Examination of Witnesses (Questions 40-59)
DEPARTMENT FOR
COMMUNITIES AND
LOCAL GOVERNMENT,
TRANSFORM SOUTH
YORKSHIRE & LIVERPOL
CITY COUNCIL
19 NOVEMBER 2007
Q40 Dr Pugh: Does it surprise you
that house prices in Bootle are up by 118%, which is more than
in the surrounding area? There is currently a crisis of affordability
in areas such as Bootle, which was supposed to be an area of market
failure.
Siobhan McCoy: We have seen house
price rises across the NewHeartlands pathfinder and across Merseyside,
and that has been one of the elements of the programme to date
where we are starting to see some success. Having said that, we
were starting from very low base values, so any increase represents
a significant increase in percentage terms.
Q41 Dr Pugh: I do recognise that,
and it was not complete hyperbole when it was said earlier that
there were miles of abandonment. I do not think that that is quite
the right term, but I certainly visited streets when I served
on the Select Committee on the Office of the Deputy Prime Minister
that looked like they were not occupied at all. None the less,
the situation has changed quite radically, has it not? From the
point of view of people looking for houses, pathfinders have not
worked, have they?
Siobhan McCoy: I think that we
would disagree with that. The pathfinder programme is still at
an early stage—
Q42 Dr Pugh: Who would disagree with
it? For someone on a waiting list struggling to get a house, the
net effect of NewHeartlands across Liverpool is 412 houses less—they
are not particularly enabled by that.
Siobhan McCoy: No, each of the
Merseyside authorities maintains a waiting list, and people are
rehoused and dealt with through that waiting list. I do not have
detailed information about that to hand today, but for residents
who are affected by the pathfinder programme, we are successful
at rehousing them and dealing with their accommodation needs.
Indeed, one success of pathfinder is that we have enabled people
to move into much more appropriate tenures as a result of our
actions.
Q43 Dr Pugh: I do not deny that some
people are better off than they were; I am just saying that the
general problem is, if anything, aggravated. May I ask the NAO
whether it studied the effects of pathfinders on rental values
and the availability of socially rented housing?
David Corner: We specifically
measured against the two targets that the Department had set,
which are private and public sector vacancy rates generally, and
house prices.
Q44 Dr Pugh: Okay. Just talking about
surrounding effects, one thing that you get with pathfinders in
a local authority is housing restraint policies elsewhere—planning
guidance and limits put on house building elsewhere. Does it surprise
you to know that I represent a constituency that is adversely
affected in that way? I have a chronic problem of affordability,
and when my residents ask what they can do to get themselves housed,
they are told, "There's the pathfinders." As we have
just established, however, there is a very limited supply of housing
there, and it is going up in price all the time. Given that, is
it worth studying the knock-on effects of pathfinders in greater
depth than hitherto? I put that question to Mr Housden.
Peter Housden: You are absolutely
right to say that those effects, which we have been debating this
afternoon, go beyond the pathfinder areas. One purpose of local
authorities being in a powerful position is precisely to enable
them to do that. I do think that—
Q45 Dr Pugh: It is possible, and
you would concede, that you could aggravate housing affordability
problems elsewhere by having a pathfinder scheme?
Peter Housden: There is clearly
a theoretical possibility, but I was going on to say that the
challenge of affordability, which has been growing more acute
in recent years, is not caused by housing market renewal but by
a wider range of very powerful factors in the economy as a whole.
Q46 Dr Pugh: May I just interrupt
you there? What it is caused by is that there are not enough houses.
In a constituency such as mine, we would welcome some more houses,
because lower down in the borough there is a pathfinder area.
Richard McCarthy: I must answer
this, because we are in a fast-moving situation. I referred earlier
to changes in household numbers and in population. It is also
important to recognise that when the pathfinder investment programme
started, there was a significant surplus of housing schemes with
planning approval which had yet to be built, and for that reason
and for the need to try to shake and influence the market, decisions
were taken, which I understand, correctly, restricted housing
growth. We are now responding rapidly to the changing circumstances
to which I referred, so we are now releasing other money to support
housing growth in the north—
Dr Pugh: I am glad—
Richard McCarthy: And, we are
making it clear—I have made it clear to every local authority
personally in the north-west, because I am currently embarked
on a tour of all regions to explain the housing Green Paper—that
the regional spatial strategy numbers are no longer ceilings;
they are now floors. But we asked people to do two things: to
properly analyse their markets, rather than just simply let rip;
and to recognise the benefit, with a country that is comparatively
highly urbanised, of using our land well and effectively. So if
we can influence private sector and public sector spend into those
areas of housing market difficulties, we use our brownfield land
well while not seeking to restrain areas elsewhere.
Q47 Dr Pugh: I accept the point.
If you will not agree with me that pathfinders does not work,
do you agree that we do not know whether it is value for money?
Peter Housden: The signs on value
for money are all positive. The range of checks that is present—
Q48 Dr Pugh: But that is not what
the NAO Report says. It says that you cannot tell whether it is
value for money.
Peter Housden: Well, I think—
Q49 Dr Pugh: You have agreed this
Report.
Peter Housden: Over the time scale
of the 15-year programme, you would not declare victory too early.
It is my responsibility to ensure that the programme can demonstrate
value for money at the level of individual schemes. We have a
number of mechanisms to do that, and a rigorous regime at pathfinder
level to ensure that that works. The governance of pathfinder
arrangements, anchored through local authorities as accountable
bodies, is strong and rigorous. We use Green Book appraisals,
and all those sort of issues apply.
