UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1038-ii

 

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

communities and local government committee

 

 

DepartmentAL ANNUAL REPORT

 

 

monday 2 NOVEMBER 2009

RT HON JOHN DENHAM MP, RT HON JOHN HEALEY MP

and RT HON ROSIE WINTERTON MP

 

 

Evidence heard in Public Questions 151 - 228

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 2 November 2009

Members present

Dr Phyllis Starkey, in the Chair

Sir Paul Beresford

Mr Clive Betts

John Cummings

Alison Seabeck

Mr Neil Turner

________________

Witnesses: Rt Hon John Denham MP, Secretary of State for Communities and Local Government, Rt Hon John Healey MP, Minister for Housing and Planning, and Ms Rosie Winterton MP, Minister for Local Government, Department for Communities and Local Government, gave evidence.

Q151 Chair: Can I welcome you, Secretary of State, to this session on the Annual Report. Since it is your first Annual Report, so to speak, in your new post, can I start by asking you, Secretary of State ,whether you regarded this post as a promotion?

Mr Denham: Yes I did. It was also, without being indiscrete, of a number of options that were discussed, the one that I chose to have and the one that I wanted to do.

Chair: That is very gratifying.

Q152 Sir Paul Beresford: Why?

Mr Denham: I have a background in local government personally as a councillor and have a strong commitment to local government. My work at the Home Office and subsequently chairing the Home Affairs Select Committee gave me a great interest in issues around community cohesion and that side of the agenda so it seemed to me to be a department where there was still a job to be done and one that I would find personally interesting and one that I thought was particularly important.

Q153 Chair: We have made the point before as a Committee when looking at the Department's Annual Report that we felt that the Department needed to increase its influence with other departments. As your answer has just pointed out, very much of what the Department seeks to achieve is actually done by other departments. Do you think you have been able to increase CLG's influence within other government departments and can you point to examples?

Mr Denham: If I set the scene I think it would be fair to say that the Department over the years has concentrated its efforts in a number of key parts of its relationship with the rest of government. I think that the relationship with the Treasury (I am not saying we get everything we want because we do not) and the understanding with Treasury officials and our officials is very good. The Department has concentrated on the main structural relationships between central and local government so delivering local area agreements and multi-area agreements is something that affects all departments. I think the successful drive for the last CSR in reducing the number of performance indicators across government was something where CLG led and was influential across government. I think I would say that I have some sympathy with the view that there may be places where we need to drive our influence further in more detailed areas. Within the last few months I would point to a number of examples where I think we have done that, most obviously (John can come in of course on this) with the scale of the Housing Programme and that ambition has involved other government departments, not just our own. I think in the consultation around local government - Strengthening Local Democracy - we clearly could not have done that without buy-in from a significant number of government departments to the increased scrutiny role of local government, and finally the recent launch of the Connecting Communities Campaign again only really makes sense if you can be confident that other government departments are going to back you up at local level. So I think there is probably more that we can do but I think there are a number of examples of where we have set out very clearly to have influence across government departments to influence delivery on the ground, not just our own Department's work.

Q154 Chair: I would just like to follow up an issue that arises directly from one of the points you made, Mr Denham, because we are then hoping to go to a lot housing related points so your contribution, Mr Healey, will probably be more appropriate there. One of the issues that you talked about was scrutiny at a local level and that brings me to the Committee's report on The Balance of Power: Central and Local Government and the appearance before us of ministers from the Department of Health and the Home Office where I think it would not be an exaggeration to say that we were very, very unimpressed at those departments' attitudes towards local government and devolving power, and the Committee is fairly disappointed obviously at the lack of success of CLG in persuading the Department of Health and the Home Office to seriously consider giving local councils a greater say over local health services and local policing. Do you think there is more you could have done to have persuaded them of the real value of localism?

Mr Denham: Perhaps I could ask you, when did those appearances take place?

Q155 Chair: When you were probably still in charge of the other department.

Mr Denham: Then what I would point to is an example in the document Strengthening Local Government which was jointly agree wording between myself and Andy Burnham to the extent that although we would not have a top-down re-organisation, we would encourage closer working relationships between PCTs and local government, not just in the sense of sharing staffing - which a number do - we explicitly said joint scrutiny and accountability arrangements, so we have opened the door there. I know that the home secretary is very keen to ensure that scrutiny plays a proper role in the oversight locally of policing in local areas. As we have published that document and on the work we have done since, we have actually had significant success in persuading other government departments that that local government scrutiny role is very important. Of course financially the biggest shift of the last few months has been the commitment to free domiciliary social care for those with high needs which is actually the biggest single transfer of funds from the Department of Health into local government since 1948. That is a pretty big statement of faith in the ability of local governments to deliver a major public service on behalf of both departments. I think we are making progress. In terms of broader influence structurally Rosie Winterton of course is both a BIS minister and a CLG minister which is enormously important in cementing the relationship with regions and the general economic development role of local authorities and of course we share our Lords minister with DWP so we also have a physical presence in two other departments which are very important, particularly at minister of state level.

Q156 Sir Paul Beresford: Many of the people that I know in local government, having been a local councillor like yourself, would say that you prior to you your department built up a huge volume of targets, massive auditing and then you brought them down a bit but they feel that the numbers may have been reduced by a combination of actually reducing them but combining numbers, but the auditing that goes on behind the scenes subsequent to those still means that your interference and load on local government is as high as it has ever been.

Mr Denham: I think, Sir Paul, that the truth about this is that when this government was elected in 1997 it was necessary across public services both in local government and in centrally run services like the NHS to get a grip on the question of quality and performance and the measurement of quality and performance. I think the first few years did involve in all of the public services an intensive programme of establishing national targets and driving performance against those targets, but equally the last few years has been a relaxing of that regime and a moving towards local delivery. In the recent shift announced in Building Britain's Future towards the establishment of entitlements, the idea of the level of service to which a citizen is entitled by being a citizen as opposed to a target which a professional is meant to deliver is a further shift in that direction. What we have tried to flag up in our own documents in the Department over the last few months is that that process will now need to go further and the idea behind Total Place - looking at all public service spending in a particular area - is clearly designed to allow and encourage the more flexible use of resources to meet local needs. I would not apologise for the period in the history of the government where targets play a very important role in focussing public services on what people are actually receiving as users and consumers of those services, but I also recognise there is a point beyond which that role was no longer going to be the big driver of performance and we had to shift towards more local measures. We are moving towards the comprehensive performance assessment which is a further stage in trying to look at the whole of local service delivery in an area and we will begin to see the results of that over the next few weeks. I think it is another move in the right direction.

Q157 Mr Betts: Can I pick you up on the relationships with the Department of Health; I am pleased to hear that they have improved but just say a department came forward to have a pilot project in a particular local authority PCT area where the local authority members effectively became the board of the PCT and gave it greater democratic accountability, how would you respond to that? Would you encourage it? Welcome it? Kill it stone dead or say it was something worth discussing with the secretary of state for health?

Mr Denham: I would certainly say - because it would be his decision - that it was something worth discussing with the secretary of state for health. The wording in Strengthening Local Democracy that we would encourage people to propose joint scrutiny and accountability arrangements. We have not sought to predetermine those or to say, "This is the way that you should do it" but I think in doing that - the secretary of state for health agreed with that wording - that was to invite proposals to ask how we could do this better at a local level. I am not in a position to say that a proposal of that sort would automatically be accepted by the secretary of state but certainly on the basis of what we have published ourselves we would not send people away, we would set up that discussion.

