Examination of Witnesses (Questions 80-99)
DEPARTMENT FOR
COMMUNITIES AND
LOCAL GOVERNMENT,
TRANSFORM SOUTH
YORKSHIRE & LIVERPOL
CITY COUNCIL
19 NOVEMBER 2007
Q80 Mr Touhig: You are a third of
the way through the programme, Mr McCarthy. It is a 15-year programme;
you are five years in.
Richard McCarthy: The figures
you are quoting are our figures to the end of 2006-07.
Q81 Mr Touhig: I am quoting the figures
provided in the Report, which your Department signed up to.
Richard McCarthy: Well, actually,
the Report also makes it clear that we have not even concluded
the programme that takes us to £1.2 billion. The £1.2
billion allocation ends in March next year. The next £1 billion
allocation commences in April next year. So that we are clear,
the outputs that you referred to have been delivered for less
than £1.2 billion to date. The next £1 billion will
take us into the next phase and we are trying to connect opportunity,
which includes the opportunity for housing growth, into the areas
where the market was dysfunctional and did not work. Helping those
places to become more attractive means they become places that
represent an opportunity for people who live there now and for
those who may want to live there in the future.
Q82 Mr Touhig: Your Department says
on its website, "Everyone should have the opportunity to
rent or buy a decent home at a price they can afford, in a place
where they want to live and work." Yet you have reduced the
housing stock by 9,500 and pushed up prices. I do not see who
you are helping.
Michael Gahagan: May I take the
point about reducing the housing stock, as I think my area is
probably quite relevant in this respect? To date, we have reduced
the housing stock because it takes three to four years lead time
to go through the process and to get developers involved. Our
full programme over the next three years shows that there will
be a net increase in houses. It is the lead times that lead to
that sort of figure.
Q83 Mr Touhig: It seems to me that
you have a good record on refurbishing houses—40,000 and
so on—but you have not managed to sort out the VAT issue,
so your pathfinders prefer to pull down houses rather than refurbishing
them. You are demolishing housing stock and that comes from a
Department that says, "We have a shortage of houses in Britain
and we need to build more."
Michael Gahagan: Well, look, I
do not look after VAT. I look after South Yorkshire.
Mr Touhig: That is big enough, I am sure.
Michael Gahagan: Yes. In one case
it has been quite an issue and the chairs have certainly said
that they would prefer it if there were equality in VAT.
Q84 Angela Browning: I should declare
an interest, although not as a former housing Minister, you will
be relieved to hear, Chairman. I recall that at the time the Government
introduced this scheme, they also introduced another scheme whereby
they penalised local authorities that were debt-free—as
in the district of East Devon, in which I am a council tax payer,
as are many of my constituents—with the purpose of recirculating,
or sequestrating, assets to help to fund these very projects.
East Devon was a debt-free authority. I therefore have a personal
interest in how the scheme is doing, as do most of my constituents.
I have heard your counter-arguments and the
idea that somehow you have demolished more than 10,000 houses
and created just over 1,000 more. Can you say how many people
from the demolished houses now occupy the new houses?
Michael Gahagan: The new houses—
Angela Browning: Those people whose houses
have been demolished have presumably been temporarily rehoused
elsewhere while that process goes on. How many of them have moved
back?
Michael Gahagan: The figure will
vary enormously. It will vary according to social—
Q85 Angela Browning: As a percentage?
Michael Gahagan: I do not know,
to be honest. All I will say is this. I shall take one scheme,
which is fairly typical. I happen to know that of 37 houses, 10
people have gone into social housing, and seven have taken loans
to help them to buy new housing elsewhere. All of them have found
houses in the neighbourhood. We try not necessarily to give an
undertaking but to say that anyone who wants to be rehoused in
the neighbourhood will be rehoused there. I do not know whether
Liverpool does the same, but we try to give that assurance.
Siobhan McCoy: We have examples,
with some new-build schemes, in which 105 of 107 new-build properties
have gone to rehouse residents from a nearby clearance area. In
general, our approach is that residents need to move only once,
into their new replacement properties. Other schemes will be quite
different, and we will see fewer people from clearance areas moving
in; we will see a new population coming in and taking up the housing
in those new-build developments. It depends on the individual
development.
Chairman: Mrs Browning, you might want
to ask for a note—further and better particulars.[3]
Q86 Angela Browning: I would, Chairman,
thank you. It would be useful to know how many of those residents
were able to avail themselves of what I am sure are the very good
houses that have been built there, but they are disproportionate
in number to the ones that have been demolished. Perhaps we could
find out.
