Examination of Witnesses (Questions 1-72)
RT HON
JOHN HEALEY
MP, MR RICHARD
MCCARTHY
AND SIR
BOB KERSLAKE
15 MARCH 2010
Q1 Chair: Welcome, Minister. As you
see, we are equally matched and the quality of the Committee team
is, I hope, well up to the quality of the team that accompanies
you! As you know, in this session we are hoping to pick up a number
of issues outstanding from various reports that we have done before
and particular issues that we have been in correspondence with
your Department or the HCA about, so we will be flitting down
a number of topics. If we could start off on progress on housebuilding
targets. You will recall that when we did our reports on housing
and the credit crunch we agreed that the Government was absolutely
right to maintain its housebuilding targets notwithstanding the
fact that, as a result of the credit crunch, housebuilding had
dropped off and we welcomed many of the measures that the Government
is taking, but it would appear that the chances of the Government
actually achieving its target of 240,000 net houses by 2016 is
now looking very difficult. How do you assess the Government's
chances?
John Healey: We have to accept
that what is the sharpest, deepest recession, certainly in 60
or 70 years, in this country has knocked plans and financial calculations
for government, for many households and for all businesses sideways.
We were confronted with the impact of recession, meaning that
last year the private housebuilding industry built homes at a
level we had not seen since 1954, and therefore the Government
was faced with precisely the challenge and the question that your
report highlighted. So for us the long-term assessment of the
nature and scale of housing need in this country remains broadly
the same, and the challenge now as we start to see the economy
recover is to make sure that the investment and support we have
put in during this very difficult past 12 to 18 months is not
withdrawn too quickly risking putting the economy back into recession
and that the support that is there for struggling homeowners with
their mortgages and with the housebuilding industry particularly
to build the affordable homes we need, creating the jobs and apprenticeships
at the same time, again is not withdrawn, as some would advocate,
in a way that would put the recovery at risk and take away the
support that many people and the industry will continue to need
at least throughout the next year.
Q2 Chair: I think we accept all that.
What I am asking is, what is the realistic assessment that the
Department has now made, given where we are at the moment and
the number of homes that have been built over the last year? What
additional steps may need to be taken if seriously we are to get
back in line to meet the target of 240,000 extra by 2016?
John Healey: It is hard to anticipate
the rate and level of recovery of the private housebuilding sector.
What we can judge and we can determine by the level of commitment
we have to supporting new build, particularly new build affordable
housing, is what we do as a Government. You will know that the
combination of the extra Housing Pledge funding in June plus the
baseline programme means that over this year and next we will
be building 112,000 new affordable homes in this country. That
is above the level we saw even in that high-water year of 2007
which immediately preceded the recession. In terms of a specific
level or date for the future, that is hard to map with any certainty,
but it is still a useful and important measure of the broad scale
of housing need that we have in this country which, if anything,
would have intensified during this period of recession.
Q3 Chair: All right. Let us get on
to the mix within the overall figure then. What do you assess
are the implications from social housing waiting lists for the
target that we need to be aiming for in the delivery of affordable
homes as opposed to homes in general, in particular social rented?
Have you a number that you are aiming for?
John Healey: We are aiming over
this year and next year to build 112,000 homes. I think our aim
for the years following should be at least to maintain that level.
Q4 Chair: Sorry, is that 112,000
in total or 112,000 affordable?
John Healey: Over the two years,
affordable homes.
Q5 Chair: What is the mix in that
112,000 of affordable homes between shared equity and rented?
John Healey: Richard McCarthy
may want to come in with the overall picture but the broad mix
of 20,000 additional affordable homes that we are funding through
the £1.5 billion Housing Pledge was broadly two to one, social
rented to low cost homeownership.
Q6 Chair: Sir Bob, did you want to
amplify that?
Sir Bob Kerslake: Out of the total
I would say that you are talking around 32,000 in each year, so
about the same figure as the Minister has given you.
Q7 Chair: 32,000 what?
Sir Bob Kerslake: Social rented,
would be the rough numbers I would calculate.
John Healey: So about two to one
or three to two rented to low cost home ownership, all affordable
and at higher levels than we built even in 2007 before recession.
Q8 Mr Slaughter: But still below
the target which was 70,000.
John Healey: Clearly below the
70,000 level, correct, but you will remember, Mr Slaughter, that
was a figure that was fixed before the economy went into recession,
before we were hit by the worldwide credit crunch, so as a consequence
we have actually had to work harder and invest more public money
per affordable home that we are continuing to build. In my judgment,
that is the right thing to be doing during recession because we
build the homes that help meet the need we have for new affordable
homes in this country, and we create the jobs at the same time
that help keep people in work during recession. I have now made
it a requirement of any government funding for housebuilding to
have an apprenticeship scheme in place and we will get extra apprenticeship
places available this year and next for young people who otherwise
would not have those opportunities and it would not have those
skills and would not strengthen our skills base as a country for
the future.
Q9 Mr Slaughter: That is this year
and next year. Do you have plans going beyond that, assuming that
the country by that stage is coming more smoothly out of recession?
John Healey: No, the plans beyond
the next financial year will be determined and set out in any
Spending Review that will follow the election, but what we are
firm about—and this is a difference of view to certain other
parties—is that the investment that we have committed (which
has been opposed) will be maintained for the rest of this year
and next year because it is essential not just to help secure
the economic recovery but it is also essential to build the affordable
homes that we need.
Q10 Mr Slaughter: Presumably you
as Housing Minister would want to see the shortfall made up by
increasing the number of affordable units being built, particularly
in the light of increased waiting lists at the moment? More so
in some parts of the country than others but we have a housing
crisis in terms of overcrowding.
John Healey: Indeed, and even
when the fiscal position was at its toughest, I think you should
look to what we have actually done over the last nine to 12 months
as a sign of our commitment to meet the need for affordable homes
for rent and for first-time buyers in this country.
Q11 Mr Slaughter: Yes, some people
and some political parties said that you should have gone further
and that some of the fiscal stimulus that went perhaps into short-term
measures like the VAT cut and so forth could have gone into the
housing market which clearly does remain important and for which
there is a pressing need and which does leave a legacy. Do you
think you should be doing more even in a recession?
John Healey: I have not really
heard coherent arguments for that. It is somewhat facile to say
that the potential value of the VAT cut could somehow have been
switched into other things. What I am clear about is that the
main Opposition would have gone into this year with a budget for
our Department of a billion pounds lower than it is and it would
have knocked back the extra money I have managed to secure and
we have put in through the Housing Pledge investment, and that
would have had a very serious effect on our housebuilding industry,
and I think it would have cut the jobs available to people and
would have also cut the apprenticeship places and skills available.
I did not take kindly to the reaction to my announcement that
we would make it a condition of contract for private house builders
or housing associations or councils that receive government grant
to build affordable homes that they have apprenticeship schemes
in place, when that was described as "ridiculous and counter-productive".