Q158 Chair: We did make that proposal in the Balance of Power report and it was not taken up.

Mr Denham: Things move forward in politics step by step and I think most people would recognise, as would the secretary of state for health, that the wording that is in our consultation document was a step beyond what government had previously said in this area. In the context of your question asking if we can show any evidence of us moving things forward, that was one example.

Q159 Chair: Perhaps we could return to the issue of housing and Mr Healey. Could you suggest ways in which the Department had in fact worked with other departments on the housing front?

John Healey: Precisely, Dr Starkey. To amplify what John Denham has said, I think it is a fair criticism of the Department in previous years; I do not think it has been characteristic of the Department in the last couple of years and certainly not in the last few months. To add to John's list, I think you can see the radical legislation that we led through Parliament to reform the planning system at the national level and the work we are now doing to help marshal and advise departments to produce the national policy statements as the cornerstone of that new system. I think you could see the prime minister's housing pledge in June, a centrepiece for the Building Britain's Future document in which, as a Department, we were able to nail a deal and negotiate a switch of funding from other parts of government, topside of £900 million. I think this Committee would be hard pressed to remember the last time when education money, health money, Home Office money or transport money was switched to housing and in particular to build affordable homes that this country needs and I think that is a sign of the strength of the Department across government. Finally I think it goes beyond government because if you look at the hard work that has gone in by my predecessor, Margaret Beckett, that I have tried to continue, to put in place support for people who may be struggling with their mortgages or arrears during this downturn, then I think the Financial Services Authority's Mortgage Markets Review demonstrates the extent to which it is accepted that there should be tougher rules and regulations on lenders. I think the extent to which the court service is now toughening up and implementing its pre-action protocol meaning that even on the day when people face a repossession order in court with the free advice and representation and the operation of that pre-action protocol we can still prevent four out of five repossessions taking place on that day. It is a department that has always played that mediating role between the local and the central and the marshalling role between government departments and I think we are playing that together as a team here probably more forcefully than we have done in previous years.

Q160 Mr Betts: A couple of weeks ago we had a discussion with officials, Richard McCarthy particularly, and we discussed with him the issue of the asset-backed securities guarantee scheme. There is certainly some evidence of an improvement in the housing market but nevertheless there still is a tightness, particularly in the wholesale financial market; interest rates tend to be considerably higher for many new products than existing products; first time buyers are having difficulty getting into the market. When we took evidence in a previous report about the asset-backed securities guarantee scheme all the evidence was that it was not really working and improvements were needed. I understand this is a Treasury matter but clearly it is one of profound importance to actually solving housing problems. I just wonder whether any progress has actually been made in trying to think about improvements to the scheme so it actually works.

John Healey: I think there have been some steps towards a recognition that what is a general problem and a consequence of the world-wide credit crunch - you point to the lack of the wholesale market essentially - is creating enormous pressures on the availability of mortgage finance. The scheme that you mentioned is part of it, the lending agreements that we have with certain banks where we have a strong stake now is also part of the solution, but it has meant that there are not just increased margins for those who are lending at the moment but two other things here. It has also meant that certain lenders that do not take retail deposits are basically not offering mortgage finance at the moment; secondly, it means that the availability, particularly those who could afford actually to sustain higher loan to value mortgages, simply are not finding the products available to them. Trying to improve the workings of the scheme is only part of the picture and may contribute to it, but actually it is a much bigger challenge to get the flow of lending available again and it is something that does not just affect those looking for mortgages, it affects those institutions in the housing field that also need to borrow in order to develop in just the same way as many companies are finding this shortage of credit and lending a problem for them.

Q161 Mr Betts: I don't think anyone was suggesting that this scheme was going to solve all the housing market and finance problems by itself, but there was feeling, certainly when we took evidence from people in the private sector, that they welcomed the idea of the scheme, the welcomed the intention, they thought it would have possibilities but the reality was that it was not working. You have probably seen the quote that it was "half a leap across a chasm: very impressive but doomed to failure". It was going in the right direction but it just had not gone far enough to make it workable. Is there a recognition amongst minsters in CLG that that is the case and that more work needs to be done with Treasury colleagues to try to get the scheme delivering?

John Healey: There is a lot of work going on with Treasury colleagues and I now attend with Lord Myners every Home Finance Forum meeting which brings together the sort of discussions that sometimes tackle these questions, but yes, that work is going on with Treasury colleagues but, as I tried to say earlier, Mr Betts, the lack of a secondary market in lending is a much bigger problem than the asset backed scheme that is designed or capable of solving.

Q162 Chair: Are you saying that if that bigger problem was solved then the asset-backed scheme would work?

John Healey: No, if that problem is solved it may be that the case for a scheme such as that is reduced.

Q163 Mr Betts: Can I come onto the report that we just done in the Committee, the Local Authority Investments dealing with the problems with the Icelandic Bank? I think the report generally was well received. One area, however, which caused the Committee some concerns in terms of response and one we are still pursuing was the Financial Services Authority who really were indicating to us that their ability to regulate Treasury management advisors was somewhat limited, particularly to regulate potential conflicts of interest where a firm was giving advice on the one hand and receiving money because of the nature of their operations in another part of their business in terms of money with regard to investment decisions that were made. Is this again a concern that the Department ministers have picked up on and one that you would be wanting to work with the Committee, because we are taking it up with the FSA to try to resolve? It is an important area and we are concerned about the regulation of this particular advice.

Mr Denham: I think the report that the Committee produced was very helpful and was very balanced. The question of what the Financial Services Authority regulates is primarily an issue for them. Normally regulation in financial services comes in where, for example, there is found to be a big imbalance between the information which is available to the person giving the financial service and the consumer. The circumstance here is that we have to treat local authorities, which are pretty big organisations, as fairly mature consumers of financial services and people who ought to be able to take responsible decisions on behalf of the people whose money they are looking after. We will, as I think the committee knows, be consulting very shortly on new guidance to local authorities in this area and one of the things we will be proposing in that is that there should be greater transparency in the way in which local authorities report on where they are seeking advice and who they have got advising them on this matter. I think we are doing the right things from our point of view in terms of the right guidance to local authorities on how they should go about doing this but without doing the thing which the Department always avoids which is putting ourselves in the position of being responsible for people making good financial decisions. I am sure the Committee agrees that needs to be a responsibility of the local authorities themselves. So far as the direct question goes about whether the FSA should regulate, that may be something the Committee wants to pursue with the FSA; I do think that is an issue for them rather than for me under these circumstances.

Q164 Mr Betts: Ultimately it would be a decision if ministers thought that the current regulatory regime was not sufficient to propose legislation on because in the end the FSA will do what it is asked to do.

Mr Denham: I guess that is true and I suppose I am saying to the Committee that I think there is more that we can do in the guidance that we put out. In a sense I think the Committee's report possibly exposed a lack of transparency, certain potential conflicts of interests that were only apparent once the Committee started digging around and asking what was actually going on, and I think if there is greater openness and transparency and we put that into our guidelines then that will prevent that situation emerging. I am not yet persuaded that government will require the FSA to operate in this area because it seems to me to be an area where local authorities should frankly be able to take sensible decisions about who advises them in their finances.