I think that the difficulty that the NAO, correctly,
in my view, points to, is that quite a number of the desired and,
some people would say, most important, outcomes are not straightforwardly
measurable in value-for-money terms. Some of the more traditional
types of regeneration schemes would give you a neat and sealed
system in terms of value for money, but, in terms of quality of
life and such indicators in these communities, they pose challenges
as to value for money. In terms of the tighter investment of public
money, we have got a significant range of measures in place to
make sure that it is delivered.
Q50 Mr Mitchell: Mr Housden, this
Report says to me that the programme is not value for money. I
do not ask you put your hand on your heart and say, "Yes,
it is value for money," but can you tell me that in your
view this programme is better value for money than, say, using
the same £2.1 billion over the period to build public housing
for rental?
Peter Housden: The indications
are that yes is the answer to that question, because of the evidence
from the past that simply building more social housing on its
own would not resolve the issues that these communities were presenting.
Q51 Mr Mitchell: Let me stop you
there. If you are going to pull down, as you have, 10,600 houses
and build only 1,200 more to replace them, and if you are going
to refurbish 46,000 houses, and if the housing market all round
is improving drastically so that all boats are raised—even
in areas with pathfinder projects—can you say that that
improvement is due to the pathfinder programme?
Peter Housden: Yes, I think it
is, because if you look at the position of these areas when the
housing market was starting to recover in the early `90s, it was
precisely then they were losing ground. You could not sell these
properties. They were passing between people for penny numbers,
with all the negative consequences that that brought. One of the
key tasks of housing market renewal, in the jargon, was to reconnect
these housing markets with the boats that were rising elsewhere.
I think the signs are that that is improving, and I think that
has benefited not just socially renting tenants—
Q52 Mr Mitchell: Let me put another
point to you: this is a plan, conceived as a bright idea by a
Department that basically does not trust local government and
therefore is prepared to impose yet another set of top-down arrangements
to run and control local government and do the job that local
government should be doing. Surely it is in the interests of the
area that local government should handle these kinds of schemes,
because it is not just a question of building new houses or refurbishing
existing ones; it is a question of regenerating areas, as the
Hills Report on social housing suggests. You can do that only
if the local authority is essentially in charge.
Peter Housden: I used to run a
local authority, so I know what central Government interference
looks like.
Q53 Mr Mitchell: I know what it feels
like, but is it useful compared with giving the money to local
government?
Peter Housden: I think the key
thing here is that the housing markets span local authority areas,
so the programme needed to bring together the two or three local
authorities in the area. Also, local authorities have important
statutory functions in terms of compulsory purchase orders and
a range of other issues, which are recognised and are sovereign
within the area. That provides not only a value-for-money assurance
but a very important channel of democratic accountability—
Q54 Mr Mitchell: We shall come to
that, because I want to move on to it, but can you tell me that
this regeneration programme has sucked in enough local authority
money and other investment to make for a drastic improvement in
the whole area?
Peter Housden: We are certainly
seeing—Siobhan talked about this—significant levels
of private investment and partnering arrangements with developers
now, who are attracted by the greater confidence in these areas.
Q55 Mr Mitchell: Let me turn to the
National Audit Office Report. Table 9 on page 16 is about the
Benwell and Scotswood regeneration. The table lists all sorts
of benefits that are coming into that area, some of which are
extraordinary. One, listed under building schools for the future,
is the establishment of an academy with expenditure of £38
million. Another is the Scotswood road dualling, which has been
in Newcastle City Council's box now for 20 years, but which is
included in the benefits of the programme. Newcastle city council
mainstream education funding would have increased anyway, and
Sure Start Capital would have come anyway, so are you not just
lumping in benefits that would have come anyway, and is this amount
of money typical? Why did you pick Benwell and Scotswood in Newcastle?
David Corner: The reason for choosing
Benwell and Scotswood was partly because we were able to obtain
the figures for those areas, whereas it proved quite difficult
in some other areas—although we approached the Government
office to get the information. The purpose of the information
in the table was merely to demonstrate the different streams of
regeneration money going into this pathfinder area.
Q56 Mr Mitchell: You cannot say that
the academy school and the road dualling are due to the regeneration
of the housing.
David Corner: No, they are part
of the wider regeneration.
Q57 Mr Mitchell: Okay. You say that
you want the figures on Newcastle to be published, but page 34
tells us that you have done a report on the acquisition of part
of the Newcastle brewery site. You do not give any report on that
report. I have estimates that say that the money spent there by
the pathfinder was a total of £11.5 million: £10 million
on acquisition, £1 million on clearance, and £500,000
on consultants. How many affordable homes will be built on that
brewery site as a result of all that expenditure, and why do you
not give a Report?[2]
David Corner: I am sorry, I cannot
say how many buildings will be built on that site; it was not
a project that we followed through in detail.
Q58 Mr Mitchell: I hope that we can
have the information on the report generally and on the costs
of the project.
Let me turn to Liverpool—a place where
my heart always seems to want to go. Why have we had two, directly
contradictory reports from people who claim to be residents of
the improvement area? One is from the WDC residents association,
which looks to me like a stooge organisation, because, as Mr Griffiths
said, it is full of praise for the project. The other chimes in
more with the kind of argument in Trevor McDonald's devastating
report today on the Liverpool housing scrutiny committee. Which
is representative, and why are they so different?
Siobhan McCoy: I am sorry, but
I am not familiar with the detail of those reports.
Q59 Mr Mitchell: Should you not be
familiar?
Siobhan McCoy: Only if they are
shared with me, and neither has been, so I am unable to comment
on the detail without seeing it.
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