I thought that was deeply disappointing.
Q12 Mr Slaughter: What do you say
the difference is between the two main parties in terms of the
current level of housebuilding then?
John Healey: They want to say
no to building the new homes that we need as a country.
Q13 Mr Slaughter: I am looking for
figures rather than rhetoric.
John Healey: If this Committee
ever has to scrutinise the plans in government that were put out
in opposition for reforms of the housing and planning system within
the last month, I think it would be quite clear that we would
see the shutters come down at a local level to building the new
homes that many young people need in order to get a start in life
and that many older people need in order to be able to move out
of homes that are too big for them. There is a big "no"
in that to the need for new affordable homes because they look
to remove the duty on local authorities to plan for affordable
homes in their area.
Chair: Tempting though it is, particularly
in the absence of members of the Opposition, I think we should
stick with what we are supposed to be doing, which is scrutinising
what the Government is up to. I am sure the Minister can give
an essay on alternatives.
Q14 Mr Slaughter: I did not get an
answer but there it is. A final question on this: there is a paragraph
in there that there is a greater need for affordable housing in
the areas where it is most difficult to build so in London and
other high-value property areas, the South East and so forth,
where land values are high and people cannot afford shared equity
and discounted sale and other forms of social affordable housing.
There is an even more pressing need for social housing there.
John Healey: There is a more pressing
need and there is a cost in areas like London. I understand as
a London MP why you recognise these pressures so clearly, but
I have to say to the Committee that £1.4 billion of the money
that I have released since I became Housing Minister in June has
been to London. We are ready, as the HCA has demonstrated, to
look at higher grant rates where necessary in order to get the
homes that are needed built in London. London is in a special
position. It has a powerful elected Mayor, with unique powers
as far as elected politicians go anywhere in the country, and
I think it is right to look to him to do more with the powers
that he has, and particularly when there is the pressure on affordable
homes and a shortage of affordable homes in London, I would expect
to see him, as I have told him, as Mayor of London looking after
the interests of Londoners, looking to increase not decrease the
level of affordable homes that is built in London.
Mr Slaughter: Oh dear, I would say to
that.
Q15 Chair: Can I ask a question about
mortgage finance because we were concerned about the inadequate
flow of mortgage finance. What progress has the Department made
in conjunction with the Treasury in actually getting the flow
of mortgage finance moving so that first-time buyers who have
got deposits can actually get their foot on the ladder?
John Healey: I think there are
two important steps that we took in the face of the credit crunch
and the meltdown of the financial services system. The first was
the Special Liquidity Scheme which was designed to underpin the
financial services sector and the second was the specific lending
agreements that the Government struck with those financial institutions
in which we the public or government on behalf of the public have
a significant stake.
Q16 Chair: Can I just stop you slightly
in mid-flow, Minister. What we are asking about here is what you
have been up to since we took evidence from you for the Annual
Report. We have been through all those schemes that the Government
has put in place but at that point you did say that you were working
with Treasury and colleagues to try and improve the flow of mortgage
funds, so it is that we are trying to get at; what has happened
since then?
John Healey: We are reviewing
and poised to reconfirm the terms of the lending agreements. We
have stepped up the support that we are ready to give to first-time
buyers through the HomeBuy Direct scheme, which means that in
this coming year 3,000 more people will have the ability to buy
their own homes for the first time through the HomeBuy Direct
Scheme than was originally planned.
Mr McCarthy: We are also supporting
the work of what is called the UK Tripartite Authorities, which
is the Treasury, the FSA and the Bank of England, and that is
very important because they are now working together in their
engagement with both the actual banks themselves but also with
potential investors to try and improve the conditions for the
residential mortgage-backed security market, the securitisation
market. That is something which we have said before they very
much have to lead on. We are working with them behind the scenes
and we engage with them directly both at ministerial and official
level, and their work is having a degree of impact—and we
must be very careful about not over-calling this—on those
circumstances out there in the market. We have seen the Lloyds
Banking Group make a successful entry to the market again in the
current year and secure another issue, and another bank is considering
going back into the market again. The importance of the Lloyds
one is that it includes a dollar tranche without a put option
which therefore means that we are seeing some US investors returning
to the mortgage market without necessarily a guaranteed buy-out,
so there have been encouraging but tentative signs.
Q17 Chair: Sir Bob, have you any
actual figures that would suggest that this is feeding through
into more people being able to buy houses?
Sir Bob Kerslake: If you look
at the numbers in terms of first-time buyers, they have fallen
back in absolute terms but proportionately they are still the
same share of the mortgage market, interestingly. It is hard to
distinguish out of that how many of them have access to cash deposits
from family and others, that is the bit that is difficult to disentangle,
but the evidence suggests that in proportionate terms first-time
buyers stay the same but those who are able to access mortgages
are almost certainly geared more to those who can access the deposit
in the first place. What is right is what the Minister has said
that HomeBuy Direct has been a very powerful tool to help those
people who cannot otherwise access parental wealth because in
effect it funds the deposit.
Q18 Mr Betts: How disappointed are
you, Minister, with the information I just saw in the media at
the weekend that looking now at some of the better mortgage products
on the market that might be more affordable to first-time buyers
and others on lower incomes, very, very few of those are provided
by the so-called state-owned banks. Indeed, if you look at the
average mortgage costs of the state-owned banks they are generally
higher than the building societies and the other banks. Is that
not rather disappointing that the banks into which we have put
public money are not responding with products that people on low
incomes can actually afford?
John Healey: I think it is disappointing
that there are so many people as first-time buyers now who if
they do not have the fallback to their families to help fund the
deposit they simply cannot get that first foot into the housing
market. That is part of the context that we have been considering
with the Treasury as we conduct these discussions with the banks
in which we have a strong stake in order to review the lending
agreements that they have with us.
Q19 Mr Betts: Is there any chance
of making progress on that?
John Healey: Yes, shortly.
Q20 Mr Betts: Before the end of April?
John Healey: I think the Committee
should expect any announcements from the Treasury rather than
from the Department of Communities and Local Government but I
will certainly talk to my ministerial colleague Lord Myners, who
is leading this work, about the Committee's views on this.
Q21 Chair: You will be aware, Minister,
that the average age of first-time buyers is getting older and
older and it is now 37, which is not—
John Healey: If they do not have
access to the Bank of Mum and Dad to help with the deposit.
Q22 Chair: That is the average of
all first-time buyers, as I understand. It was 36 last time I
looked but it has obviously continued to get worse. That obviously
has implications for the number of people who are likely to be
able to become owner-occupiers, or at least when they become owner-occupiers.
I know you made a speech to the Fabian Society in December talking
about the balance of housing tenure. Is it time for ministers
to be upfront in recognising that there is going to be a whole
group of people who previously might have expected to be able
to buy who are not going to be able to buy now?