Q165 Mr Betts: We have written to the FSA expressing some concerns over this issue. Presumably, if we are not satisfied with their response, then you would be happy to receive some further correspondence from the Committee.

Mr Denham: Of course and I do think the Committee's role in this area has been very, very useful to everybody.

Q166 John Cummings: Did the decision to force housing associations to reduce their rents by two per cent in any way represent your Department losing the argument with the Treasury and DWP over the cost of housing benefit?

John Healey: No. We are not forcing housing associations to reduce their rents by two per cent. Housing associations, as the Committee may know, fix their rents according to a formula. That formula is essentially RPI plus half a per cent. There was a concern when the budget projection was minus three per cent because it is fixed according to the September RPI. The Housing Federation put forward proposals which I did not find persuasive but I did believe that there was a case for putting in a floor in the case of very low negative inflation and I published those proposals for consultation in July. In fact the RPI in September was minus 1.4 so that the general rent change for housing association rents will be minus 0.9 per cent for next year.

Q167 John Cummings: Therefore you do not anticipate fewer houses being built as a result of the decision to force a reduction in rent.

John Healey: I do recognise that it will put pressure on some of the operating and some of the investigation budgets in some housing associations. I think that argument was overstated at the time it was made and all the evidence that I see of housing associations putting bids in in order to use government grant, particularly the extra money that is available for housing associations through the housing pledge funding, I see no shortage of housing associations willing and able to build the new homes that they think are needed in the areas they serve.

Q168 John Cummings: So you are actually saying that you do not anticipate fewer houses being built.

John Healey: I do not anticipate the sort of consequences for housing associations' ability to build and develop that was put to me earlier in the summer and all the evidence that I see from housing associations bidding healthily and heartily for the extra money that we are putting on the table to support them to build, particularly during recession, suggests that that argument was overstated when it was made.

Q169 John Cummings: So there will not be fewer homes built. Is this what you are saying, Minister?

John Healey: There will be more housing association new homes built as a result of the money we are making available, notwithstanding any pressure that some housing associations might find as a result of the rent change next year.

Q170 Chair: Ms Winterton, you have a joint appointment between CLG and BIS; can you point to any concrete achievements thus far of that joint appointment?

Ms Winterton: I think the real achievement would be the coordination of the response to the economic downturn and looking to the recovery that has been possible because of the work of local authorities and regional development agencies in first of all making sure that there were joint strategies for getting help to individuals and to businesses in the downturn itself, but also planning for the future when the recovery comes and what regional economies are gong to look like and how the local authorities can work together in order to ensure that they are playing their full part in planning for that. That is about the political leadership coming together perhaps with what you might call business leadership and ensuring that there is coordination between the two. I think also the organisation that has been required around the sub-national review has meant that the relationship between BIS and CLG has been absolutely crucial to get the new Leaders boards up and running, to ensure that they are working closely with RDA boards as well. One of my roles within BIS as well is to coordinate the regional ministers and again I think the regional ministers economic delivery groups which have brought together the local authorities in a region and representatives from the regional development agencies, JobCentre Plus, health service and others has been absolutely vital in ensuring that there was not duplication in terms of getting help out there in the first place and not duplication in terms of looking to the future as well.

Q171 Alison Seabeck: Can I ask on the issue of regions particularly how damaging in terms of being able to deliver across the region economic development and obviously meeting some of BIS's own targets, the delay in the regional spatial strategy being finalised has been for the department?

Ms Winterton: First of all, in terms of looking to the future, there are obviously the new spatial strategies which will come out in the joint work between the RDA boards and Leaders boards. In all areas what there has been is a spatial strategy in place that people are working to. There is obviously in these negotiations a certain amount of to-ing fro-ing but it is not as though there is not something in place that people can work to in the meantime.

Q172 Sir Paul Beresford: Local authorities are overseen by the Audit Commission. The Audit Commission measures the statistics and targets and so forth that you set. How do you think they would feel about your own strategic objectives and your failure to actually meet them? I know the NAO has had a look and has not been very polite. What are you doing about it?

Mr Denham: I think the NAO actually had a judgment which was a little more balanced than being not very polite because it did not particularly criticise us compared with other government departments.

Q173 Sir Paul Beresford: That is just relativity, is it not?

Mr Denham: A number of the strategic objectives that we have in the Department were set afresh at the beginning of the spending review and in areas where the baseline data and the tracking data was not readily available. I have to say, looking at that as Secretary of State, it can be frustrating from my point of view too not to have performance month by month or quarter by quarter available to me to check the progress of the Department but actually the NAO recognised, I think, that the Department had done a reasonable job given how many of the areas where we had DSOs there was not actually baseline information in place so mechanisms had to be constructed to track it.

Q174 Sir Paul Beresford: So the DSOs were wrong, were they?

Mr Denham: I do not think they were wrong but I think that if you were to repeat the exercise for the next CSR my conclusion would be that you have to look very carefully at the balance between having a measure which is a good strategic measure which, if you can get it right, gives you a better cross-government measure of how well you are doing so you have the sense of the ideal measure and those that you can practically put in place and measure in a reasonable time scale. From my point of view I would say that I find it frustrating to be 18 months into the CSR and to have quite a number of areas of my Department's work where I cannot readily put my hands on a set of figures that says how well I am doing.

Q175 Chair: Can I just leap in a second, Secretary of State? No doubt you have read last year's comment on last year's Annual Report where we actually said that next time a secretary of state comes before us - I appreciate you are a different Secretary of State - to discuss her (as it was then) Department's overall performance we do not expect her to have to rely on complaints about the nature of the indicators which have been set in order to explain the apparent poor performance. The department will have been aware that this was an area that needed attention.

Mr Denham: Indeed and in the autumn report which is due fairly soon we will have filled in some but not all of the gaps in the area in which we need to fill it in. It is a fair point to make from last year but the reality is that the construction baseline in collecting the data has taken time and it has to be done in a satisfactory way. We will have 36 out of 50 indicators in the autumn performance report which should be due out in December; we will have 47 out of 50 in our 2010 annual report. Sitting here as we are today I share the Committee's frustration to some extent in the ability to measure our progress.

Q176 Sir Paul Beresford: Does your Department's performance provide genuine accountability for its range of work? Obviously going from your previous remarks, no.

Mr Denham: I think if you looked solely at the DSOs as ways of measuring our performance then clearly in those areas where we cannot yet give an assessment of progress that is less than satisfactory, that would obviously have to be said. On the other hand I think the Department publishes a wide range of data and information about our activities and we are always more than willing to appear as ministers in front of the Select Committee to go into details in particular areas of activity. I think it would be a mistake to suggest that the DSOs are the only ways of measuring the performance of this Department; there are others and I am sure the Committee recognises that.

Q177 Sir Paul Beresford: Looking at your priorities, has the economic climate changed those priorities?

