Examination of Witnesses (Questions 20-39)
DEPARTMENT FOR
COMMUNITIES AND
LOCAL GOVERNMENT,
TRANSFORM SOUTH
YORKSHIRE & LIVERPOL
CITY COUNCIL
19 NOVEMBER 2007
Q20 Mr Curry: But, by definition,
you have to have a boundary, otherwise the thing does not work,
and there are people living on the other side of that boundary.
I am just concerned that, with the best will in the world, the
benefit achieved inside the relevant area might bring a disbenefit
outside it.
Michael Gahagan: Yes, that is
a real point, and the reverse also applies: things done outside
the pathfinder area can have a knock-on effect on that area. Part
of the answer is that we have local authorities very much on the
case. Another part is that every pathfinder has done something,
because they are all concerned about displacement. We have the
Centre for Urban and Regional Studies doing analyses all the time
of what is going on in pathfinder areas and in their wider areas.
We have not seen evidence of that yet, but that does not mean
that it is not an issue.
Q21 Mr Curry: You said, Mr Housden,
that the programme had to be married to the wider strategic housing
programme of 3 million by 2020. Of course, the construction industry
has the prospect of a great deal of work in the next few years.
What assumptions have you made, over the life of your programme,
about inflation in relation to construction industry costs, such
as labour and the cost of getting the job done? Have the assumptions
that you have made up to now been borne out, or have cost increases
outrun them?
Richard McCarthy: We have not
underpinned the specific numbers going into the 2007 Comprehensive
Spending Review by a specific percentage of construction inflation.
However, I can tell you that we review the costs from the pathfinders
on a regular basis. We now have business plans for the next three
years that we and Government offices are analysing, with assistance
from the Audit Commission. We will look at those in the context
of house price, building and land inflation to ensure that they
are sustainable and that efforts are focused on the areas requiring
our greatest attention.
Q22 Mr Curry: How frequently do you
re-tender? If you have a programme of, say, demolition or refurbishment,
does one contractor do the whole extensive programme, or do you
constantly re-tender to try and get the best price?
Richard McCarthy: Central Government
have been running on a two-year funding basis, and we are now
moving to a three-year funding regime, in line with other movements
in the funding of local government and local partnerships, and
we are considering bids on that basis. Perhaps either Mike or
Siobhan would like to comment on what happens within the pathfinders,
which have to go through a process of tendering and of testing
individual projects.
Siobhan McCoy: I would like to
speak about the Liverpool experience of engaging private sector
developers. Liverpool went out through an OJEC procurement process
and procured four lead partners as developer partners for the
next seven years, so that we can get long-term benefits and added
value from long-term partnerships. On refurbishment schemes, we
tend to bid on a scheme-by-scheme basis, so that we can get the
best possible price for individual schemes.
Q23 Mr Curry: Sorry to ask if you
have read all of these things, but you might be aware, Mr Housden,
that in the past few days the Policy Exchange has produced an
analysis of the regeneration programmes—and just as Mr Hill
confessed over the pathfinders, I must confess over the city challenge
initiative and single regeneration budgets; we are all implicated
in this. The Policy Exchange argues that there are huge question
marks over whether regeneration programmes work at all and says
that the wealth gap between 18 regeneration areas and the rest
of the country has doubled—from 7 to 14%—over the
lifetime of the programme. If regeneration programmes work, are
we simply trying to mitigate the effects of general economic trends
by working more effectively and making some regions richer than
others? After all, since we have had regional development areas,
the wealth gap between regions has actually increased, not decreased.
Peter Housden: There are some
very powerful factors at work here. The labour market, which,
of course, has shifted importantly in recent decades, is one factor,
but that which I think is most relevant to housing market renewal
is asset wealth—in the jargon—and the accumulation
of capital that particular families can secure in the housing
market. That is a very important factor in social mobility and
chances for wealth across generations. So regeneration schemes
that do not address property values seem to be vulnerable to your
charge. One thing that strikes any visitor to a housing market
renewal pathfinder is this: they were designed to solve the problem
of the fact that many people, including the weakest and most vulnerable,
were trapped in properties that, increasingly, were becoming disconnected
from regional house prices and that, in practice, they could not
sell those houses—negative equity and all those issues came
up. I think, therefore, that there is a very powerful moral case
for doing something here. However, on the specifics of regeneration
strategies, one that addresses property values, asset transfer
and other such issues would be a really important arrow.
Q24 Mr Curry: Do you think that we
should look hard at how we measure things? I remember city challenge
and SRBs. We talked about the number of jobs safeguarded and created.
However, it is actually very difficult to measure outcomes and
to be certain about what has delivered, is it not? How do you
measure them? After all, this is very ambitious—it is called
a housing market renewal. It is quite ambitious of the Government
to decide to change the market. They usually do it by accident
through mistakes, rather than through positive action. How do
you judge whether you have changed the market? Can we judge that
this side of a generation?