John Healey: I think the facts
speak for themselves. Over the last decade the increase in the
number of people living in the private rented sector has gone
up by around 90,000 a year and in the last three years it has
gone up even higher at a faster rate. Over the next decade we
can expect the private rented sector at least to expand by a further
million, so it seems to me in policy terms part of the responsibility
of government is to try and do two things. First of all, we need
to try to see if we can support greater and better investment
into this sector. That is something the Homes and Communities
Agency is working on. It is something that we are looking at with
the Treasury and the potential fiscal barriers for doing so. The
second thing, it seems to me, is to make sure that we deal with
the worst landlords who drag down the reputation of the rest of
the sector. The Committee will have noticed in recent weeks that
I have made announcements about changing the regulations on houses
of multiple occupation, looking to issue a general consent over
private local landlord licensing schemes; in other words to give
more local power to councils to deal with the worst landlords
that are causing problems to the wider area and the tenants.
Q23 Chair: We will come back to the
regulation of the private rented sector later, if we may. Can
we concentrate on the first part of what you were saying. I think
there are concerns that there is a difference between encouraging
institutional investment in purpose-built private rented accommodation
and the buy-to-let market and concerns that buy-to-let is just
competing with first-time buyers but also that buy-to-let properties
are often not very well-managed, unlike an institutional investor
who might be in it for the long run. Is that difference between
those two different sorts of private rented sector landlords,
if I can put it that way, being taken into account in the discussions
you are having with the Treasury about possible fiscal mechanisms,
or maybe it is the HCA, to encourage institutional investment?
John Healey: Our principal concern
and area of discussion with the Treasury—and indeed the
Government has recently issued a consultation paper on this—has
been about the challenge of seeing whether we can get, probably
for the first time for 50 or 60 years, institutional investors
seriously interested in helping to fund the increase in the provision
and also the increase in the standards that we can look to in
this country for the private rented sector.
Q24 Chair: Rather than buy-to-let?
Mr McCarthy: I think the important
thing is the commissioning of new homes as opposed to the acquisition
of homes that happen to be built by a housing developer. I think
we have to be careful though about the standards we apply to the
buy-to-let sector. The buy-to-let sector has helped the growth
of the private rented sector quite significantly. Without it,
it would be a lot smaller than it is now. Not all buy-to-let landlords
are bad but, nonetheless, we see the value of trying to build
not just institutional investment but also the institutional private
sector landlords out there in the sector.
Sir Bob Kerslake: From the point
of view of the Agency, why we are interested is exactly as the
Minister has said: it brings new sorts of finance into housing
and also it gives an element of demand to the housing sector.
The real issue for the housing sector is their caution about building
is governed by the fact they are not sure they can sell at the
end of it. If you can pre-sell to an institutional investor, that
is very, very powerful. The third thing is it does give somebody
who is interested in renting a choice here. They can go for the
institutionally funded private rented sector as an option to buy-to-let.
It is not either/or; it is both. One of the key things here is
that individuals may still want to buy but they are going to buy
at an older age and they therefore need a better choice and range
for them in the private rented sector. That is where I think the
institutional investors can play an important role.
Chair: Can we move on to reform of the
Housing Revenue Account subsidy. Clive?
Q25 Mr Betts: Have you any news for
us, Minister?
John Healey: Shortly.
Q26 Mr Betts: So that probably does
mean before the end of April. Right!
John Healey: As a guidance, Mr
Betts, the official purdah period for local government starts
on 25 March.
Q27 Mr Betts: You just agreed before
the end of April and now that means before the end of March, so
that is very helpful! Just to pursue a couple of issues with regard
to reform. I think the general principle of the reform was almost
universally welcomed. Concern was expressed, and I do not know
whether you can say any more about the amount of debt that might
be put on to local authorities as a result of the reform. We understand
that is about shifting the debt around to reflect the different
subsidy positions that authorities are in, but that the total
amount might be greater than that which currently exists. Certainly
authorities have raised that concern with us. Are you able to
say any more about that at this stage?
John Healey: When I discussed
this with the Committee last time I did point out that the basis
for any settlement and self-financing for the future was that
it was broadly cost neutral between local and central government,
but I am very much aware of how central a concern the level of
debt is for local government, although when I first published
the detailed plans at the end of July, local government generally
at that point said that they wanted the whole of the debt written
off and were not even prepared to consider a deal that incorporated
the current level of debt that the system supports. I am conscious
of the views, not least because the responses to the consultation
have been detailed and wide-ranging, and the detailed work that
we have been able to do in the meantime with local government
has been very helpful in getting much closer to the sort of proposals
I hope to be able to publish shortly.
Q28 Mr Betts: In terms of what the
reforms might achieve, two objectives came across quite clearly
when we talked about this. The first is the ability for councils,
for ALMOs to be able to have a much better discussion with their
tenants about the standard of service they want related to rent
levels, which is quite important, and, secondly, because there
is more control over rent levels in the future, an ability through
prudential borrowing to borrow against those rental streams and
actually fund investment upfront. There were some concerns that
the Government may be looking for additional controls on local
authorities' borrowing beyond the prudential guidelines in order
to protect the public budget from much higher rents generating
housing benefit costs.
John Healey: I understand the
point you are making. What was the question?
Q29 Mr Betts: The question was: are
you looking at any additional controls beyond the prudential guidelines
over local authorities' borrowing linked to future rent increases
that they will be able to levy?
John Healey: With respect, I think
the Committee needs to appreciate that the Treasury and the rest
of government are looking right across the piece at the moment
at nailing the details of the proposals I hope to be able to publish,
so to pre-empt any part of that would not be wise at this stage.
I would say, however, this is a very tough deal to land, not least
because at this point where the fiscal position is tight, where
the public sector borrowing position is tight, it makes the circumstances
in being able to prepare these proposals in order that we can
consult fully with local government more difficult to do now than
perhaps it has been at any time over the last few years when this
might have been something that government could have considered.
Nevertheless I am determined that we will do so.
Q30 Mr Betts: In terms of the policy
of convergence, which certainly we have had a few discussions
about in a local context over the past few weeks, would it still
be the policy to bring local authority and housing association
rents on to a path of convergence, given that one of the objectives,
as I say, is the greater freedom over rent levels that councils
and ALMOs might achieve under the new proposals?