Mr Denham: The economic situation has had a marked effect on the Department. Obviously within the last year spending was brought forward from the third year of the CSR in order to accelerate capital investment in areas of important activities to give a fiscal boot in the economy. John Healey has spoken about the housing work that has been going on. Rosie Winterton has spoken about the Real Help Now work that is putting in mortgage rescue; the work of the Working Neighbourhoods Fund to get people back into work; the cooperation of local authorities with DWP over the Future Jobs Fund. There are actually a huge range of activities undertaken by my Department and my officials which, if one went back 16 or 17 months, were not on the agenda at all, so it has had a huge effect on the way in which the Department operates.

Q178 Sir Paul Beresford: Are they going t be reflected in your targets and indicators?

Mr Denham: I think there will be areas where the changed economic circumstances make it difficult for us to hit some of the targets which we had set out to achieve 18 months ago at the beginning of the CSR. I will leave it to John to talk about the details but clearly producing housing in the volumes that one wanted with the mechanisms that had been issued, particularly private sales of properties to cross-fund social housing, that market has changed entirely; it is one of the very strong justifications for putting additional public finance into social and affordable housing to make sure that that activity keeps going. So there will be areas where inevitably the targets that were set out to be achieved three years ago will look different in the light of the recession. That does not meant that we are looking in the wrong areas but there will be areas like that.

Q179 Sir Paul Beresford: A large proportion of your Department's portfolio includes local government; you are leaning on local government to get their service standard up and get their cost down. What are you doing in your Department to do that and what are you doing to help local government?

Mr Denham: We are reducing our own departmental expenditure by about five per cent a year; we are cutting our own costs; we have centralised the London activities of the Department into one building within the last year; we are helping local government by investing directly in the regional economic efficiency partnerships which have helped the very substantial savings in local government that we saw last year (£1.7 million has been fed back in front line services). There are again a range of activities where we are trying to make sure that our own activities are slimmed down as efficiently as possible and we are working with local government to ensure that they can do that too.

Q180 Sir Paul Beresford: What about savings? Are the savings being recycled and going back in?

Mr Denham: We have a reduction in our budget.

Q181 Sir Paul Beresford: It is not being recycled.

Mr Denham: No, it goes I am afraid.

Q182 Alison Seabeck: Picking up on something the permanent secretary was talking about last time he was here, in relation to one of the explanations he gave for not meeting some of these targets he said that staff had been moving quite significantly around in your department - a very large department, a lot of staff - the average tenure in post is 0.8 of a year which does not really help people if they are there to deliver specific outcomes, if they are constantly moving. It actually sounded a bit like musical chairs to be honest. Have you had discussions with him about the HR side of the Department and how you can help your staff deliver better?

Mr Denham: There is a very extensive programme under way in the Department at the moment broadly under the heading of staff development. We had a major conference of all staff that that ministers took part in in September but that is backed up by intensive training, discussions across departments, looking at ways in which we can work more effectively and better. This was not invented by this team of ministers; we came into the Department, recognised weaknesses in these areas and we already had under the permanent secretary a full programme in place to do a lot to promote the values of the Department, to make staff feel valued, to make them feel they had a big contribution not just to the work of their particular part of the Department but to understand the Department as a whole. That is actually one of the challenges for CLG; it is a hugely wide-ranging department. For somebody working in community empowerment to understand what is happening in the housing or planning part of the Department is a real challenge but very important for the way they do their job. I would say that there is a very big programme of that sort underway. On the particular thing about staff, it is not so much turnover because this is generally people moving within the Department, I think part of that will lie in the way these things are measured. Relatively minor changes of role might make it look as though someone has had complete change of post which is not necessarily true. Secondly, if we go back to Paul's point about the impact of the downturn and the Department's priorities, it is sort of inevitable in a way that we have to along to people and say, "I am sorry, priorities have changed; we want you to shift your programme of activity" and that will mean people moving from one post to another. What we are keen to do is to make sure that the skills that staff gain in that process are not lost to the Department as a whole.

Q183 Mr Betts: We were a little surprised, Minister, that in the same period when you were launching the Housing Pledge and starting local authorities on the course of building council houses once again that the Audit Commission came out with a report basically saying that local authorities are spending too much of their efforts in looking at house building rather than doing something about the state of their existing housing stock.

John Healey: So was I and it was not a report I accepted as it happens. I think they overlooked the massive effort that local authorities and government made for instance in the Decent Homes Programme in recent years. I think it overlooks the fact that actually local authorities are perfectly capable of doing more than one thing at a time. I was disappointed that it did not recognise that the housing pledge and the importance of local councils being able to build new homes that their people need again was not recognised as a strong vote of confidence not just from our Department but from the government in the bigger role that local authorities should play.

Q184 Mr Betts: Could we move on to look at some of the elements of the funding of the Housing Pledge? I am sure that those of us who have been arguing for this cause for quite some time and who have a commitment to housing welcome the extra money that came into housing, but there were two areas where there were some concerns expressed. First of all that money was diverted from the Growth Funds - I think £128 million - into funding the Housing Pledge and a feeling that if that led to money not being spent on infrastructure which of itself could open sites up for potential future housing development, actually it might be self defeating to a degree. Were those concerns considered and have you thought any more about them?

John Healey: Yes, they were considered; I considered them very carefully. My proposal - and we are out to consultation on this at the moment - is to switch £128 million of capital from next year's element of the Growth Fund (which is the final year of a three year settlement) which still means that those growth areas will get £685 million to switch to a programme that enables us to build now - this year and next year - because that is one of the most effective things we can do as a government in the face of recession. We would be able to build the affordable homes that are needed, create jobs (over 45,000 of them this year and next) that help people stay in work and also, because I am requiring as a condition of contract from this point anyone - whether it is a private sector developer, a council or a housing association - to have apprenticeship schemes in place and this will mean that we will create nearly 3000 extra apprenticeships over this year and next. That to me is a sensible use of public investment. I had to do something within our Department in order to seal the deal with the rest of government and leveraging was significantly more for housing than we were switching from our own programmes. As far as the growth fund goes this was a programme devised and planned with budgets attached before the CSR period, before the recession and I think it is reasonable to say that government, like any other organisation and indeed every household, has to recalibrate their plans and budgets in the face of recession. Using part of that Growth Fund money now in order to build rather than transfer to local authorities - who may use it for investment which some time in the future could free up the scope to build, particularly as that funding is, as this Committee will know well, not ring fenced and not necessarily used for those purposes - seemed to me a necessary decision to take as part of putting together the overall pledge that allows us to build these homes this year and next.

Q185 Mr Betts: I hear the argument; it is about getting money spent here and now on very important public service building new houses and creating jobs as well. When we look at the money that was switched from ALMO Programme (particularly phase six ALMOs, the £150 million) that argument is not really the same, is it? I am sure you understand the sense of almost anger out there among some of those authorities where they worked very hard to get themselves up to two star status, who believed that would automatically trigger funding, who had the programmes in line to deliver, had tenants expecting their housing to be improved and suddenly there is a postponement which is bad for tenants but also in terms of jobs given that for every pound spent on modernisation of properties it probably creates more jobs on site than a pound spent on a new build property. It is the same argument as on the Growth Fund for creating jobs and apprenticeships.

John Healey: It is not the same argument but it is not a switch, which is how you started by describing it. It is not a switch of funding out of the Decent Homes Programme; it is a likely deferment of some funding in 2010/11 - probably to years 2011/12 - and it is only potentially affecting those ALMOs that had still not reached the required two star standard to be eligible for the funding in the first place. What I have made clear in this House is that as a government we remain totally committed to fully completing and fully funding the Decent Homes Programme. This is for a small number potentially of ALMOs who had to reach the required standard, they should look to expect the funding coming on stream more likely in 2011/12 rather than 2010/11.

