this; how much are you still listening to the public on this? Have you been touching base with the people who are still suffering to see how they think the Government has been performing? You have touched on helping people initially but how mad are they still in 2008 (I do not mean lunatic mad, I mean cross)?

Mr Rossington: I think there are three things to bring out here. First of all, as Mr Housden has said, there has been a very serious look at the lessons from the flooding last year through the review conducted by Sir Michael Pitt and that has been reported in two phases. Secondly we had a look ourselves at the very specific lessons in relation to the immediate response. Thirdly, in terms of both the immediate response and the recovery programme as well, there has been a lot of work through government office networks.

Q70 Anne Main: Have ministers or significant people been going up regularly to the flood affected areas to ask how things are going? Are people feeling that we are doing all we can?

Mr Rossington: To give an example, you will be aware that there have been some floods recently in Northumberland.

Q71 Anne Main: I am thinking about Hull.

Mr Rossington: Certainly this is something that remains at the top of the Department's agenda.

Q72 Anne Main: Can we have a note of the visits that have been made.

Mr Rossington: Yes.

Q73 Chair: I think it would be opportune at this point to bring in Sir Ken Knight to ask directly whether you are satisfied with the Government's response to your review of the operational response by the Fire and Rescue Service after the flooding.

Sir Ken Knight: My review was undertaken as a preliminary review this time last year and I produced an interim report in November to see whether the scope was appropriate. It was much more narrowly focussed, quite properly, than Sir Michael's report; mine was the role of the Fire and Rescue Service and whether it needed either strategic or tactical change of direction and what support we could give it. My final report was produced during the consultation period of the Pitt Review quite deliberately so he could take into account the findings in that review. I made 27 recommendations - some were tactical and some were more strategic - and what I found, not surprisingly I would say, was that the Fire and Rescue Service responded extremely well on that occasion. They were not the only responders however, there were some very notable other responders like the RLI who also played a significant part in rescue and response. My recommendations were around ensuring that we have a safe, resilient and strategic response which is interoperable for such events in the future, alongside the model that we already have for new dimensions equipment and terrorist attack. All those recommendations went into Sir Michael's review and I am confident they are being taken into account in the round and in the outcome this autumn of the Government's review of all of the findings.

Q74 Chair: Would you be able to tell us now how many of your recommendations have been accepted and how many remain to be done?

Sir Ken Knight: Some of the recommendations do not form part of Sir Michael's review. As I say, some of them are very much tactical about the preparedness of Fire and Rescue Services in training and they do not form part of the wider picture. We are actioning those and are producing an action plan in conjunction with the Chief Fire Officers' Association and internally to ensure that we have an action plan alongside the other review and they are not dependent on Sir Michael's review. The most substantial part of my findings actually were around whether or not there should be a statutory duty for the Fire and Rescue Service to respond which I looked at very closely indeed for such incidents in the future. Sir Michael talked about a statutory duty as required; I had a view that there was not a necessity for a statutory duty provided there was a safe, resilient and national interoperable response that was available in widespread flooding.

Q75 Andrew George: Mr Housden, the Department achieved only two of its own nine public service agreement targets; what star rating would the Department achieve if it were a local authority?

Mr Housden: I thought you would ask us this question I should say.

Chair: You must have a good answer then.

Q76 Mr Betts: A five star answer!

Mr Housden: You will understand that each of the PSAs that we were working to in the spending review period had its own particular rules to determine whether or not the target was met. If you look at our targets across the piece you find that 65 per cent of them, of those sub-targets, were either met, on course or ahead. So pretty good I think is the answer to your overall question. If you look at each one of those PSAs - I am happy to do that in turn - you can actually see some very substantial achievements in that area of work. What is the purpose of PSAs? Well, they were to shape the Government's priorities, to galvanise action up and down the country on these issues and to provide accountability. In that sense I think they have succeeded and you can point to some real advances. The example I liked the best was ministerial case work which have to be completed within 16 weeks from the date of them requiring closing and the target is 100 per cent done within all of that and within that timeframe, and 530 cases were completed within the timeframe and one was not; one was a day or two literally later and so the target was not met. If you look at the neighbourhood renewal one (we have had some important conversations with the Committee before) six sub-targets - all six - had to be met, five actually were. Pretty good I think is the answer.

Q77 Andrew George: I certainly hope you are as lenient with local authorities as you are with yourselves in your explanations. Going back to one question on funding with regards to flooding, I note that the Department either objected or disagreed or took issue with some of the recommendations or some of the findings of the Audit Commission and the Pitt Review. Which key aspects of those two reports would you say you took issue with and why?

Mr Rossington: I am afraid I do not have the detail about that here with me. I think we would need to write to you if we may.