John Healey: Indeed, although
the principal benefit, apart from being able to be master of their
own finances and their own planning for their housing in the future,
by being independent of this annual national subsidy system, is
of course that it would be based on making sure that there is
more money in the system to be able to maintain the homes at a
standard that we would recognise and require as the Decent Homes
Standard, so essentially that means that we will be able to say
to everyone who has had the Decent Homes work done, "In future
this will be a system that guarantees that your home will be maintained
at that level," so that we will not fall back to the situation
that we saw in previous decades where a failure to fund that led
to a large backlog of repairs and maintenance. That is the principal
benefit, in my view. On the question of rents, there has to be
a rents policy and trajectory in order to formulate one of the
central dimensions of the calculation and the deal. I think there
is a principled case for saying that if local authority housing
is essentially at the same standard and maintained at the same
standard as housing association social housing, then rent levels
should be similar. I think there is a principled case for maintaining
a rents policy for public housing, not least because it helps
ensure that rents are kept affordable for the long term. I think
there is no getting away from the fact that in the planning for
any of the 177 councils that are currently part of the HRA system
and in drawing up the dimensions of any proposal for this self-financing
change, then a rents policy and rents assumptions need to be built
into that. You are quite correct in saying as part of your initial
question that at the moment there is no fixed date for the convergence
of rent between council and housing association properties, which
was the point that I think finally I got across to your local
council leader and your senior officers at a meeting that we had
with them.
Q31 Mr Betts: But certainly the ALMO
movement feel on balance they are generally more efficient at
delivering than housing associations are in terms of their management
costs. If an organisation can deliver the same standard of service
with lower costs then presumably there will the ability to pass
those lower costs in lower rents to tenants if that is what is
chosen to be done?
John Healey: Yes.
Q32 Mr Betts: There is also some
concern that what comes out might be an agreement that then could
be altered at some stage in the future given the obvious concerns
around the general economic situation and public finances. Is
that another possibility—that we might get a settlement
that then could be adjusted? There is concern again that if organisations
are looking to borrow for the long term the caveats about their
ability to make decisions could be quite damaging.
John Healey: I have described
this as a once-and-for-all self-financing settlement and unless
it is in-built into the terms of the deal, with possibly a safety
valve in circumstances that were tightly constrained such as where
we got the calculations wrong in a particular case, then the basis
for this sort of arrangement for the future is undermined, so
I see it very much as a once-and-for-all settlement that allows
local councils then, and from then on, to be able to fund and
run their own housing.
Q33 Chair: Can we turn to planning
skills and labour shortages and a series of questions in the first
instance for Sir Bob about the HCA Academy. I guess it is to try
and discover whether the change of the HCA Academy to the HCA
Skills and Knowledge Directorate is a sensible way of achieving
what was intended to be achieved in the first place at less cost
and more effectiveness or a downgrading of the original aims of
the HCA Academy?
Sir Bob Kerslake: It is absolutely
and certainly not the second of those. What we are trying to do
with the proposals we have put forward is two things really. First
of all, it is to embed the skills agenda in the Agency so that
it plays across everything that we do as an Agency. In that sense
we think we can enhance the skills agenda as it is taken forward.
Let me give a practical example of that point. One of the key
things that we have developed as the Agency is what we have called
the Single Conversation, which is about forming the bridge between
the Agency as a national agency that works locally and local authorities.
Through that Single Conversation we identify what the priorities
are for an area and how we can best deliver them. One of the things
that would certainly play into that conversation is the issue
of skills. Where we identify capacity issues part of the role
of the Knowledge and Skills Directorate, as it now is, would be
to help in a very targeted way to work with those authorities
that have specific capacity problems. It means in a way that we
can strengthen and target the resources that we have of the Directorate
for Skills into the areas where they are most needed. We do that
because it is absolutely part of the Agency. I think it is a very
practical way of embedding the function of the Academy absolutely
at the core of the Agency's business. I think the second thing
it does is help us with what I know has been a preoccupation of
the Select Committee, which is the question of supply of some
of the key skills. The original purpose of the Academy was broader
than that and in fact much of its training and development, as
you know, is in more non-technical areas, for example planning
for non-planners, the work that we do with political leaders and
non-planning experts to help them understand planning, but nevertheless
a key issue obviously is the issue of supply. The picture that
we now have that is emerging from our refresh with other bodies
called Mind the Skills Gap is a much more complex picture in terms
of the availability of skills. It is not a single picture across
the whole of local government. Some have now managed to address
their skills issues in part because of course the volumes have
come down. Others still have issues to deal with. Through the
Directorate I think we can be much more precise about where we
input the resources and effort, both in the broader agenda of
capacity and in the specific agenda of the availability and supply
of professionals. So I think it is absolutely the first of what
you said: a smarter way of delivering the underlying ambitions
of the original Academy.
Q34 Chair: How does that relate to
your Skills Action Plan? Is the Skills Action Plan about what
you have just said?
Sir Bob Kerslake: Yes. There are
two things which we are working on across the whole field of skills
as well as what the Agency directly does itself. One of those
is the assessment of where the gaps are, and that has been through
an initiative called Mind the Skills Gap that was done jointly
with others to assess where the gaps were in professions. The
second thing that we are involved in is that we take the lead
as the Agency across a whole range of skills partners in ensuring
that there is a joined-up approach to the delivery of knowledge
and skills development across local government and other partners.
That is what the Skills Action Plan does, so the first, if you
like, informs the second. Having got a good understanding of where
the gaps are, you then form the Action Plan based on that. The
key value of the Action Plan is that we get a joint understanding
of what is being done and we get a clear understanding of who
is going to address each individual issue, so we do not get overlaps
and we do not miss something out.
Q35 Chair: Are there a set of clear
delivery targets or outcomes for the Action Plan? Is each one
allocated either to the HCA or to a local authority?
Sir Bob Kerslake: There are clear
targets and those targets are set out in the Action Plan.
Q36 Chair: Are they numerical?
Sir Bob Kerslake: There are numerical
targets there and there are targets for the individual bodies
as well, so it is both that we are talking about.
Q37 Chair: And how is the achievement
of them going to be measured?
Sir Bob Kerslake: We will obviously
do a refresh of the Action Plan and how it has performed but we
are also accountable through to the Department on the targets
that we are set on this part of the agenda as well.
Q38 Chair: Are you reporting back
to the Department on your own targets or on all the targets, whether
you were supposed to be delivering them or somebody else was?
Sir Bob Kerslake: We would report
back to the Department on both issues, but actually the reporting
back would not just be to CLG; it would be to other government
departments who sponsor others who are doing skills work.
Q39 Chair: Can I turn to the Minister
and another point that you made in November 2009 when you told
us that you had set up the Planning Skills and Capacity Board.
Could you report what it has been doing since November?
Mr McCarthy: I am happy to do
that. The Planning Skills and Capacity Board is up and running.