Q186 Mr Betts: There are some authorities who were in the pipeline to become two star and subsequently have become two star or are about to become two star who are going to be affected. It may be a deferment but it is a switch from one year to the next. Given the disappointment that exists among individuals and the fact that housing refurbishment does generate a significant number of jobs (more for pound spend than new build), is there no possibility in the Department budget of the size you have that you could not find that additional money somewhere to keep the programme at its previously set levels? I notice you said "likely deferment"; does the word "likely" mean that there is a possibility that it may not happen?

John Healey: Believe me, Mr Betts the first two or three weeks when I was nailing this deal across government I looked very hard at absolutely every part of the Housing Programme and at the options that there might be for the Department playing its part in the tough decisions and tough switches that were required. I took the view that these were at that time ALMOs who had not reached the standard, that may have had provisional plans in place and what I am able to say to each of them is that we are not switching the funding away from you but you may find that the timetable for the Decent Homes Programme that you wish to put in place once you have actually managed to get the standard we require to become eligible may be different to the provisional plans that you had in place.

Q187 Mr Betts: The word "likely" was used before; the word "may" has been used now.

John Healey: In the case of Basildon and in the case of Easington we have been able to release some money this year and next year, both are ALMOs that have just reached their two star status. It is less than they may have originally wanted but it does allow the programme to begin, it allows the contracts to be let and I am very disappointed that with four other ALMOs our ability to have those sorts of discussions when and if they reach that two star standard at the moment are stalled by the fact that they are choosing to take a judicial review route to challenge the decisions I have taken but that will have to play its own course through the court.

Q188 Mr Betts: I do not want to put words in your mouth, Minister, but are you effectively saying that where you have been able to enter into discussions with ALMOs the funding may not come on stream quite as quickly but it enables them to let contracts in a way which does commit the government to provide that funding for the future?

John Healey: That is correct but I have also given a very clear commitment that this is a government that will complete the Decent Homes Programme and is planning to do so not just in the work we do up until the next election but beyond as well.

Q189 John Cummings: I just have one comment on that, if I may, in relation to expectation and promises. Easington did not expect £170 million; that £170 million was earmarked and promised.

John Healey: The £170 million was over four or perhaps five years and that funding, if we have a labour government in power after the next election, will be delivered in full to those Easington residents. That is a commitment I have made very clearly, Mr Cummings. It is a programme that was absolutely essential given the huge backlog of repairs and the state of our council and housing association housing after the last government. It is something I am very proud that we have given such a huge commitment to and I am determined that we complete it and we will.

Q190 Mr Betts: When we did the Housing and Credit Crunch report I think the Committee, as well as commenting on the immediate measures the government was obviously having to take in a unique set of circumstances, the way the housing market has been affected throughout, we made some comments about medium and longer term thinking. Obviously the minister's attention was focussed on the here and now and how we dealt with the credit crunch but have we got any further forward in terms of looking at the medium and longer term. Is the 2020 target of three million new homes an aspiration now? Is it an objective or a target? Is it something that is going to have to be revised? Is there thought now about how we are going to get from where we are at now, an improving housing market, to a sort of house building programme we all want to see in the future?

John Healey: I think the targets that were set pre-recession were a clear and continuing indicator of the scale of need in this country and the scale of the challenge to improve and increase the supply, in other words the number of new homes - particularly affordable new homes - that we build in this country. Clearly the recession has knocked the timetable for that sideways. We have not seen this level of private sector house building since at least the early 1980s recession. What I think I am proud to be able to say is that at a time when the private sector in large measure shut up shop the public sector and the public commitment to funding affordable homes has been stepped up, so the year pre-recession in 2007 when we built in this country more homes than we built for nearly 30 years - over 207,000 - the component of affordable homes at that stage was just over 53,000 and we will start in this year in recession, as we will next year as a result of the investment we are prepared to make, more affordable homes than were built even in 2007.

Q191 Mr Betts: The start we are now making on local authorities building houses once again, that is not just a start for the recession, it is the beginning of a longer term policy for local authorities to have a real role in this area.

John Healey: It is part of a piece, Mr Betts. You can see the fact that with the round one grant for local authorities to build, the 49 councils together in England will start this financial year the biggest council house building programme in this country for nearly two decades. At the end of last week bids closed on round two and I aim to make decisions on that before Christmas. Alongside that are the reforms that we are planning to make and that I have set out to the housing revenue accounts subsidy system, in other words the system that has held councils back since the mid-80s from being able to manage their own housing and to build to meet needs in their area will be dismantled. On a number of fronts I think you can see a consistent commitment to councils playing a bigger part in the building and the provision of affordable homes that we need right across the country in the future.

Q192 Mr Betts: That moves us on to my final question about housing revenue. I think generally there was a very warm welcome across the board for the proposals you put forward and hopefully they can be implemented as quickly as possible. Some people argued that government should write off all existing housing debt - most of us regarded that as pretty unlikely - but the objective was to re-distribute around authorities fairly existing housing debt. There has been some talk, however, that Treasury also want something in return for the surplus on the rental income that they would have had if the existing system had continued for a number of years and they would like to capitalise that and add that to the debt that is going to be redistributed. Could you put us at ease that that is not going to happen?

John Healey: You are taking us into territory where we are doing detailed work now. The main argument here is that for all 202 councils that are currently part of the subsidy system, there will in future years, if we can move to a self-financing locally controlled independent and devolved system that will involve a one-off re-basing of debt within the system as part of a fair settlement, that means that there will be more money in the system in order to maintain a better quality of council homes for the next two or three decades.

Q193 Mr Betts: I think that is helpful reassurance because there was concern that the Treasury had its eyes on that little bit of extra money and was thinking about taking it for itself.

John Healey: Our consultation only closed last week but I have been quite encouraged by the fact that the local government association and the association of retained council housing authorities do recognise, although they would rather not have to face it, the force of the argument that to expect the national taxpayer, particularly at this time, to pick up an annual bill of over a billion pounds to relieve local government of debt that has been incurred in local government is unrealistic and they have declared as part of their response that they will work closely with us to try to develop a detailed and fair system in order to move to these sorts of changes I want to see. If they do that it will be possible, if they work strongly and closely with us, to have an offer on the table to local government for dismantling the system and doing this once and for all rebasing in the New Year. That is my aim.

Q194 Mr Turner: The Chartered Institute of Housing's comments on the Department's performance included the comment that they were afraid that there would be the parking of the green paper that you have just been talking about on the housing revenue reallocation. Can you give us the assurance that I think is implicit in everything you have said so far that that is not the case, it has not been parked at all and it has been very actively pursued?

John Healey: The plans for reforming the council housing finance system - the HRA subsidy system - had not been parked. They were published in July, the consultation is now closed and, depending on the extent and willingness to work closely with us at local government, we can move quite rapidly to set out an outline for how the system in the future could work.