Q78 Andrew George: One of the recommendations of the Audit Commission report was a more simplified, incentive based, transparent funding system than the rather complex system that exists at present. Do you think that the recommendations from the Audit Commission's recommendations could be implemented or are they impossible to achieve?

Mr Housden: As David suggests, let us come back to you on that. I think the situation ministers faced when those flooding incidents occurred were the traditional instrument of the Belwin formula whereby an authority had to get over a threshold they deemed was not appropriate to those circumstances. So we had a Belwin-plus arrangement put in place, plus also a quite unprecedented concerted action around government in terms of recovery investment. In terms of an immediate response to the circumstance, I think it was fit for purpose. It would be wrong of me not to say that I think, in my view, John Healey put a huge amount of personal energy into going to Hull and a range of other badly affected locations over an extended period, so it was not just the first couple of weeks. Again, relevant to this Committee's proper concerns over the years, ministers felt that the place the response should be driven from was the locality and not from Whitehall, so providing money to enable local councils and local people to decide what would help them. All this seems to me to be the right sort of thing to do, but let us come back to you on those broader questions.

Chair: We will move on to questions about the Fire and Rescue Service. Clive?

Q79 Mr Betts: As I understand it fire related deaths are at the lowest levels since 1959 but at least five of the bigger fire services are not meeting their target of cutting the number of such deaths by 20 per cent by 2010. Why is that and what can be done to try to make sure we get those targets back on course?

Sir Ken Knight: We are working very hard indeed, as are fire risk authorities, to reduce accidental fire deaths. I am pleased to say it is the lowest now for 50 years, accidental fire deaths in the home. They are now at such a low level at some 260 year that they are quite a volatile low level figure and just two or three tragic fire deaths at a single incident actually skew those figures considerably statistically. We do monitor those very carefully and I know the Fire and Rescue Services concerned do as well, but it is that very low level of figures which is why we maintain the pressure to reduce those fire deaths but also those targets are now becoming less useable in terms of that statistical data. However, the underpinning story of lower fire deaths is because we have also ensured that the initiatives such as home risk fire checks (which have been hugely successful) by firefighters and pump-priming funding from CLG as well as other fire kills advertising campaigns are having a huge effect on the reduction of fire deaths. There will always be that slight volatility with a small number of fires with a large number of fire deaths.

Q80 Mr Betts: One of the things we raised concerns about last year was the slow-down of response times. I think the figures that I have are from 2000 when 46 per cent of response times were within five minutes and that had declined to 35 per cent by 2006. That is quite a significant decline. It was blamed on extra traffic but is that the sole story? Traffic has gone up about nine per cent but response times have gone down quite a bit more than that.

Sir Ken Knight: It is not the sole story nor, I would suggest, is it the sole time that is important in saving lives. The time from when a fire starts to when the occupant is aware it is there - the time from ignition to the time of awareness - is where smoke alarms play a very big part in ensuring people are aware of a fire from a very, very early stage, particularly the most vulnerable. There is a very strong correlation between fire deaths and deprivation. The second time is the point at which people are aware there is a fire and the fire services are actually called. Those two earlier times are even more critical I would suggest, certainly from my experience, in saving lives than actually the speed of response from the time the fire engine is running from its respective fire station or wherever it is coming from to the call. You are right in showing that certainly response times, that last part, has got longer. I am pleased to say that home fire detection - the first part - has got quicker because people are becoming much more aware of fires, particularly those most at risk. We are currently undertaking a study which will be completed shortly. In the main it is probably due to traffic. We are not alone in that; there was a similar public study undertaken in the London Fire and Emergency Planning Authority in the last 12 months. I am aware the ambulance service is showing a similar sort of slow down of times due to traffic. I am confident that we will ensure that many more lives are saved not by response time itself but by those earlier times which are absolutely crucial in the reduction of lives lost.

Andrew George: FireControl, is that on time and on budget?

Chair: Will it achieve its savings?

Q81 Andrew George: The £23 million savings that were predicted?

Sir Ken Knight: Personally I do not think we should focus just on cost because there is a far bigger reason for having regional fire control. It is about the resilience of the fire control moving from the existing 47 disparate fire controls that cannot talk to each other technically to nine interoperable regional fire controls. The business cases are being published in stages; the timings I think will be met at the back end and there may well be some need to ensure that it is right at the front end. I think that is absolutely critical. I think as a project it needs to be right, not quick because I think it is about the calls being taken at the front end.

Q82 Andrew George: Front end? Back end? Will it be completed by 2011?

Sir Ken Knight: The final roll out in 2011.

Q83 Chair: Are you suggesting we are not going to get the saving?