I ask you to turn to paragraphs 2.9 and 2.10
on page 17 of the NAO Report, which seem to indicate one of the
reasons why the scheme did not get off to such a good start. Basically,
it is suggested that at the beginning the strategy was for off-the-shelf
schemes, which councils previously would have used if they had
had the finance. When the money came along from this scheme, it
was put into those off-the-shelf schemes.
That seems to have produced many quite useful
improvements to properties—face-lifting social housing and
former council housing. However, paragraph 2.10 states: "This
investment contributed more towards meeting the Decent Homes target
than to addressing the causes of low demand on a permanent basis."
In other words, not the strategic objective for which your scheme
was set up. How did you deal with that, and how much damage did
that lack of focus cause at the start of the scheme?
Peter Housden: If I may say so,
you put that very fairly. That is exactly our reading of the position.
The schemes that were brought forward by local authorities in
that way each had to pass rigorous tests. They would not simply
say, "Well it's available, we'll do it." It had to be
part of a broader approach. We were quite right to say that if
that was all that the pathfinders were going to add to the party,
it would have been a much weaker programme.
As those programmes have continued, there has
been a rigorous process of assessing their quality, and the range
and impact of the proposed schemes. In a couple of cases, the
pathfinder schemes have had their proposals held up or knocked
back because of the lack of strategic approach that you describe.
The management of their performance was rigorous to ensure that
they took that broad view.
My sense is that, as the programme has developed,
those learning mechanisms have had an increasing impact, and we
now have a much stronger set. However, I would not want the Committee
to take the view that those initial projects were somehow not
worth while or not subject to the right type of scrutiny. They
were.
Q87 Angela Browning: Have you learned
from that initial exercise?
Peter Housden: The whole programme
has resulted in learnings throughout.
Q88 Angela Browning: Thank you. I
turn to something that the Chairman raised in his initial questions,
but which I wish to pursue a little further. I refer to paragraph
3.16, on page 24, and the question of external purchases and speculation,
and their impact.
The NAO Report suggests that the pathfinder
scheme has been reduced by approximately £10,000 a property
as a result of advance speculation on housing that is to be demolished.
We heard a very detailed account from Ms McCoy about the process
you follow. There is local dialogue about where you might decide
to demolish. Perhaps you might tell us on what scale that is—so
many roads, a whole estate or whatever. There is an initial consultation
with residents and it is after the decision has been made to demolish
that you enter into one-to-one negotiations about the value of
people's property, compensation and so on.
It seems pretty obvious to me that once a particular
area or group of streets has been identified in the public domain—which
it would have been—it is pretty easy for speculators to
see where they might leap in. I put this question broadly to the
whole panel: does it not occur to you that, having gone through
the public consultation, there is an opportunity for the speculators
to get in before you do, in terms of your negotiation? Have you
not been alert to that in the past?
Siobhan McCoy: First, on the question
about the scale of demolition, in Liverpool we are dealing with
a great range of different-sized schemes from those affecting
just one or two blocks of properties up to the Anfield and Breckfield
clearance, for example, which affects about 1,700 properties.
In those areas, we have done initial consultations, and it is
correct that that raises awareness and perception of the potential
outcomes from that process. People in the wider area will become
aware that there is the potential for those houses to be acquired
as part of a clearance programme.
The issue of speculators is something that we
are only too alive to. Unfortunately, it is not particularly easy
to tackle. One potential way of tackling it would be to move in
first and acquire any properties that were available on the open
market. However, with resident involvement, we have agreed on
a phasing programme so that they know roughly when we will be
able to buy their properties. If we started acquiring properties
in other phases, it would be unfair to them and would affect the
speed with which we could move through the area and buy their
properties.
Q89 Angela Browning: Roughly what
percentage of those properties is in private ownership?
Siobhan McCoy: The majority of
these properties are in private ownership or have been long-term
vacant and may have been acquired by the public sector. In many
areas in Liverpool, the social rented sector has propped up the
housing market for a number of years—perhaps since the '70s
or '80s. It depends on the individual area. Across Merseyside,
there is lower than average owner-occupation. That is part of
the reason why we are intervening in some of these areas.
Q90 Angela Browning: It seems to
me that, knowing that this pattern is clearly established and
knowing the amount of money involved, you should be concentrating
on what you might do to mitigate some of that money that is going
to speculators. I hope that Mr Housden will not take this too
adversely, but I thought that he was a little flippant in replying
to the Chairman that it was because of the market and that nothing
could be done. I hoped that, between you, there would have been
some ideas as to how you might do something about this issue.