Q195 Mr Turner: I think that is excellent news; most of us will be extremely pleased with that. I asked you this, as you will recall, at DCLG questions last week and one of your comments was (and I am sorry to throw this back at you without letting you know): "I am now doing detailed work with those local authorities that want the reform". Does that indicated that if any of the local authorities are opposed to it, that some of those who are debt free are opposed to coming to a deal on this, that you would make a deal with those ones that did want to go ahead with this and leave the other ones parked, if I can use that phrase, to come to some kind of an agreement at a later date, or would it need all the local authorities who have council houses at the moment to be part of that deal?

John Healey: Principally what it means is that if local government collectively and the authorities involved in the system at the moment are prepared to work with us and are prepared to accept an outline arrangement for the new system - I will look to put quite a lot of details on the table early in the New Year - then we could move on a voluntary basis to dismantle that system, in which case those authorities could start to gain the benefit of that from the financial year 2011/12. If we cannot move without across the board agreement, then it is likely that primary legislation will be required. That will take longer, it will be longer before we can dismantle the system and it will be longer before all authorities can benefit from it.

Q196 Chair: Can I turn to the issue of skills and capacities in house building? There has been a remark already about the large numbers of jobs that are involved in house building and you can add to that the kind of restructuring industry proper, all the suppliers of products right down to builders' merchants that also depend on the rate of house building. In response to our report Housing and the Credit Crunch the Department said it was working with BIS to see how they could engage with the house building industry in the skills sector to identify practical approaches to monitoring capacity in the house building industry. Can you tell us what progress has be made now on monitoring capacity in the house building industry at large and what progress is being made?

Ms Winterton: One of the issues that we have been working on in the economic delivery groups with local authorities and RDAs is how to get an idea of how local authorities can look at their procurement practices, how they draw up their contracts, how they work with ALMOs to look at the ability of contracts to be made available to smaller suppliers. In some instances obviously there are big contractors who can come in but following it down through the supply line to smaller local contractors, making sure that contracts are not all bundled up in such a way that smaller local suppliers are not able to access them but also - and this is where the intelligence on the ground is so important - knowing what is happening at the moment but also knowing what possibilities there are for the future and that does require local councils, for example, having good advice not only on their websites but also from officers about how contracts can be accessed properly and then looking at how the skills set can be built up through contracts as well and particularly on the construction side linking some of the bids for future jobs fund to the construction side and looking at how that can mean training, how that can mean apprenticeships and getting away from what has been a bit of a myth that it cannot be stipulated in contracts that these kinds of issues should be taken into account, using local people and stipulating training issues. Those are the two key ways that we have been using the BIS side, particularly in terms of the skills side and the RDAs and the local authorities in terms of looking at contracts that are coming up.

Q197 Chair: Given the importance of the construction industry in all its different ramifications and the large numbers of jobs dependent on it, and the fact that it is a business where being in the UK gives you a huge advantage for accessing construction work within the UK - if I can put it that way - why is it that BIS does not appear to be aware of how many jobs there are and have the intelligence already that would then enable it to target measures at those industries?

Ms Winterton: One of the things that can be quite difficult is getting some of the on the ground intelligence from very small contractors.

Q198 Chair: Surely the Local Small Business Service - I know this is straying into BIS - and the links with the chambers of commerce and Business Link should have meant that that information was available.

Ms Winterton: What I do, for example, in the Yorkshire and Humber area as regional minister to have the Federation of Small Businesses on the economic delivery group that I have. There are two things that that requires. Sometimes it can require people to be actually members and very often some of the information we get back is from surveys of some of these organisations which can vary in their accuracy but what we do want to do - this is part of planning for the coming months and for the recovery - is to get a very clear idea through, for example, employment and skills boards where local authorities will have private sector representatives on them, to look at where local contractors are saying that they could have, for example, training opportunities or they do want to access contracts and looking at how we can map that more effectively. It is one of the things that we do need to do more effectively, but what we are doing at the moment is using the various channels that are being built up. When we look at some of the powers that will be coming in through the Local Economic Development and Construction Bill again that gives the ability to look at what can be done more effectively to make an assessment of the local labour market and how that could be built up.

Mr Denham: As we are getting into BIS business, if I went back just over a year to the job that I previously held, Innovation, Universities and Skills, we had a number of meetings with the Construction Industry Training Board looking at skills for construction. There were two or three things that came out of those discussions; at least on two of them it is very clear to see how governments reflect on that agenda. The first thing the Construction Industry Training Board said was that you should make the provision of apprenticeships a requirement of public sector procurement. You will see within the Housing Programme on which John has been leading but with encouragement across government, that is becoming absolutely required in the whole of the Housing Programme that John has been talking about but is becoming increasingly common in other areas of public sector procurement. That is actually a transformation in the past 12 months on an issue where many people had asked for action for quite some time. The second thing was the industry said very frequently that training was not a problem as long as they had certainty about what they were training for. So some of the decisions the government has taken, for example about low carbon homes or the work that DEC is doing (not yet finalised on retro fitting homes and so on) are what the construction industry was looking for because they will train if they know what the market is going to be. It is not a matter of us trying to come out with a pocket calculator, the number of FE colleges to fill jobs; people will do that and they will use the training funds which are in the system. The third thing that to my knowledge BIS is continuing to pursue was to be much more effective as a broker between potential employers and the training system, particularly at higher level skills, at level four, foundation degree skills and so on in that crucial area of project management in construction and at degree level where what was needed was not so much new funds but the brokering of discussions between the employers and the higher education institutions or the FE colleges that would fill those posts. I think that has also been pursued so even if we do not have today the particular numbers I would say that over the last year to 18 months there has been quite a change in the traditional attitude towards skills supply and using all the mechanisms that are available to us.

Q199 Mr Betts: Would you tell the Committee whether you believe that the Mortgage Rescue Scheme has been a success?

John Healey: Yes. I believe it has been a success in these terms: it is a backstop; it is there as part of help that we have tried to put in place and ensure is in place really at every stage for families who find they start to fall behind with their mortgage payments. It is a provision we have made over two years. I would be happy if nobody needed the Mortgage Rescue Scheme but the fact is that some people, even with the detailed advice that we are funding and making available, even with serious discussions or potential negotiations with their lenders over the terms at which they are borrowing cannot solve their problem, even the payment of mortgage interest which the government is doing for more than 200,000 families each month will not work, some people as a last resort helping them stay in their own homes where we want them to stay means that they are ready to switch from being a home owner struggling with their mortgage to being a tenant of a housing association, so they stay in their home but the ownership changes. That is its role in the system as a backstop and it is playing a useful part for that relatively small number of families.

Q200 John Cummings: Is there any reason why it has been so slow in showing the various results of the scheme?

John Healey: I am not sure that it has been slow because several thousand people every two or three months are getting advice from local authorities as part of this scheme and being helped to find other solutions to the pressures they are under. In a sense the fact that other options are explored - the mortgage rescue scheme may be a last resort - is I think the reason why the numbers which are finally done under the Mortgage Rescue Scheme have taken some time to come through. There have been ways that we have looked to speed that up so we have now got a central team in place that is approaching lenders for some of their borrowers who may be under pressure who could be appropriate for this scheme. We are speeding it up because we now have many more housing associations involved as part of the scheme and they are able to play that part to step in and take the ownership over.

Q201 John Cummings: Do the changes you have made suggest, Minister, suggest any weaknesses in the formulation or the delivery of this policy?