Mr Rossington: As Sir Kenneth says, we published the regional businesses cases a few months ago and those showed a lesser saving than had originally been projected.

Q84 Chair: How much?

Mr Rossington: It had gone down from 28 per cent a year to around ten per cent a year.

Q85 Chair: How much is that in millions?

Mr Rossington: We can give you the figures. The corollary of that is that having now done much more detailed work on this we are more sure of the figures. I would come back to the same point that Ken made, as well as the savings this project needs to be seen in terms of national resilience.

Q86 Chair: We did take that point, however it is important, if part of the argument made up front is savings, that the savings are actually there. What about Firebuy then? What about the savings on Firebuy?

Mr Rossington: The position on Firebuy is that it has contributed some savings.

Q87 Chair: How much?

Mr Rossington: So far £1.5 million but these are obviously not as much as was originally hoped for and what is happening there is that the current procurement strategy for the fire service runs from the period 2005 to 2008. We are in the process of consulting on the next phase of that and that consultation ends in November when we will want to look at the results also of the review that the Office of Government Commerce has done.

Chair: I think this may be an issue we want to take up with the relevant ministers. Could we make sure before we meet with them in the next two weeks that we are reminded of what the original projected savings were on those two projects and we have an up-to-date report on what the current savings are.

Anne Main: And the extra work.

Andrew George: Given that the National Audit Office has said that in fact they do not expect any savings on FireControl, could we have your response to that conclusion?

Q88 Mr Betts: Has it actually been sorted out now who actually will control FireControl? One of the issues raised before was that several different fire services having one control room, but it was not actually clear who was going to be in charge of it and when things went wrong who would be accountable?

Sir Ken Knight: London has a single fire authority so it is rather simpler because the London Fire and Emergency Planning Authority will continue to respond through its regional control. The remaining eight will be in the control of local authority companies so actually a consortium of those separate fire authorities in each area. In the South West you have a number of fire authorities so rather than have a lead authority it will be a local authority controlled company consisting of the elected members of those local fire authorities.

Q89 Mr Betts: The elected members of councils are elected second hand to the fire authorities and then elected at third hand to another body who control the FireControl.

Sir Ken Knight: I think they are appointed rather than elected, but that is the general thrust, yes.

Mr Housden: I think that is a fairly familiar way for councils to operate now at sub-regional and regional level.

Chair: Just because it is familiar does not mean it is a good idea. We have two other topics we want to wrap up. Anne, an aspect of climate change?

Q90 Anne Main: The Government made a commitment to roll out Smart Meters to all households within a decade. Has it dropped that commitment? On what economic grounds is roll-out to all homes now apparently questionable? What economic grounds were those?

Mr Housden: I think Smart Metering is a matter that falls to Defra rather than Communities and Local Government.

Q91 Anne Main: We did a joint thing on it because I remember specifically asking about this, you were keen that EDD was not a substitute for Smart Meters; we raised that at the time.

Mr Housden: I am aware that we did a joint study on this and ministers I think came together to give evidence to you, but actually the lead on that falls to Defra just as other parts of the package fall to us.

Q92 Chair: What advice is the CLG giving to Defra on that matter then? Or are you not?

Mr Housden: On Smart Metering?

Q93 Chair: Yes.

Mr Housden: I am not aware that we are giving them any particular advice.

Q94 Anne Main: Where was the joint bit of this then? Where was the join-up between the two departments being joint on this?

Mr McCarthy: A lot of work has been done in terms of the review and actually crucially in terms of the next consultation, a document which will be coming out on existing dwellings.

Anne Main: Are you saying that you do not know what is going on then in the sense of reducing carbon footprints in homes, making them more energy efficient? You have not had any notification of alteration to rolling them out to all households in a decade? As far as you are concerned the original statement still stands.

Q95 Chair: Presumably this might be the new Climate Change Department, is it?

Mr McCarthy: It will be now. No, sorry, metering will rest with Defra.

Q96 Anne Main: This was part of the criticism originally, the way the DCLG was operating when it was ODPM was that the communication of its vision to other departments was not there. Given this was a joint thing to us I am amazed that the DCLG does not seem to be aware of the fact that this now seems to be a dead duck.

Mr Housden: In the joint work that we are doing with Defra and other colleagues on climate change there are a whole number of areas where we are leading on things like standards for new homes, the existing buildings work which Richard has described that is going to come out towards the end of the year. I am afraid our inadequacy here is a narrow one, that we do not have the information about how Defra have carried this forward but we can ask them to provide it for you.

Q97 Chair: That would be extremely helpful. It would also be helpful, if it is within your ability to do it and you are not trespassing on other departments, to clarify why it has stayed with Defra when climate change in general seems to have moved off to the new department.