Peter Housden: I have indicated
that I think that we are looking at correlations. As we stand,
the correlation between the housing market renewal activity and
the sorts of changes in market relativities that we were seeking
to produce look positive. The housing market, of course, is not
a static entity and is driven by a range of factors. The Chairman
mentioned the price of credit and Richard mentioned the change
in demographics. All those things will mean that the context of
housing market renewal will continue to change. We need to have
a management structure, from ministerial offices through pathfinders
into local areas, that can respond effectively to those changing
circumstances to maintain good outcomes for people in communities
and value for money from public investment.
Q25 Mr Curry: Coming back to my original
question, if a market is to be sustained, other factors will make
it sustainable, will they not? First, people have to have jobs,
because they have to be able to pay their mortgage or whatever.
Secondly, we have to have schools to which people want to send
their children. Thirdly, people have to be able to park their
car in the street without it being vandalised. Okay, there is
Richard Rogers and all the business about density, but that is
what people actually want. What elements in the pathfinders add
to trying to give people homes that they will want to live in?
We all talk about sustainability of the community when the programme
is finished.
Richard McCarthy: This is absolutely
essential, if I may say so, Mr Curry. What is important is that,
first, there is economic underpinning to the programme, but our
direct investment through the pathfinder programme has included
investment in the environment as well as individual buildings.
Revenue funding connects with neighbourhood management schemes
and management initiatives. Indeed, the Report illustrates that
the local police are often involved alongside neighbourhood management
bodies and the regional development agency as well, because the
programme is about understanding how markets operate, understanding
the influences that make a place attractive or unattractive and
connecting our investment streams, whether they are mainstream
such as the schools programme—building schools for the future,
for example—or specialist and regenerative.
We have been clear from the start, and we have
reinforced this more recently in our bidding rounds, in asking
pathfinders to ensure that there is a clear economic narrative,
that we understand the local social programmes and that money
is connected with those other initiatives. Individual pathfinders
could be used to illustrate that. I am sure that Mr Gahagan could
give examples from South Yorkshire, if he has time and if you
are willing to accept them.
Chairman: Time marches on. Thank you
very much.
Q26 Nigel Griffiths: I am a former
Construction Minister, and I am reading "Cranford" at
the moment, but I am also reading a memorandum that has been submitted
by the WDC residents association. [1]It
seems to paint a picture that is different from the one that has
been construed from the annual report. It is one of a great deal
of co-operation, consultation and the positive. At the same time,
the association is rather critical of groups and individuals whom
it says are not representative, lobbying against the proposal.
Ms McCoy, you presumably have direct experience of that. Have
you seen the memorandum?
Siobhan McCoy: No, I am afraid
that I have not.
Q27 Nigel Griffiths: Right. The association
is saying that, in 2005, there was a demonstration in favour of
the demolition to counter some of the negative attitudes that
had sprung up three years into the project. What is your assessment
of how well relations with local people have been handled?
Siobhan McCoy: From our perspective,
we have engaged with residents of the Welsh Streets area for a
long period of time. The NAO Report recognises that we have been
engaging since 1998 or thereabouts. When the pathfinder programme
became operational in the early 2000s, it enabled us to move forward
with consultation, and we stepped things up somewhat. We engaged
outside consultants to assist us in the process, to go through
a neighbourhood renewal assessment process and look at options
for housing in the Welsh Streets area.
We feel that we have been engaging with the
residents of the wider Welsh Streets area for a number of years.
That said, it is not always possible to engage with every single
resident of an area. We have used many methods to try to engage
with them. It is also not possible to ensure that every single
resident is onboard with our proposals, but we always strive to
ensure that the majority of residents are in favour of the interventions
that are proposed for a neighbourhood. The NAO Report demonstrates
that the majority of residents of the Welsh Streets were in favour
of the demolition proposals.
Q28 Nigel Griffiths: Mr Housden,
what has been the best lesson learned concerning consultation
and the involvement of local people in the five years that the
projects have been under way?
Peter Housden: It is important
that lessons were learned about early engagement and transparent
provision of information, so that people were treated as adults
who may make up their own minds on the basis of the facts. The
importance of consulting businesses as well as individuals was
recognised, as was the need to ensure that residents are provided
with the opportunity to be consulted and involved for a considerable
period. On visits, we found that the trust factor came through
strongly. When residents trusted the local council and regeneration
partners to fulfil their word, there were high levels of support.
When circumstances weakened trust, people were more difficult.
The Audit Commission's work is critical. The programme is innovative,
and we wanted to ensure that the nine pathfinders, in their own
difficult areas, were able to learn from one another. Knowledge
sharing among the pathfinders was an important theme of the Audit
Commission's evaluation.
Q29 Nigel Griffiths: You have answered
a question that I have not yet put. I believe in looking at opportunity
cost. I should be interested to know what you believe would be
the next best option if it had not been a political issue—I
believe that you said that it was demand-led by Ministers and
outsiders.