It is chaired by the Chief Planner. It involves all the relevant
professional bodies and it involves the HCA in seeking to co-ordinate
the activities and investment that we are putting into attracting
more students into the sector, so it will have been working, for
example, on specifying the work of the Mind the Skills Gap and
the analytical work that has gone into underpinning that, so we
can tell you that the number of planning students now has risen
from the 600 there were in 2000 to 1,000 now. The number of post-graduate
bursaries we are funding has now increased to 181 in the year
that we are just about to enter. Also emerging data is now coming
through which suggests that although we have seen a 22 per cent
fall in the number of planning applications being received by
local authorities, we have not seen such a large-scale reduction
in the number of planners, which you shared with us previously
when we were here for the Annual Report inquiry. The figures seem
to suggest a reduction of around four per cent. These are encouraging
signs and the work of the Board is to help make sure we have got
that database and then to engage particularly with the professional
bodies so that we are working as one rather than independently
in the promotion of planning skills and their delivery.
John Healey: Just in case the
Committee did not quite pick up the significance of what Richard
McCarthy just said there, I am announcing today £1.8 million
for next year to support those 181 bursaries in 16 different universities.
As Richard said, the analytical work carried out under the Board
was important in providing me with the evidence base on which
to make that decision.
Q40 Chair: I hope some of those bursaries
might be in the University Centre Milton Keynes, which would be
tremendously appropriate.
John Healey: Let me consult my
list.
Q41 Chair: Can I just check about
the numbers then, Mr McCarthy. Have you published a more recent
assessment of the numbers of people who are employed in planning?
Mr McCarthy: That is coming out,
so I am giving you some advance information of some of the data
that will be coming out. It seemed appropriate to share that with
you today.
Q42 Chair: The Housing and Planning
Delivery Grant was my next topic, on which I believe you were
consulting, Minister. The consultation closed in June 2009. Have
we got the final allocations yet and the results of the consultation?
John Healey: This is probably
the only forum in which I could say this, but I intend tomorrow
to lay a short written statement which will confirm the allocation
of this year's Housing Planning Delivery Grant, a total of £135
million to 349 local authorities, an average grant of around £370,000
each.
Q43 Chair: It would seem a bit churlish
to ask but I will: why has it taken so long?
John Healey: It has taken until
now—which I regret because, like the Committee, I am conscious
of the budget and planning processes within local councils—because
there have been a number of competing pressures in the Department.
The Committee will be aware, for instance, that there was an adjustment
made to the Housing and Planning Delivery Grant for this year
as a result of the settlement on council rent. Also I have wanted
to take a hard look at how effective, as far as we can tell at
present, the Housing and Planning Delivery Grant has been because
it is an important incentive designed to try and make sure the
local authorities are putting in place the proper planning policies
and, in particular, are putting in place the proper five-year
land banks that are required to see homes built that we need in
every part of the country.
Q44 Chair: Was it your assessment
that it was achieving that?
John Healey: There is more work
to be done, in my view, to make this a more sharply designed incentive,
but off the back of the consultation we have conducted I am content
to confirm the funding for this year and, in my view, the Housing
and Planning Delivery Grant still plays an important role and
part of the system.
Chair: Thank you very much. Can we move
on then, Clive, to your next subject.
Q45 Mr Betts: Sir Bob, I suppose
you are waiting for the question I am going ask now. There has
been quite bit of discussion in certain sections of the media
about the HCA funding housing schemes through Kickstart which
CABE have scored as very high risk and very poorly designed. How
do you justify that?
Sir Bob Kerslake: I think the
first thing to say is that we put a lot of thought into how we
approached the issue of design within the Kickstart programme.
The Agency specifically asked CABE to take on a role on our behalf
of doing the assessment of schemes using the Building for Life
standards. The reason we did that was that we recognised that
for these schemes they were already, by definition, pretty advanced.
They had planning permission, typically, certainly in the first
round, and were well-developed in their design and thinking. We
wanted to have an understanding of where the scheme stood in design
terms and in particular to identify those which we thought were
of poor design and take those out from consideration for funding.
Design was a key bit of the thinking on Kickstart but so also
of course was deliverability and value for money. What we did
was to get CABE to do the Building for Life assessment on our
behalf. They did it as a desk-top exercise, it is important to
say, and they did it on the available information that we had
through the bidding process. In some instances that information
was good and in some instances it was not as good. Having got
the assessment by CABE, which was tremendously helpful to us in
identifying where schemes seemed to work in design terms on their
first desk-top assessment and where there were issues to pursue,
we then followed up using our regional design advisers to look
in more depth at the schemes that scored with lower scores under
Building for Life to (a) to see whether there was additional information
we could put together that was not available from the desk-top
assessment and (b) to understand better the local context. All
of that information then went to our internal decision-making
body that had the combination of value for money, deliverability,
strategic fit, how important the scheme was to the local area,
the Building for Life scores and the reports of our regional design
advisers. In the round many of the schemes that CABE had concerns
about we did not fund—there were 11 that we rejected—in
other cases we felt the additional information that we got through
out regional design advisers was sufficient taken in the round
to support the schemes. That is the basic model we used.
Q46 Mr Betts: Is not the truth that
with the very understandable desire to get the schemes built and
available for people to live in that the speed of response has
actually overtaken the need for good-quality design?
Sir Bob Kerslake: I do not agree
with that, no. We clearly were working with a scheme that had
to move at pace because the whole purpose was to take some early
action to stimulate the market. I think actually we put a considerable
amount of effort and thought into considering design issues alongside
what local authorities felt themselves about the priorities and
so on. This issue was by no means a light issue. We took it very,
very seriously in the process. Where I think the pace did cause
us some challenges was in the desk-top exercise for CABE and the
completeness of the information they had. The key point to make
is that we did not leave it at that. We did not say, "That
was the CABE score so we will not do any more." We followed
up using our own regional design advisers to look in more depth
at the schemes on the ground to see whether they could provide
additional information. I think actually we put a great deal of
effort into this and we used the resources of CABE and our own
teams to get to some well-judged decisions.
Q47 Mr Betts: But the reality is
surely that we have got schemes that have been funded in round
one for which planning permission was not granted at the time
that CABE did their assessment and you did your assessment. That
is true, is it not?
Sir Bob Kerslake: In most instances
there were very few that did not actually have planning permission.
Q48 Mr Betts: Do you know how many?
Sir Bob Kerslake: I have not got
the number in front of me in terms of planning but one of our
tests on round one for deliverability was that they had planning
permission, so they would almost certainly have had outline planning
permission and probably in most cases detailed planning permission.
Q49 Mr Betts: But outline makes a
big difference in terms of design.
Sir Bob Kerslake: But what I am
saying is the vast bulk of them will have had detailed planning
permission because if they did not they were unlikely to meet
our very demanding delivery timescales for round one.
Q50 Mr Betts: Can you let us have
some more information?[1]
Sir Bob Kerslake: I would be absolutely
happy to let you have that. This is a key point. These were not
schemes at the early stages of development. These were schemes
that had been in the system for a number of years very often and
for which detailed design had been well-advanced. If they were
not they almost certainly were not going to meet our criteria
for funding.
