Examination of Witnesses (Questions 100-114)
DEPARTMENT FOR
COMMUNITIES AND
LOCAL GOVERNMENT,
TRANSFORM SOUTH
YORKSHIRE & LIVERPOL
CITY COUNCIL
19 NOVEMBER 2007
Q100 Geraldine Smith: May I finish
on a high? I am a real fan of pathfinders, and my major criticism
is that we do not have one in Morecambe. You need to do more for
housing in coastal resorts, which sometimes have similar problems
with redundant guest houses. I do, however, have concerns about
accountability—you cannot get complacent. I am sure that
there are some really good pathfinder schemes, and that there
are some equally terrible ones, but the question is how you hold
people accountable. You have boards, but I would be interested
to hear how they are made up and who sits on them.
Michael Gahagan: On my board—remember
I have four authorities, so we had to be careful not to make it
too big—we have the chairs of housing regeneration in the
four authorities, coupled with the officials at that level. It
is very important to make sure that the local authorities are
fully involved, which comes back to an earlier question. We also
have a couple of private sector representatives, a housing association
representative and a couple of others whom I cannot remember.
But to come to your point about accountability, the NAO Report
rather undervalues the role of the Audit Commission. They crawl
all over us periodically. They come in and look at our overall
scheme. In our case, they then picked a couple of neighbourhoods
at random and went in to examine in detail what we had done and
whether we had properly assessed the schemes and looked at the
options. The Audit Commission is very challenging, and that is
a very good guarantee of value for money in many ways. Do not
get me wrong—it is not all sweetness and light, and we have
big differences of opinion, but they keep us on our toes.
Siobhan McCoy: Perhaps I can add
to that from a local authority perspective, in terms of how we
are accountable. First, I am accountable to the residents and
the communities out there on the ground, and they are very good
at holding you to account on certain things. Then, obviously,
I am accountable to the pathfinder, and we have things such as
project appraisal processes. I am also accountable to the board
and so on. Then, as has been mentioned, we have our HMRI scrutiny
panel in Liverpool, which is made up of elected members, and I
am accountable to them. People like the Audit Commission also
come in and inspect us, and we also have internal audit. There
are also people like the CLG. So, from our perspective, we think
that we are held accountable in quite a number of ways.
Q101 Geraldine Smith: I guess that
I am concerned about people who are elected being involved. At
the end of the day, you may feel that you are accountable, but
residents will feel that they cannot sack you if you do a bad
job. You may be accountable indirectly, but they want to see the
people they can get rid of if they think that things are not working
in their neighbourhood. I am concerned about quango-type organisations
running some of the pathfinders, as they appear to be.
On Saturday night, a local councillor from Burnley
told me that he felt that he had no involvement with the pathfinders.
He had a number of concerns, and it might be possible to resolve
some of them quite easily, but it is important that there is community
engagement and accountability. I know that that is difficult.
When you talk about demolition, some people will think, "Great.
We want out of here, and this is an opportunity. We've got a bit
of extra money to do it." Equally, you will get people who
say, "I've lived here for 50 years and I don't want to move."
I can quite understand why you get two very different sides. Quite
often, however, with the right information, people come round
to a scheme. Do you make sure that there is consultation not only
at the beginning, but as things change? These schemes must change
so many times as you go along. Do you make sure that you really
keep the public—particularly those who are directly affected—up
to date with what is happening?
Michael Gahagan: Absolutely—we
have to. If demolition is involved and there is a compulsory purchase
order, there will be a public inquiry, so you will be held to
account for how you have consulted people at every stage. We,
like almost every pathfinder, have committees—in my case,
it is chaired by the ward councillor—in all the priority
areas, and they meet regularly to chase up progress. That sort
of thing is endemic now.
Richard McCarthy: You referred
to Burnley, which is in East Lancashire. There, the partnership
company, Elevate, is owned by the six local authorities. As you
may have noticed in the Report, they are thinking of converting
it into a city development corporation owned exclusively by them.
So what you have there is a partnership between local government.
I am not quite sure who the representative is, and the council
might want to contact them, but it is owned by Burnley with the
other five authorities.
Q102 Geraldine Smith: Thank you.
I regard the increase in house prices in pathfinder areas as a
measure of success. I should be really worried if they were falling
or not rising pretty quickly, but I can understand the impact
that it has on people whose house is being demolished but who
want to remain in the area. Do you not have schemes where you
refurbish other similar houses that are left and offer such people
a choice of moving to them at no cost?
Michael Gahagan: Yes, they are
called home swaps. You should not think that all people whose
houses are demolished move into a new house, because they do not.