Peter Housden: The case was compelling
in terms of the range of new circumstances at the end of the 1990s.
I am not aware that any Government had faced such a combination
of circumstances or the need to act on them. The most telling
indicators for me relate to the simple, straightforward housing
interventions in areas of low demand. Scotswood in Newcastle—an
area of great disadvantage—is a famous example of a place
where the Housing Corporation undertook a perfectly good refurbishment
of some social properties using public money, only to find that
factors, such as those mentioned by Mr Curry, meant that nobody
wanted to live in the area anyway, regardless of how good individual
houses were. There was an a issue with those particular circumstances.
I can claim no credit—I was doing something else at the
time—for recognising that you cannot legislate to solve
the problem or deal with it in Whitehall; it is about getting
stuck in and ensuring that you learn quickly and effectively as
you go along.
Q30 Nigel Griffiths: I used to chair
a housing committee. When you are refurbishing houses en masse,
the people who move out are quite often satisfied with the house
that they move to and do not want to move back. You must be aware
that the vacated houses must be such that folk will want to move
to them. I am glad you have got that in the frame.
Which of the Report's criticisms concerns you
most and how will you address it?
Chairman: They are always the difficult
questions, are they not?
Peter Housden: The basic design
of the programme, as I have outlined, means that there is an urgent
need to tackle some new issues in a number of different contexts,
and it lays us open, as the Report says, to the charge of a lack
of consistency. I cannot judge now whether those inconsistencies
were resolved as quickly as possible, or whether the rate of learning
among pathfinders was quick enough. I am satisfied, however, that
all the headline indicators of value for money and other such
essentials were maintained throughout the programme. When examining
the Report, I dwelt most on the early years of the programme,
when we were learning and developing a rigorous framework.
Q31 Nigel Griffiths: So do you now
have a toolkit that allows new people and groups interested in
pathfinders to absorb those lessons, and do you run training seminars?
Peter Housden: Yes. The Audit
Commission work has been very important for us, but the most powerful
learning tool is the pathfinder networks—Mike is the chair
of that partnership—and they have a vibrant programme to
help them learn from each other. The Audit Commission inputs are
important, and what we get from the National Audit Office Report,
your conclusions and so forth will all be grist to the mill. There
is a great appetite to recognise that this is not straightforward,
but new and difficult, and therefore to learn as we go along.
Michael Gahagan: The chairs and
directors get together. A big conference was organised by the
chairs and directors in Sheffield a few weeks ago. That was precisely
to look at transferring good practice, and we have done quite
a bit of that. We now need to build up that programme and home
in on particular issues, not just for the pathfinders and for
the other three areas, but more widely. I think that we are now
in a position to start to do that.
Q32 Dr Pugh: If I were to say to
you that the pathfinder projects have knocked down some nasty
old houses and built some bright new ones, but broadly failed
on their major objectives, would you agree?
Peter Housden: Personally, I would
not.
Q33 Dr Pugh: I would not expect you
to, but the social rented sector in the north-west has shrunk
by about 50,000 properties. Would you have expected the waiting
list for socially rented housing in the north-west to have gone
down or up?
Peter Housden: There is always
buoyant demand for socially rented housing.
Q34 Dr Pugh: Well, the waiting list
has gone up by 93%, has it not? That is not a particularly good
signal.
Peter Housden: The numbers are
hard to measure, but they do not surprise me.
Q35 Dr Pugh: But it is not a good
signal, is it?
Peter Housden: Well, it depends
on what you think it is measuring. The demand is always buoyant,
and many people from a range of different circumstances are seeking
social housing.
Q36 Dr Pugh: Okay. Let us look at
Merseyside. Has the socially rented stock there gone up or down?
Siobhan McCoy: Overall, levels
of social rented stock in Merseyside have been reducing. I do
not have the exact figures to hand—
Dr Pugh: By about 10% actually.
Siobhan McCoy: What we have seen
in Merseyside is an historic pattern of an oversupply of social
rented housing, and that was one of the issues that was identified.
Q37 Dr Pugh: If that was the case,
you would expect the waiting list to go down again, would you
not?
Siobhan McCoy: Not necessarily.
A number of other factors have impacted on social housing waiting
lists over recent years. There have been wider issues of affordability,
and there have been changes to the definitions of homeless people
and other people who can seek accommodation on the waiting list.
There have also been impacts as a result of clearance schemes—that
has been recognised—and issues with properties being lost
to the right to buy.
Q38 Dr Pugh: Absolutely, but on a
day-to-day basis, if you are looking for a house, you do not want
to see an increased waiting list, and the waiting list on Merseyside
has gone up by 126%.
Siobhan McCoy: The key issue for
us would be the quality of social rented accommodation and making
sure that it is the right quality accommodation in the right areas
to meet need.
Q39 Dr Pugh: But some accommodation
is probably preferable to no accommodation at all.
Siobhan McCoy: If it is well-managed,
good-quality accommodation—that is important for us.
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