John Healey: To be fair yes, I think they did. The weaknesses that I saw when I came into the job in June included us not having enough housing associations that were ready and signed up as part of the scheme; we are raising that number now. I do not think enough lenders were looking hard at whether the Mortgage Rescue Scheme might be appropriate for some of their borrowers who were really in trouble and we have done that with the central team. I have also allowed the Homes and Communities Agency to flex the grant rates that are there because what housing associations were finding as they looked to take on these properties was that there was actually quite a large bill often to bring them up to the sort of standard before they would let them as a housing association and that had not been anticipated in the way we originally designed the scheme. I think what we have done, Mr Cummings, is show a flexibility where there seem to be some pinch points in the system but my overall contention is that it plays a useful role as a backstop scheme and cannot be judged simply by the number of people that have taken full advantage of it.

Q202 Chair: Minister, can I ask about Home Information Packs? Last week - or it might have been the week before - Mr McCarthy told us that "Ministers have a range of views about HIPs". Can you tell me what range of views your ministers currently hold?

Mr Denham: We have just one view and that is held by Mr Healey.

John Healey: To be quite honest, I have no idea what he meant.

Q203 Chair: You will be going back to find out then.

John Healey: I have not asked him, but I will.

Q204 Chair: In that case I will ask a different question which is in relation to the decision to make the Home Condition Reports voluntary. We have received written evidence that that has, in the words of the licenser of home inspections, fundamentally undermined the whole policy initiative and destroyed the hopes of many individuals who invested many thousands of pounds each in gaining a qualification which has so far proved completely useless.

John Healey: There may not be a range of views that ministers take of HIPs but there is a range of views that organisations with an interest in the field take of HIPs. It seemed a sensible decision to take at the time. It has not stopped us improving HIPs in other ways and when we come to do an evaluation of HIPs then that will be one element that we will look at closely.

Q205 Chair: There are many who would say that were there to be a change in government that it would leave HIPs extremely vulnerable to just be got rid of.

John Healey: I don't wave a big flag for HIPs but it seems to me that they are playing a useful role, particularly for first time buyers who often do not know the questions to ask and do not know the information they should be looking at. Some of the emerging evidence seems to suggest that they can speed up the process of home buying and simplify it. Some of the evidence suggests that they can cut down on the amount of expenditure for buyers through aborted sales processes. I think it would be a shame if they were simply swept away but I do think that some of the suggestions that somehow HIPs are responsible for blighting the housing market - which are some of the arguments I have heard from those who wish to remove it - is so far from the main problem and the main challenge that is faced in the housing market at the moment to be really an irrelevance.

Q206 Chair: Do you not think. Mr Healey, that your evident lack of enthusiasm would help to contribute to the feeling that there is little sense of direction in the Department on HIPs?

John Healey: No, I do not have a lack of enthusiasm; I am trying to keep them in a proper perspective. I sat on the benches in the House of Commons as local government minister as part of this team and for nearly two years the one big political issue that the Conservative Party wanted to raise - and it seemed to be the only thing they wanted to talk about in housing - was HIPs. There was no debate about the scale and nature of the housing need in this country; no debate or commitment to the level of funding that government must make to try to deal with the shortage of affordable housing and no serious discussion about the sort of help that people needed faced with recession to help them try to stay in their homes which we have been putting in place. So I try to keep them in perspective rather than necessarily regarding them with the sort of view that I heard from opposition parties. I think they have proved a useful measure. They had a shaky start and I think they are bedding down. Some of the emerging evidence seems to suggest that they are useful for people who want to buy homes particularly for the first time and when we come to evaluate them some of the wider criticisms that you have quoted, Dr Starkey, we will take into account and weigh up at that point.

Q207 John Cummings: I would like to bring you round to the FiReControl project which obviously is causing everyone a great deal of concern when you consider the immense overrunning costs that have taken place at the present time and a number of fire and control centres that are just standing idle with no possibility in the immediate future of carrying out the role which they were designed and built for. Can you tell the Committee how much of the blame for the FiReControl project cost and time overruns lies with your Department as opposed to the contractor?

Mr Denham: I think that in any contract of this sort it would be wrong to suggest that all of the responsibility lies in one place so I am sure that if one went back to the beginning of this improvements could have been made in the contractual arrangements surrounding the project. I would say though, Mr Cummings, that the fundamental problem here is that the EADS have not as yet been able to deliver the system capable of performing the function they have been contracted to provide. So if you are saying where is the balance of responsibility I would say it was with the contractor. This is a challenge because, as you say, eight of the nine FiReControl centres have been constructed and the basic concept of interoperability between fire services within each region is very important as part of developing our national resilience.

Q208 John Cummings: Are you saying, Secretary of State, that you have the expertise within the Department to monitor this project from the very beginning, to draw up the contracts, to let the contracts, to supervise and in cost control?

Mr Denham: I think what I am saying is that the fundamental problem is that EADS as yet have not been able to deliver the products and the services that they have been contracted to provided. I would not try to suggest - because I do not think it ever is like this in the real world - that everything is a hundred per cent in one way or that there were not any things that might not have been done differently from my department in the past.

Q209 John Cummings: What lessons have been learned? Very expensive lessons have been learned.

Mr Denham: I think one of the critical things is to make sure in the contract that the timetable, that the definition of what needs to be delivered at each stage and the circumstances in which redress can be sought are defined as clearly, accurately and tightly as possible.

Q210 John Cummings: In evidence to the committee the permanent secretary, when asked whether the Department had sufficient skills or experience, replied, "If you take FiReControl, for example, in the last little while we have taken on some additional consultancy expertise to be absolutely sure we could understand properly and have a proper dialogue with the pretty rarefied issues that EADS, our principal contractor, said they were facing in developing the right interfaces to deliver this programme." Sir Humphrey could not have put that any better. So what truly is the situation within the Department in relation to the expertise you carry in-house in order to make sure that this fiasco does not occur again?

Mr Denham: I think actually what Mr Housden or Sir Humphrey said in these circumstances was entirely compatible with what I said.

Q211 John Cummings: Precisely.

Mr Denham: That was meant to be a positive statement. What the permanent secretary said is that in the recent past - in the last year or so, perhaps a bit more than that - the Department's team for dealing with this contract has been strengthened. That is absolutely the same as what I am saying. If you go back to the beginning of this contract and ask whether there are lessons to be learned and could things have been done better at the beginning, then yes, they could have been. Recognising that the team has been strengthened within the Department to ensure that we are in a much better position to manage the contract effectively. Secondly, the delay that we announced in the summer was the opportunity to renegotiate elements of the contract to address the issues which I mentioned earlier and things which perhaps could have been better defined in the original contract, so I think the Department has taken significant steps to give ourselves the capacity to deal with this contract because it is a very important contract.

Q212 Chair: Should that not have been done at the outset given that the difficulties you are describing are exactly the defects that have occurred across government in relation to large IT contracts?