Q51 Mr Betts: This is back to the
speed issue again, is it not, because ultimately schemes are being
funded with public money that CABE are clearly not happy with.
I do not think anyone is going to be happy with back-to-back houses
being built.
John Healey: Let me blunter than
Sir Bob, if I may. Design standards were one of five criteria
that went into the assessment of these schemes and the decisions
that ultimately I took. This was a scheme which did not exist
before that we put in place in response to the recession to see
how fast we could get the stalled sites back on track, and the
jobs and the apprenticeships that would come from that, the need,
in other words, as Sir Bob said, the strategic fit within that
particular area, the value for money (on which we ran some pretty
tough tests) were all part of the ultimate stop-go decision, so
design was a part of it but not the only part of it. It may have
been the only criterion or consideration for CABE but we took
a broader view. The result was that some schemes were rejected
on design grounds. Sir Bob has mentioned the figure of 11. On
others we felt confident to go ahead because we had more information
than CABE was able to supply as a result of the detailed work
the HCA did in the regions. Across the piece in round one around
60 per cent of the homes that we are going to be funding through
Kickstart are designed and will be built, and in many cases are
already being built now, to Code Level 3.
Q52 Chair: But the question, Minister,
is whether there were other schemes that could have been brought
forward that were better designed. Are you saying that the only
way you could get to the numbers was by allowing in these schemes
which were less than wholly satisfactory?
Sir Bob Kerslake: It is really
important to be clear about this point. We ran two rounds of Kickstart.
In both instances they were significantly over-subscribed. What
we did was to assess all of those schemes in terms of deliverability,
value for money, design and local priority. It was not a question
of whether we took this scheme or that scheme in relation to the
design issue. The key test for the design question was whether
we were satisfied in terms of all the information we had available
that we could reasonably support the scheme in terms of its overall
design. If we were not satisfied, we rejected the scheme, and
if we were, we agreed the scheme, and that was the key test in
the process. In making that decision, we had a combination of
information which was the information from CABE and their Building
for Life assessment and the information from our regional design
advisers. So what I am saying to you is that we had good rounded
information on design and we did not say we would support a scheme
that we thought was of inadequate design because we had to support
a scheme today. That was not the process at all. We took a view
about design in the round alongside deliverability and value for
money.
Q53 Mr Betts: Just to follow up,
one of the other issues around—and some of us might think
that if it were not for Will Hurst at Building Design we
might not even have had this information in the public domain—there
seems almost to have been an effort to restrict the information
which comes out and a refusal to give information about which
schemes CABE criticised, what their scoring was, and how you came
to a view therefore that may be different to CABE's. Why can that
information not be put in the public domain? We are talking about
two publicly funded bodies, the HCA and CABE, having discussions
which the public are not entitled to have a look at.
Sir Bob Kerslake: I would challenge
that point. We put out an interim report after round one. It is
important to say we have two rounds of Kickstart, one of which
is pretty much, as the Minister says, in contract now and most
of them are starting, and we have a round two which we are currently
going through. We published an interim report at the end of round
one saying what we had learned about the first exercise and how
it had gone in anticipation of the second round. In that report
we gave the distribution of the Building for Life scores that
we had for the schemes that we had accepted.
Q54 Chair: Why can you not publish
the Building for Life score against the actual scheme because
then members of the public could actually see whether, to be blunt,
poor design is something the public worry about or is something
that only Building Design worries about?
Sir Bob Kerslake: There are two
points we would make here. The first is, as I said earlier, the
Building for Life score was one part of an overall assessment.
Our view is that what we should do, which is what we do with every
other bidding process that we run as an agency, is publish a complete
set of information on individual schemes at the point at which
the schemes are in contract and we have completed the process.
That would be a normal pattern and we have said that with CABE
we will do a full report once we have got through round one and
round two, which will include individual information on individual
schemes. We have already said we will do that and we will do that.
What I think would be the case from our point of view is that
to do that halfway through on one issue, which is the issue of
the Building for Life scores, would be a very partial report and
would not be what we indicated to the bidders at the time they
put their bids in. I think we have been as full as we could reasonably
be at this point in time with the interim report and, with CABE,
we will do a full report on individual schemes once we have completed
the Kickstart process and then everybody can form their own judgments
about the whole of the Kickstart exercise.
Q55 Mr Betts: Is one of the judgments
you are looking at as part of that the long-term costs of maintaining
some of these properties? I suppose anyone who has been involved
in social housing at all since the war can look at examples of
schemes that were put up to get numbers done quickly which in
the long-term have cost an absolute fortune in terms of maintenance
or early demolition. Is that an issue that is part of the judgment
you are taking?
Sir Bob Kerslake: It is absolutely
an issue, but what is important to say here is that in relation
to the affordable housing component of these schemes they have
been assessed in exactly the same process as any other of our
affordable housing. We are not distinguishing them. They will
be taken on by a housing association which is unlikely to take
on housing, indeed would not have even got involved in the schemes
unless they had confidence about the sustainability of the schemes.
Q56 Chair: My experience from my
constituency is that a lot of the housing which is in blocks with
social housing often gets taken over by the private rented sector,
not owner-occupiers, and then if the standard is not good enough
the social problems caused in the private rented sector are horrendously
worse than comparable housing in the social sector because there
is no management. I am reassured that the affordable housing is
up to the usual high standard but I do not think that private
housing should be a poor standard.
Sir Bob Kerslake: The question
I was asked was is there likely to be a maintenance bill in relation
to the affordable housing.
Q57 Chair: I do not think Clive was
just asking about the maintenance, he was asking about the social
costs that occur when you get a lot of people living in poorly
designed housing and that does not depend on the tenure.
Sir Bob Kerslake: No, I absolutely
agree with that point. Apologies if I heard the question wrong.
I thought the question was about a maintenance bill for the public
sector.
Q58 Mr Betts: I think it was, but
the question has been extended. It is just as relevant.
Sir Bob Kerslake: Let me answer
the two questions in that case. On the first question on public
housing, all the safeguards that apply in relation to any affordable
housing that we fund apply in relation to Kickstart, that is to
say they have to have a proper registered provider to run the
stock and they would have been involved in developing the schemes.
It is important to say that had we not seen the downturn these
schemes would have gone ahead and been built anyway. The second
point you raise is around private rented stock and its sustainability.
There are two key points about what we have done in relation to
that. The first point is whether or not the sort of problem you
talk about that occurs on this is often a product where the right
kind of housing is being built in the right place, and the key
players who know about these issues are the local authorities
and their partners on the ground. A key test for us has been,
"What are the views of the local partners in terms of the
priority in this scheme?" That was one key factor, but we
did not leave it at that. We also got advice from both CABE and
our regional design advisers as to whether or not they felt that
the design and development would be a sustainable development.