Michael Gahagan: This is a very
real issue that does concern us, but I echo what Siobhan said.
We are trying to think of options, but it is sometimes easier
to postulate the problem than the solution. We have to go through
the public consultation process. We must discuss such things as
persuading the Government to freeze values at a point in time
before a scheme is declared. However, that would hit the owner-occupiers
as well. This matter is something that we are discussing, but
it is not easy.
Q91 Angela Browning: I hope so, but
it is something that you need to look at.
Finally, I was concerned to read in paragraph
2.6 of the Report of the rather patchy involvement of Government
offices. I wonder how your Department views that, Mr Housden.
We see in paragraph 2.6 that some Government offices have been
very involved and up to speed on this, but it has almost been
an optional extra for others. Why should that be? I would have
thought that they had a real interest in seeing how things were
going and, if necessary, offering the expert advice that a Government
office might offer.
Peter Housden: I do not think
that there is any lack of clarity on our side of the table about
what we expect of Government offices, now and going forward, on
housing market renewal. They provide a critical link to the planning
system. They also provide some important links to regeneration.
Of course, they are also represented on the pathfinder boards.
However, I guess that one of the things that would point you towards
difference would be the scale of the pathfinders.
In the north-west, for example, there are very
large-scale schemes compared to other areas, where the schemes
are much smaller. So, the involvement of the Government office
for the north-west in housing market renewal will be proportionally
much larger. We are quite clear, particularly within the housing
growth context in which renewal will take place, that the involvement
of the Government offices will be of continuing importance.
Angela Browning: My time is up, although
the Chairman asked me to come back. I would like to know about
the Homes and Communities Agency, which you will hand over to
in 2009.
Chairman: You can always address that
issue at the end, if you wish to.
Q92 Phil Wilson: According to the
National Audit Office Report, there has been improvement in pathfinder
areas: low demand is less severe, there have been a lot of physical
improvements, and the local housing market has improved and is
working better. However, the Report goes on to say that the NAO
cannot put its finger on whether the pathfinder projects themselves
have achieved those improvements, although it seems to me that
the improvement is in the pathfinder areas. Where would you say
that the projects have added value, to make that difference?
Peter Housden: You are on to a
really important point. Whenever the Committee and other bodies
are considering regeneration schemes, what you are identifying
there would be a case to consider. Particularly where markets
are involved, there is not just a one-to-one correspondence, which
means that we do this and that is the outcome.
What gives us confidence that this programme
is moving in the right direction is what one finds if one examines
those areas of low demand where pathfinder interventions were
not made. They were not made in those areas because the problems
were less severe. Therefore, in a rising housing market, with
more favourable demographics, you would expect that those less
severely affected areas to see more rapid rises in house prices
and more rapid reductions in vacancy rates, but that has not happened.
The pathfinder areas have done better on both those scores. From
a lower base, they have done better.
I cannot demonstrate to you in a theory or a
theorem that that improvement is the result of housing market
renewal, but there is a pretty strong correlation between pathfinder
interventions and those types of outcome. Again, it is a long-term
programme; this is a fairly early stage. However, those outcomes
lead me to think that these are promising signs that the pathfinder
style of intervention works. It obviously needs to reflect changing
circumstances.
We are now in a quite different circumstance,
where markets are rising, demographics have shifted significantly
and the context is one of growth, so we need to keep moving the
focus of the programme. However, regarding the history of the
programme that this Report is examining, those outcomes give me
confidence that we are delivering value for money.
Q93 Phil Wilson: The Audit Commission
is quoted in the Report and it has a lot of praise for the way
that you communicate and relate to community groups. Can you give
us an example of how you would conduct a survey in a local community?
How is that survey modelled and put into action, because customer
satisfaction is high, according to the Report. Can you give us
an example of how you would launch one of those surveys?
Michael Gahagan: I am sure that
both Siobhan and I can give you examples. I think that there is
a table at the end of the conclusions. I would have certain differences
with that table, but overall that is the type of thing that we
do. There is usually a raft of things that we do. There are public
meetings, which are not the most important avenue, because people
are often very cautious about, or even afraid of, asking questions
in a public meeting and the meeting can be captured by the most
vocal. There is always a lot of one-to-one communication, such
as visits. There are also drop-in centres and drop-in arrangements,
which are very important, particularly for some groups. Where
there are ethnic minority communities, you have to work through
particular groups. For example, there is usually an Asian women's
centre in the area, which you work through.