They can take up the equity loan, but quite often they move into
a nearby area in which there are home swaps. Quite a high proportion—up
to 20%—just move elsewhere. They have wanted to leave the
area; they go and live with relations; or they want to move to
the seaside or something. So there is a whole raft of things going
on. Increasing unaffordability can be a problem. I do not know
about Liverpool, but so far, in my area, people have found good
alternative accommodation, but it could well be an issue in the
future.
Q103 Geraldine Smith: May we go back
to measuring the outcomes? I find this really difficult, because
if you put down too many measures that people have to comply with,
they just find ways of getting around them. You are into ticking
boxes, and it all becomes a bit meaningless. The best measure
is probably how people feel in the area and what the area looks
like at the end, but are there other ways of measuring the success
or lack of it in pathfinder areas?
Michael Gahagan: I do not think
you can use any one measure, and in ours and the Department's
evaluations, we use a raft of things: satisfaction with the area,
certainly, and people's investment—what are the owner-occupiers
doing with their houses? Someone said, "Count the conservatories,"
which never happened in a neighbourhood that we dealt with before.
People are now investing in those areas, and the vacancy rate
is an other measure. You must take the whole range of things,
which is what we use in the Centre for Regional and Urban Studies.
I think that the Department is doing the same thing nationally.
Richard McCarthy: Yes, correct.
We commissioned some research, which we are analysing with the
researchers to work out how we develop our database without overloading
people and finding ourselves stuck with too much detail. It is
about building on that experience in the pathfinders.
Q104 Geraldine Smith: A couple of
quick points, because I am running out of time. When you started
looking at the properties, did you find, particularly where they
were privately rented, people sometimes living in them with all
sorts of problems, such as alcohol problems, or perhaps a host
of social problems that required further intervention? Did the
support services exist, or did it put an enormous strain on social
services?
Michael Gahagan: Everybody can
give examples of that, especially at the bottom end of the private
rented sector. You have got to remember that some of those houses
are dreadful, and sometimes, one-to-one, we have found people
who have been missed by other safety nets, and you can put them
in touch. That is sometimes an issue. Conversely, sometimes you
get antisocial behaviour, which creates all sorts of problems
in the area.
Siobhan McCoy: Similarly, in Liverpool,
we are developing a joint project with our Supporting People
service, so that when we identify vulnerable members of the community
who may be in need of additional services, we can offer them support.
We are working on that, and we predict that it will be much needed
and a big success.
Q105 Geraldine Smith: Finally, may
I ask about the impact on other, non-pathfinder areas? It concerns
me, because my constituency has housing problems, and we find
that, in the north-west, a lot of the money goes to the pathfinders
and the regional housing boards. So what about the impact of pathfinders
on outside areas? That is a real concern.
Richard McCarthy: We explicitly
targeted the areas that experienced the greatest need. Indeed,
we then rolled out the programme at a more modest level into places,
such as Tees Valley, which asked for additional resources. Local
authorities receive resources at regional level not only for new
house building and investment in their stock, but some money for
investment in private sector stock. It is down to local government
and regional housing boards to decide how to invest that money.
We have focused on the most severe areas, and
we are looking at how we can begin to connect to not only other
regeneration programmes, but our investment in growth in some
parts of the north. We are looking at how we can do that together,
and we leave some resources with regional housing bodies to invest
in private sector stock.
Q106 Geraldine Smith: This really
will be my final question. We have mentioned VAT. Do you think
that there should be a differential between demolition and refurbishment—yes
or no? It seems to me to be extremely unfair.
Michael Gahagan: No, if you want
an answer from me.
Chairman: You have been very patient,
gentlemen. There will be a couple of quick supplementary questions
arising from the evidence given to Mrs Browning and Mr Mitchell.
Q107 Angela Browning: Mr Housden,
in 2009, the Department will hand responsibility for the scheme
to the Homes and Communities Agency, so it is now effectively
two years before you have to meet your targets. What would be
the cost savings of handing over to the agency?
Richard McCarthy: It is more about
the benefits of bringing our investment streams together. We are
not handing over the strategic responsibility of the Department
or taking it away from Ministers. The agency will bring together
the investment functions of English Partnerships and the Housing
Corporation, both of which are involved in our pathfinder areas.
We want to invest in the pathfinders through those bodies and
take it to local government, and to connect it to investments
made by English Partnerships and the Housing Corporation. We will
look at local areas across the piece through one agency, rather,
as can sometimes happen, three agencies turning up with different
pots of money. We want to drive greater value for money from our
investment and to see whether we can increase outputs and outcomes
through the better co-ordination of our activities.