We have applied three levels of test. There is the general test
on public housing, there is the input of the local authority and
its partners, and there is the expertise of our own regional design
advisers on the sustainability of these schemes. I would say,
if anything, there is a more thorough process than you might have
seen historically on the development of housing schemes.
Q59 Mr Betts: In the second round
have you improved the process?
Sir Bob Kerslake: There are three
things that are easier for us to do in the second round. The first
thing we have done is to apply a more rigorous test before we
go into what we have called the due diligence. That has reduced
the number that we are seeing through due diligence through this
process. That is important because it means less aborted work
if we do not then approve the schemes. We have applied a stronger
test in the first stage of the process. The second thing we have
been able to do in round two of the process is clearly the weight
of those schemes has changed a bit so we have got more that are
HomeBuy Direct and more that are pure affordable housing, if you
like, in the mix, and then we have applied the same test as we
have for our other schemes that are not part of the Kickstart
initiative. The third thing we have been able to do is because
we started at an earlier stage in the process, if there are issues
that emerge then we have got more time to address them specifically
within the scheme. Those are all things that are there in round
two that were not there in round one. Typically I think we are
going to see some bigger schemes in round two as well because
those bigger schemes did not fit readily the timescale for round
one. Those are the factors that are different in round two. Fundamentally,
the process that we are applying is the same in round two. We
will get the Building for Life assessments and then we will look
at those alongside any information we have from our regional advisers
because we think that system was a very thorough process that
got to the heart of the issue for these schemes.
Q60 Mr Betts: Is it likely that there
will be some schemes that you might have funded in round one to
get underway that you would be a bit more careful about funding
in round two?
Sir Bob Kerslake: I genuinely
do not believe that. If I did I would be honest and say we funded
some that we might not fund now. We only funded schemes that we
were comfortable with funding in round one. As I said, when we
were not happy on any aspect—design, deliverability, local
fit, value for money—we did not fund them in round one.
In fact, rather than fund schemes we were not happy with, some
of the money that was available in round one was put into round
two. For me, I do not think that is the issue here.
Q61 Mr Betts: Could I think a bit
longer term. You have thrown up some issues here that some of
us suspected were around, that there are some schemes in the private
sector which are pretty awful in terms of design and sustainability.
I wonder whether there is a long-term issue about whether it is
the HCA's job or an extended bit of your remit to do something
in terms of the information you will have gathered by looking
at some of these schemes about doing something to try to drive
up standards in the private housing sector.
Sir Bob Kerslake: I think it is
part of our role. It is actually built into the duties of the
Agency to promote sustainability and design. We take that responsibility
incredibly seriously and it will feature in the standards that
we will publish shortly where either our land or our funding is
involved. There is a difference between encouraging and supporting
good quality design and sustainability within the current requirements
of the sector, which is the point you are making, and everybody
would say—certainly I would—that there is always room
for improvement here, and what you would have as an aspirational
goal going forward to raise both sustainability and standards.
If I just say a word about sustainability for a minute. As the
Minister has just said, if you look at the Code Levels, we gave
an incentive during the Kickstart programme to schemes that had
higher Code Levels and, as a consequence, 60 per cent of the Kickstart
schemes are at Code 3 or above which is significantly above what
the sector is doing at the moment, so already we are incentivising
it. Similarly, if you look at local authority new build, 90 per
cent of the round two schemes on local authority new build are
at Code 4 and above. You can see that through the process we are
driving up standards as we move along and that should always be
part of what we do as an Agency. We should look either through
our minimum standards or the way we apply funding incentives to
drive standards up.
Mr McCarthy: We will look to apply
that experience and share that with planning colleagues inside
the Department and then look to see how we can spread that out
to planning authorities. The key thing is the role of planning
authorities.
Chair: That would be a very good idea
to spread it out to different council planning authorities. We
will move on now to the private rented sector.
Q62 Mr Slaughter: There is something
of a history of reports, not the Green Paper that is promised,
there was a report from this Committee that had some fairly large-scale
recommendations two years ago, but not much from the Government
in terms of proposals for reform. The report from this Committee
dealt with issues like different types of private tenancy, improved
regulation and how to get bigger investors, institutional investors,
into the private sector market to effectively bring it into the
21st century, which I am afraid in areas like my constituency
where there is a significant private rented sector there is still
a very large amount of either amateur or bad landlords and there
is a need for those three things. Where are you in relation to
implementation of proposals to improve the quality in the private
rented sector?
John Healey: We are working on
the third, as we have discussed, already either with moves that
I have made in the last month on the second or with confirmed
plans for the regulation of managing and lettings agents and the
establishment of a national landlord register. On the first, essentially
still considering whether or not there is a case for the sort
of recommendations that you were making at that time.
Q63 Mr Slaughter: The Law Commission
has suggested that there is room for longer-term private tenancies
to give more stability and security within the private sector
market. Is the Government looking at that?
John Healey: I am aware of the
Law Commission's report and, in a sense, it makes some recommendations
similar to this Select Committee's. It is on the table.
Q64 Mr Slaughter: For example, you
are looking at proposals to bring more tenancies within the ambit
of assured shorthold tenancies, high value tenancies. That is
my understanding of your intention. For most people, unless they
are happy with very shorthold tenancies, they are an unstable
basis for long-term planning.
John Healey: I understand that.
Mr Slaughter: With bad landlords they
can lead to evictions on the basis of people simply asking for
their tenancy rights.
Q65 Chair: Just before you respond,
Minister, can I point out that two years ago the Department was
looking at recommendations made by the Law Commission. There does
appear to be a lack of urgency in addressing what is clearly a
big problem.
John Healey: Frankly, I am not
sure it is a lack of urgency but a lack of conviction that, for
instance, the Law Commission's report fully made the case. I am
concerned about the position of private tenants. In policy terms
we tend to look at tenure rather than the people who are living
in private rented homes. It is one of the reasons why we have
now made a commitment to legislate to make sure that all private
tenants have a right to, and do have, a written tenancy agreement.
That seems to me the basis for making sure that private tenants
are in a better position than they are now in relation to their
landlords. The national landlord register will help because it
will allow tenants, not just local authorities and others, to
check on the track record of the reputation of the landlords.
There is more that we can do and I am looking at doing to set
up sources of independent impartial advice to tenants in the private
sector because it is hard for them to know if they have questions
about their status as a tenant, problems with their landlord,
who at present they should turn to. It seems to me that Government
can step in to help fill that and meet that need.
Q66 Mr Slaughter: With respect, this
is all fire fighting stuff, is it not? You are not doing anything
that could set up a private rented sector or encourage development
of a private rented sector which would be an acceptable alternative
to either social rented or owner-occupation for those people who
do not fit into either of those categories.
John Healey: No, I do not accept
that it is fire fighting, Mr Slaughter. As this Committee knows,
the Law Commission's recommendations and report were part of what
the Rugg Review considered in the work that they did and the recommendations
they put forward, some of which I have mentioned that we are acting
on.