Mr Denham: I think it is absolutely correct to say that the experience of the public sector in dealing with large IT contacts is not an entirely happy one. Those of us who have had cause to look into this in the past find that the experience of the private sector in dealing with large IT contracts is rarely any better but just less well-publicised and less costly to the taxpayer. If you take schemes of this sort which go back several years there is no doubt in my view that Whitehall has had to work very hard to strengthen its capacity to deal with these major IT projects and to understand how complex and difficult they can be. Of course it is very easy for me as a relatively new Secretary of State to sit here saying that it should have been done better a few years ago, but you are right to say that there have been some systemic challenges for Whitehall in dealing with these big essentially IT based projects and that Whitehall has had to work very hard to get itself the skills and capacity to deal with them effectively.

Q213 John Cummings: Why is the FiReControl project still worth pursuing, Minister, despite its ever-growing cost when there appears to be no end in sight?

Mr Denham: The fundamental reason for having FiReControl is that on any analysis of national resilience our ability to deal with major civil emergencies, let alone potential issues like terrorist attacks, requires a level of cooperation and interoperability between different fire and rescue services which are not provided by the current communication systems in fire and rescue service. It is frankly desirable that you are able to direct resources from more than one service to a particular incident at times of great stress. The concept of FiReControl is to give us that basic resilience. If we do not have FiReControl and go back to a local system of command and control then we cannot build that resilience into the system.

Q214 John Cummings: If you were a betting man when would you think they are going to be in operation?

Mr Denham: We announced the timetable last summer. We constantly keep these things under review. If there are any changes to that I will certainly tell the Select Committee, but the timetable that we published is the one that we are currently working to.

Q215 John Cummings: You are not prepared to put a bet.

Mr Denham: I am not a betting man, Mr Cummings.

Q216 Mr Betts: In the past the Committee, in previous reports, has drawn attention to the problem of the lack of available planning skills and how that could actually hold up the development process in a number of authorities. Perhaps there is not the immediate pressure that there was 18 months ago on this issue, but the problem with planning skills is that you have to prepare for the future if you are going to draw plans up and get people into university doing appropriate courses. We were a disappointed that there was no mention in the annual report this year about the issue of planning skills. Is that because it is not considered to be an immediate problem or just an oversight?

John Healey: If it is not in there then I would have to take responsibility for that because actually, prompted by this Committee, we have stepped up what we have been trying to do to make sure that there are sufficient skills planners in the system. You are quite right, Mr Betts, at the moment the pressure may not be on planning departments but certainly if we are concerned about this in the medium term then those skills will be just as essential as they have been in the past. One thing we have done is step up the departmental bursaries for university planning undergraduates; 102 were available last year, 175 are available this year. Following a recommendation you pressed upon us we have set up the Planning Skills and Capacity Board which brings together a range of organisations who provide support and expertise to assist local authorities in making sure they have the capacity and skills in their department, so the HCA Skills Academy, the Commission for Architecture and Built Environment and also the Planning Advisory Service are all together now part of that board and the first step they have done is make clear to local authorities what support they offer and how to get it. I think there is some useful work going on and certainly useful work as an investment for the years to come.

Q217 Mr Betts: Is that Board actually working now?

John Healey: Yes. I think it is early days but I think already we are able to show clearer information and coordinated information about the support and advice that is there for local authorities to draw on. That seems to me a sensible first step.

Q218 Mr Betts: Another organisation perhaps we were less than convinced about was what is now the Homes and Communities Agency Academy. Are we convinced that they are doing a good job - maybe a better job - than we thought they were doing when we had them before the Committee last year?

John Healey: I do not know; that is a judgment you will have to make. Whether they are doing a better job than when you looked at them before I do not know, but they are playing an active part in that Board and they have a useful role to play.

Q219 Chair: Minister, when you say they have a useful part to play can you point to anything where they have actually added value to activities that were not already being done by other organisations?

John Healey: I think they are bringing a dimension of support, particularly for local authority planning departments which is not necessarily covered, for instance, by CABE and they have been able to set out that proposition as part of the work of this Board that we have brought together.

Q220 Chair: Can I ask you, given the time, if you could drop us a note afterwards listing all the extra things you think that the Academy has done.

John Healey: I am very happy to do that; it probably will not take too long.

Q221 Mr Betts: The Housing and Planning Delivery Grant I think was generally well received as an entity but there has been a concern first of all that cuts have been announced in the future amounts of the grant and, secondly, unlike previous years authorities do not know what the grant for next year is going to be and obviously this is an issue where planning for the future is pretty important. Is there are reason why the announcement of the grant has been delayed? Is there any indication of when it might be announced and does that herald possible further cuts?

John Healey: I am considering this now; it is a matter for next year. Having been a local government minister I am conscious that local authorities tend to work on provisional budgets and have their budget discussions this month and finalise them in January/early February. I would aim to make any announcements on the Housing and Planning Delivery Grant on a timescale that allows them to incorporate those into their final budget planning.

Q222 Mr Betts: In terms of the reductions in the grants, is that likely to have an impact on authorities' ability to deliver in the planning field?

John Healey: Although these decisions were taken before I took up the post in June, I think there is a relatively small reduction in the Housing Planning Delivery Grant total for this year. That was in order to help support the reduction in guideline rent for council tenants, a decision which was taken I think in March of this year. So the overall total for this year in that grant reflects those decisions.

Q223 John Cummings: In addressing the shortage of personnel, is this an important part of the remit as a Homes and Community Agency Academy?

John Healey: Perhaps given the invitation from the Committee, Mr Cummings, I will cover that point specifically in the note that I let you have.

Q224 John Cummings: How do you account for the reduction in the number of planners and the continuing shortfalls against numbers budgeted for, shown in the figures provided in your appendix to your letter of 14 October?

John Healey: I do not recall a specific letter or the appendix but I will check that out. I imagine - and I will let the Committee know if this is not correct - that if there is a current reduction in planners in local planning departments it will reflect the fall-off of planning activity and planning applications as a result of the recession and I expect that to be a short term downturn.

Q225 John Cummings: Perhaps you could also write the Committee a note also indicating the steps that your Department is taking in order to address any of the shortages in planning.

John Healey: Yes, indeed. I have told the Committee some of the main steps that we have been taking but I can certainly flesh that out for you.

Q226 Chair: Just coming back to the Homes and Communities Agency Academy, a lot of our concern, I think, comes from the fact that the government response to our report on Planning Matters said that the remit at the Academy would be to raise the profile of planning and other sustainable communities' professions and increase entry into those industries, and yet the minister's letter to me says that the HCAA has a limited role to play in addressing the shortfall of planners. There seems to be a certain schizophrenia within the Department as to quite what the role of the HCAA is. Would you like to clarify it?

John Healey: I am not sure it is inconsistent. If you have the HCA Academy with a role to try to raise the profile of the profession, to encourage more people to understand what the nature of the job is, that does not seem to me consistent with saying that it has a limited role because clearly the HCA Academy does not fund, does not appoint, does not train planners and the ability to deal with those three challenges clearly rests elsewhere.

Q227 Chair: I think that is part of the reason why we have a concern about quite what the Academy does given the money that goes to it.

John Healey: I've got that point now; I will deal with it in the note that you have invited me to let you have.

Q228 Chair: That would be extremely helpful. I think that we have covered an enormous range of topics - we actually had some more - which reflects the extremely wide breadth of things that the Department is involved in, but I think this would be an appropriate time to thank all three of you very much and we look forward to the further clarification about the HCAA; thank you very much indeed.

Mr Denham: Thank you very much.