Q108 Angela Browning: So what will
be the cost saving of the change in structure?
Richard McCarthy: I cannot give
you the cost saving. We have developed a model that would show
a £1 billion cost saving overall from our investment programmes
for the first initial period, but I cannot translate that into
a number for housing market renewal.
Q109 Angela Browning: I wonder whether
we could have a note, because the Committee may well wish to talk
to the Homes and Communities Agency.[4]
Richard McCarthy: It does not
yet exist—the Bill was introduced only last week.
Q110 Mr Mitchell: By hook or by crook,
I am the last in this book. Mr Housden, I have two points to make
from the Report that I should like you to answer. Paragraph 4.8
states: "In some pathfinder areas speculative purchases by
private sector landlords have contributed to the transient nature
of communities with tenancy turnover of 30% in some cases".
Before that, paragraph 3.17 states: "a significant but unknown
number of citizens from other European Union countries have moved
into some pathfinder areas, such as Birmingham and Manchester,
attracted by the relatively cheap housing. Such in-migration was
not envisaged at the time of the programme's establishment."
There we have two developments. Can you quantify the results of
either or both of them and what contribution they make to social
stability in those areas?
Peter Housden: In terms of migration,
pathfinders keep a close eye on demographics of their areas as
a whole. There are a range of factors, but increased household
formation is one of the biggest single drivers of growth strategies
and is important. One of the difficulties with the pathfinder
areas is that they are relatively small and certainly smaller
than the size at which official statistics are collected. Nevertheless,
demographics are important.
I take the significance of Mrs Browning's point
in relation to speculation, and we take it seriously. It is difficult,
however, to find mechanisms that will damp down speculation without
harming the prospects of people who have owned property in an
area on an individual basis for a long period. Both are caught
in the same net, as it were, but we shall continue to explore
ways in which to find such mechanisms. One of the ways, as Siobhan
McCoy talked about, is to get the most appropriate time window,
so that you are being clear about your intentions and moving forward
on them as swiftly as you can to minimise the period of uncertainty.
Both of those are important issues for us.
Q111 Mr Mitchell: Okay, but could
you give us a note on the figures, or any figures that you have?[5]
The second question was: what contribution do both developments
make to social stability?
Peter Housden: Social stability
is a key outcome for housing market renewal. One of the characteristics
of the areas prior to housing market renewal intervention was
very high levels of instability, with high numbers of people leaving
the area and a high degree of unhappiness among those people in
the area.
Mr Curry made a point about mixed communities.
We very much embody that point as an aspiration for this investment
and others. You pointed out the chart of the range of things going
into Newcastle—there are plentiful opportunities to use
public money to establish a sustainable community of people with
decent employment prospects and decent transport, alongside decent
housing.
Chairman: Thank you. I think we have
been through this. Mr Williams has the last question about VAT.
Q112 Mr Williams: The same question
to each of you, starting with Mr McCarthy: do you not think it
utterly ludicrous that the correct structural decision might not
be taken just because of the arbitrariness of the VAT system?
Richard McCarthy: I would welcome
the freedom of a system that was more consistent in its approach.
Peter Housden: VAT is a matter
for the Chancellor.
Q113 Mr Williams: That is not what
I asked you. Would it have altered your decisions if VAT had not
been operated as it has been by the Department?
Peter Housden: That is a different
question. It is very hard to answer hypothetical questions.
Mr Williams: We have a would-be politician
here.
Michael Gahagan: On the question
of whether I would like to see a level playing field, I have already
said yes.
Siobhan McCoy: We do not make
decisions based on VAT; we make decisions based on what is appropriate
for a particular neighbourhood.
Q114 Mr Curry: It is not a decision
just for the Chancellor. Are you aware, Mr Housden, of any approach
by the Government to Brussels to seek more flexibility in reapplication
of VAT to these projects, and what is the procedure in Holland
or other countries with proven regeneration projects?
Peter Housden: I am not.
Chairman: You are aware now.
That concludes our hearing, and I am sure that
that we will want to come back to the VAT point in our Report.
I am grateful to Mr Williams for highlighting the point. Mr Wilson
put his finger on it: obviously, matters have improved considerably
in pathfinder areas, but the evidence is not entirely clear how
much of that is due to the work of the pathfinders. For instance,
low demand for properties has fallen in the pathfinder areas,
but not as quickly as it has in the rest of the country. Equally,
you, Mr Housden, would no doubt argue that, but for your efforts,
it would not have fallen at all. It is clearly a difficult Report
that we have to grapple with.
Thank you very much.
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