Therefore, you will always have that type of
assessment and you will always start with a range of options that
you gradually narrow down. Right through the process, you will
use those different vehicles. I think that that is true for almost
everywhere now. In fact, I do not know anywhere where that type
of approach has not been adopted.
Siobhan McCoy: To add to that,
wherever possible we also try to link in with existing local government
structures, so that we do not try to replicate things that are
already happening on the ground that have well-established ways
of engaging with local communities. We also do things such as
sending out newsletters, and we have specific studies that are
undertaken to help us to engage with communities. We also involve
residents through things such as design working groups, so that
they can get involved with looking at the design of new-build
properties. We have some examples of those on the ground.
Richard McCarthy: May I add something
briefly? There is some real innovation here. For example, in east
Lancashire, the mediation service from Northern Ireland has been
involved in building more cohesive communities, so that we can
do something to bring real benefits to the community as a whole,
not just to individual parts. That brought the community closer
together.
In Gateshead, for example, the development of
street committees within the pathfinder has led to a resident
requirement and request for demolition that was not originally
planned. We are going to see that through because it is what residents
wanted and helped to shape through their street committees and
the pathfinder.
Q94 Phil Wilson: You mentioned the
table on page 39 and said that there are some differences. Are
they just technical differences?
Michael Gahagan: They are fairly
minor differences. I think that the table probably gives a bit
too much emphasis to public meetings, which I would not regard
as the most important, for the reasons that I explained. Furthermore,
from memory, it talks about an external facilitator chairing.
That is quite useful sometimes, but we have found across the pathfinder—four
local authorities are involved, and the chairs of housing and
regeneration sit on my board—that it is better that they
be chaired by ward councillors, rather than a facilitator, to
be honest.
Q95 Phil Wilson: You mean local authority
councillors?
Michael Gahagan: Yes. The third
difference, where I would be a bit concerned, is where the table
talks about street representatives with a: "clear remit to
change proposals if necessary". Although I think that no
one would ever go ahead without majority support, if that implies
a power of veto on the details, I would have a slight problem
with it for two reasons.
First, you can have very transient communities.
For example, in the Welsh Streets area, 50% of the community has
left, and in another of my areas we have 100 different private
landlords for 800 houses. Secondly, some of these areas are extremely
important from the point of view of the city, and I think that
it is key that the properly-elected city fathers have the important
say in what happens in them. I do not think that in all cases
that can be left exclusively to the local community. Communities
have to be consulted, but I do not think that they should always
have a complete power of veto on everything.
Q96 Phil Wilson: Theses initiatives
are outside the statutory planning system. Is that a good or bad
thing? Would you rather be in or out?
Michael Gahagan: I am quite happy
with the way that this works. I am happy being out. I think that
we will have an issue over the next three years in that we have
to work very closely with the planners. For example, we have made
representations on the regional spatial strategy that the regional
assembly has taken on board. The Secretary of State then made
a response. All I can say is that it seems to work—if it
ain't broke, don't mend it.
Over the next few years, I think that increasingly
we will have to adopt the Barker "plan, monitor, manage"
approach, because we could get into a position where we over-release
land. We must build up our intelligence systems to be better than
they are now.
Q97 Phil Wilson: Does being outside
the system create problems with duplication?
Michael Gahagan: No, I think that
there would be problems with duplications if we were inside.
Q98 Phil Wilson: Page 44 of the Report
mentions an: "interest-free relocation equity loan of up
to £35,000". That seems to be a really generous and
good initiative. Is that how you could have a real effect in these
communities?
Siobhan McCoy: Certainly, from
the Liverpool perspective, that equity loan is needed and is helping
residents—who might not otherwise be able to relocate and
purchase their own property outright—because no ongoing
repayments are required during the term of the loan. They repay
when the property is sold. It is very beneficial to residents
we deal with.
Q99 Phil Wilson: So it can loosen
up the housing market, so to speak.
Siobhan McCoy: It is there specifically
to assist displaced residents.
Richard McCarthy: It also represents
excellent value for money, because the equity growth returns to
the pathfinder and local authority. So you help someone upfront
and then the equity return is held back, which is available for
more investment in an area or where considered appropriate.
3 Note by witness: Between 2002 and 2007, the
housing market renewal programme has directly provided 1078 new
homes. Of these, 366 have gone to residents affected by the programme. Back
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