Mr McCarthy: Water regulation still exists within Defra.

Q98 Chair: That is interesting. The final point is about departmental organisation and efficiency. Firstly, why has the Department been so super efficient and cut 950 posts when it was only asked to cut 400?

Ms Nouss: We have really been looking at the efficiency programme over a long term and trying to work out what we can do as a Department to drive improvements in how we work. So some of this has been driven by process improvement; some of it has been driven by technology. To the extent that we can actually identify the ability to save resources at the back end of our business to actually focus on front line policy making, that is exactly what we are doing.

Q99 Chair: You have found savings that the Gershon Report did not find, in fact more than twice as many.

Ms Nouss: I think it is probably fair to say that when Gershon first came along we were fairly cautious about the extent of the savings that we might be able to identify. We have actually worked to drive as much value and efficiency from our business.

Q100 Chair: It sounds a bit like "under the previous management".

Mr Housden: I think these are inevitably broad brush things but government offices are good examples of all of this where really their staff has been reduced by 30 per cent over the period of this time because the nature of their work has changed, it has become more complex and more involved, local area agreements, other types of work and they have moved away from processing. We have made these reductions where we can on the grounds that the less we spend on administration the more is available for public services.

Q101 Chair: Finally, staff surveys and internal communication. The National Audit Office review does actually recognise that improvements have been made in the Department but nevertheless there does still seem to be a significant level of perceived bullying, harassment and discrimination. How are you going to deal with what might be called the hard core of a problem that still seems to be going on?

Mr Housden: I would take issue with the National Audit Office if that is their view because there is not bullying, harassment and intimidation within the Department. We have put a lot of work into this in the last couple of years. What I think we were seeking to deal with was a climate within the organisation - not universally but more than you would want - of a rather robust management style on occasions and one that did not really draw out from people their opinions and their views and treat them with respect. We have put a lot of time and effort into creating the right climate, so what we do as senior people, how we behave; a lot of investment in coaching and also providing some opportunities for staff who feel they are being badly treated to talk off-line, so we have some counsellors who are available for members of staff who volunteer and have been trained to hear their concerns in an anonymous way and to advise them on how they carry them forward. I think we have made important progress in those areas and our staff survey that is being produced now to go with the capability review assessment (which of course will be available to you shortly) shows some further improvements in those areas.

Q102 Chair: The data comes from your own staff survey. It is evident that there is improvement but not enough I would say and I suspect you might agree.

Mr Housden: Yes, I do agree with that; it is the terminology I take exception to, it summons a picture that is not there. I think the Department has worked incredibly hard over the last couple of years particularly. I am very proud of what colleagues have secured for ministers and for the public. Have we still got further to go in terms of our overall development of the organisation, yes we have.

Q103 Mr Betts: You announced some possible changes to PPS6, abolishing the need test, strengthening the impact test. There are two ways of looking at it, one that it is not going to make any difference because the Department is in favour of city centre and district centre developments rather than out of town developments, but what sort of developments might get planning approval under the new proposals that would not now or the other way round, what might be turned down under the new proposals that would have been allowed?

Mr McCarthy: First of all I think it is important to recognise that the need test was regarded as a blunt instrument and actually largely discredited by all players and actors in the field both in terms of the local planning authorities and indeed by applicants. We think that the impact test is a more sophisticated way of allowing local authorities to make the right judgment and to allow them to then set a clear planning policy within their local plans for the development of their retail offer within the town centre and on the edge of town centre areas. The intention is, through the general theme of the Government, to try and devolve a creative planning framework in the context of planning that makes it easier for authorities to clarify what their policy is and then to make a decision which they can defend which then is not open to appeal or call in because they have a very clear planning framework under which to operate. We believe that the impact test will help them do that in a way that is defendable and clear. Time will ultimately prove that right or wrong.

Q104 Mr Betts: So the intention is to have fewer out of town developments.

Mr McCarthy: The Government's position is unchanged in focussing its priorities in in town developments. That remains.

Q105 Mr Betts: You will be aware that in Sheffield they have received a report from the council that they think it is really unhelpful, they think that the current policy works very well, they have a good record of resisting further out of town developments. The same view is taken by John Lewis who made their view clear about wanting to retain the need test. Developers like Westfield have also come out and said that they are concerned about any relaxing of the situation when they are committed to generation schemes in district and city centres. Is the Government aware of these concerns?

Mr McCarthy: We are going to be considering what people are saying to us. It would be premature for me to announce what ministers are going to do in response to those reactions. The intention was to create a test for local government and local planning authorities that was more effective. I can absolutely assure you again there is no intention at all in government policy to detract from town centre first in terms of its retail offer which PPS6 seeks to cover.

Chair: Thank you very much indeed.