Q67 Mr Slaughter: I appreciate we
have an election coming, we are all aware of that, but putting
that to one side just for the moment, as Housing Minister what
would you like to see as the next step in reform of the private
rented market?
John Healey: I would like to see
institutional investors allowing us to build more good quality,
well managed private rented homes to help meet the need that will
undoubtedly grow and is undoubtedly already there. I would like
to see the worst of the private sector landlords stamped out,
and some of the steps I have taken already will allow local councils
to do that. I would like to see those who live in the private
rented sector as tenants with more information, better back up
and better able to deal with their landlord if there are problems.
On each of those fronts we are working to put that sort of approach
in place.
Q68 Chair: The evidence we have had
about the low priority that most local authorities give to regulating
the private rented sector as it is—just to pre-empt a report
we have not yet published but will do shortly—that they
are not even policing properly on public health hazards basically
suggests you are living in cloud-cuckoo land if you believe that
councils are going to take their strategic housing responsibilities
seriously enough to actually police the whole of the private rented
sector.
John Healey: I have not seen that
evidence and would be interested to see it. The argument I heard
from local authorities was not the one you have just said but
more that in order, for instance, to be able to set up a private
landlord licensing scheme to deal with local areas where there
are problems, councils found the hoops that we as central Government
made them jump through too complex, so a general consent that
allows them where they have the evidence and the concern in their
local area to go ahead and decide for themselves to do that seems
to me a sensible step forward. The ability for them to control
better the proliferation of bedsit barons, which many of them
were saying work not only to the disadvantage of tenants but also
to the disadvantage of the local neighbourhood and many local
residents, are new powers the councils will have. They are directly
in response to the sorts of arguments that local authorities and
MPs were making to me about the sorts of changes that were needed.
Mr Betts: I wonder whether it might be
possible at some point, and maybe you are already doing it with
the LGA, to put some examples out about those authorities which
are getting this right because even with the difficulties some
are doing a lot more than others and the idea that nothing can
be done is not true, there is still something that can be done
even with the existing regime.
Chair: Add to that it is important councils
target on the most problematic as opposed to collecting licensing
fees from the least problematic.
Q69 Mr Betts: As a Committee we did
a report on Existing Housing and Climate Change
back in April 2008 and I think the Government's response was a
recognition that more had to be done with regard to energy efficiency
of existing homes. I wonder if you could advise us, Minister,
are we on target in the UK to meet our 2020 interim targets as
far as the housing sector is concerned?
John Healey: I think with the
publication of our joint report with DECC on Warm Homes,
Greener Homes, for the first time that sets out a clear
programme on how we will deal with existing homes and puts in
place the funding mechanisms that will allow that to happen.
Q70 Mr Betts: In terms of the different
sectors, are we making any more progress in the social housing
sector? Do they actually get some resources for the replacement
of inefficient heating systems? It is something that has not necessarily
been tackled as part of Decent Homes. The boilers are probably
still working if they are 15 years old but are almost certainly
about twice as inefficient as a new boiler that comes on the market
now. The various grants that are available to owner-occupiers
on low incomes and private sector tenants are not available to
social housing tenants, they rely on their landlord for this.
Is there any more hope we can give in this area?
Mr McCarthy: There is a substantial
offer in here in the HEMS, as we call it—the Household Energy
Management Strategy—for support for investment in local
authority and social housing, but that focuses on the fabric of
the building. You will be aware of the very large numbers of heating
systems that have been upgraded through the Decent Homes programme
and there has been a very significant change in the SAP rating
for our social stock from 47 around 12 years ago to 59 now. What
the HEMS does is it offers an arrangement through the extension
of the supplier obligation known as CERT, and for the period from
2012 to 2015 it says that all occupiers of social housing, which
includes leaseholders of former social housing in the same blocks
where there are social housing tenants, will be treated as priority
households for investment in outstanding cavity wall and loft
insulation. That is to be done by 2015. Then about 700,000 homes
need to have solid wall insulation and roughly 300,000 are due
to be done by 2015 and a further 400,000 by 2020. What we say
here is that certainly for the period up to 2015 this work will
be funded through the supplier obligation and it leaves open a
decision about what the obligation will be and what it will fund
for the period after 2015. In terms of further work on heating
systems, you will be aware that we are also introducing a feed-in
tariff and the renewable heat incentive. We are looking for local
authorities and housing association landlords to take up the opportunities
of those incentives to find ways of developing more community-based
schemes for renewable heat and energy which will be far more efficient
than simply replacing boilers in some instances. What we hope
that our social landlords will do will be to set the pace for
those community investment schemes. We had a modest programme
of some additional funding that we secured in the Budget last
year for some community infrastructure projects which were funded
through the HCA which were very popular and have been successfully
undertaken, along with the cavity wall insulation that we undertook
with some money last year as well. I think this is a tremendous
offer for our social landlords and our social tenants. It uses
a mixture of the supplier obligation and those renewable heat
and feed-in tariff opportunities. We also hope that we will see
some comprehensive retrofits for energy efficiency and improved
heating systems using renewables as we move towards the 2020 period.
Q71 Mr Betts: In terms of the owner-occupied
sector, has any more thought been given to Energy Performance
Certificates being issued or required on a regular basis even
when properties are not being sold? Are we sure they are having
an impact as they are when people come to look at purchasing new
homes?
Mr McCarthy: We have some evidence
and there is work being done on the overall HIP package. There
is some evidence that the EPCs are being read, are being used
and influencing people's investment decisions alongside the availability
of incentive schemes delivered primarily through the CERT initiative
and the supplier obligation. No decision has yet been taken by
ministers about increasing the requirement for Energy Performance
Certificates. Of course, people can request them. What is worth
emphasising is the Household Energy Management Strategy really
puts local authorities centre stage. At the moment the CERT is
very much delivered through suppliers and they make many of the
decisions and much of the running. What happens here now is that
we are asking local authorities to play a very clear co-ordinating
role and energy suppliers will be required to work with them so
that we can develop through local government and others, but mainly
local government, community, neighbourhood based approaches which
will allow them to take services in to reach all tenures in a
locality which we think will assist both owner-occupiers but also,
very importantly, private landlords where we want to see energy
efficiency standards rise significantly over the coming period.
Q72 Chair: Can we thank you very
much, Minister, Mr McCarthy and Sir Bob. We obviously look forward
to reconvening some time after the General Election.
John Healey: Thank you. Can I
personally thank you and your Committee, Chair, for its very active
interest in housing and for the succession of reports even in
my short time as Housing Minister that you have published. I welcome
the recommendations and do take them seriously.
Chair: Thank you very much. We know it
is important to people out there.
1 Additional information provided in HOU 01. Back
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