Examination of Witnesses (Questions 35-39)
RT HON
MARGARET BECKETT
MP, RICHARD MCCARTHY,
SIR ROBERT
KERSLAKE AND
PETER MARSH
16 DECEMBER 2008
Q35 Chairman: You obviously received
the intelligence that we are a bit short on numbers owing to flu
and other commitments but it has allowed us to focus our efforts
much more on teasing out the information we require so you may
regard this as a mixed blessing. May I start by taking up the
issue of government housing targets and the ability to meet them?
I do not really want to re-open the debate we had with you last
time as to whether it is a target or an ambition to reach the
three million. I am much more interested in whether, within that
overall number target, there is some re-thinking in current circumstances
about the balance between homes for rent, for shared ownership
and for market housing.
Margaret Beckett: It depends a
little, as so often, on how you define your terms. How I would
put it, rather than saying that at this moment there is a big
re-think going on, is that although we have just commissioned
or are about to commission some more research into housing need
which may cast light on this issue, there is a consciousness that
it is possible that there will come out of it perhaps a slightly
different balance between people's approach in terms of whether
they want home ownership or whether they want to rent, wherever
that be. However, having said that, my impression is that at the
moment there continues to be quite a strong demand for home ownership,
including for the shared equity schemes that we are continuing
to run or are beginning to promote and so on. It may be that actually
the underlying desire towards ownership on some scale is so great
that there will not be that much of a difference. It is too early
to tell but that is exactly the kind of thing which I hope will
come out of the research we are commissioning into what housing
need is and how it is expressed.
Q36 Chairman: May we just concentrate
on the short term as opposed to the medium term. In the short
term it is quite clear that demand that can be expressed as opposed
to demand which is related to need is extremely constrained as
regards ownership and therefore presumably the demand is being
expressed as rental, either in the private sector or social rented.
What about short term shift?
Margaret Beckett: We think there
is a relatively strong response, for example to the HomeBuy Direct
programme which we gave the latest details of yesterday. It is
an ongoing thing but yes, I do not dispute that at present there
is a considerable demand for rented property and rented property
of a good enough standard in particular.
Sir Robert Kerslake: I am happy
to add a few thoughts on the short-term position. Your phrase
"effective demand" is absolutely right. The constraints
at the moment are twofold: one is the ability of purchasers to
access mortgages and the other is the ability of developers, whether
they be housing associations or others, to access investment finance
to deliver houses for sale where there is a sales risk. In a sense
the sales side is being squeezed in both directions is the way
I would describe it. The reality is that what we are doing is
to try to address that issue in two ways. One is to make it easier
for people to access mortgages, and that is in effect what HomeBuy
Direct does, by being a second charge behind the mortgage that
makes it more possible for people to access mortgages. The evidence,
as announced by the Minister yesterday, is that there is a good
deal of interest in that scheme from the sector, from house builders
and others. On the other side, in terms of development of schemes,
what no doubt you will have picked up from the National Housing
Federation is that there is a certain amount of reluctance on
the part of housing associations to take forward schemes which
have significant sales risk. What we are seeking to do is to be
flexible, to recognise that short-term reality and enable them
both to do social rented and rent-to-buy so when the market does
lift the opportunity is there to purchase.
Q37 Mr Betts: Is there not an immediate
problem? We do not know quite when the market will lift. We have,
as we all recognise because people are not able to access home
ownership as easily as they might have done a year ago, an increasing
demand for social housing and we all see that in our surgeries
as Members of Parliament. We have housing association schemes
not going forward potentially because they simply cannot stack
up the numbers now and with not being able to sell they need to
cross-subsidise. We have S.106 schemes grinding to a halt as well.
Is the reality not that, despite what the Government have done
already, we need a substantial increase in government funding
for social rented housing if we are going to bring the two together,
the increasing demand for social rented housing and the fact that
the supplies in various forms are drying up?
Margaret Beckett: We have brought
forward funding.
Mr McCarthy: You will be aware
of the £400 million we announced.
Q38 Mr Betts: On top of that. That
is not going to deal with this gap, is it? It is going to get
wider rather than narrower even with that funding.
Mr McCarthy: The best priority
must be for us to maximise the opportunity we have now to spend
the money brought forward, now some £0.5 billion for social
rented housing, because remember the PBR announced further additional
money brought forward to support the social rented programme along
with the decent homes programme. The first job that the HCA has
to do with housing associations and others is actually maximise
those social rented homes and we can new build with the money
brought forward and were more money to be made available I am
sure we would spend that further.
Q39 Mr Betts: How many extra units
is the money which has so far been provided going to create?
Mr McCarthy: You will remember
that the money we announced in September, that £400 million
should deliver a further 5,500 homes so you can proportion that
up. You will be aware that we also have to deal with some of the
funding pressures which now exist in our funding system with less
subsidy from S.106 agreements and the staircasing concerns.
Margaret Beckett: The initial
thinking was that that £550 million might bring us forward
about 7,500 units.
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