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Communities and Local Government Autumn Performance Report 2009
Thank you for your letter of 25 February in which you requested further information and explanations on a range of points as part of your Committee's analysis of the Department's 2009 Autumn Performance Report. Please find our detailed response to your queries:
DSO 1: Local Government (a) The Committee notes that the latest information on indicators 1.1 and 1.2 show a decline in people's satisfaction with the local area and the perception of their ability to influence local decisions. What assessment has the Department made of the reasons for that decline in each case?
i) Indicator 1.1 (Overall satisfaction with the local area):
The change in the indicator, from 82% in 2008-09 to 80% in April to June 2009, was not statistically significant. Thus it is not correct to say that the level of satisfaction has declined. The different figures may well result from differences between the groups of people included in the two samples.
To go into more detail, the 2008-09 Citizenship Survey provided a baseline figure that 82 (81.5) per cent of adults in England were satisfied with their local area as a place to live, with the measure of success being a statistically significant increase from the baseline measure over the Spending Review period. The Autumn Performance Report 2009 reported the latest data from the Citizenship Survey available at the time: that in April to June 2009 80 per cent (79.8) of adults were satisfied with their local area as a place to live. This was not significantly different from the 2008-09 baseline and so did not demonstrate a decline. Although the decrease was 1.7 percentage points from the baseline, one of 2.2 percentage points would have been needed to obtain a statistically significant change. More recent data, for April to September 2009, found that 82% of adults were satisfied with their local area as a place to live. This was again unchanged from the 2008-09 baseline.
As the question on satisfaction with local area was first introduced in the Citizenship Survey in 2008-09, comparisons with previous years cannot be drawn.
Indicator 1.2 (percentage of people who feel they can influence decisions in their locality):
Citizenship Survey data for the first two quarters of 2009-10 (April to September 2009) have shown a statistically significant fall in the proportions of people who feel they can influence decisions in their local area when compared with the 2007-08 baseline and also with latest year's data (for 2008-09). It fell from 38.2% in 2007-08 and 39.3% in 2008-09 to 35.6% in April-September 2009.
This is statistically significant even though it is based on a relatively small sample size (just two quarters of the annual survey). However, because people's perceptions tend to be influenced by a range of short-term factors, as well as longer term ones, it is usual to examine trends in such indicators over the longer term, without attempting to make any firm assessments of the causes of short-term changes. A more detailed assessment of the reasons for any changes will therefore be able to be made when figures are available for the whole of 2009-10.
(b) Why the target for indicator 1.1 requires an improvement, while that for 1.2 simply requires there to be no deterioration?
For each DSO indicator, a separate decision was made, in the light of available analysis, on the level that a target needed to be at for it to be ambitious but realistic. In some cases, such as indicator 1.1, this resulted in seeking an improvement over the baseline, whereas in others, where the baseline figure was already high, or where the scope for achieving an increase was thought to be limited (as for indicator 1.2), then the target was no reduction.
(c) With reference to indicator 1.7, the Committee notes that the National Audit Office is currently reviewing the new reporting process by which local authorities submit their value for money figures to the Department. When is that review due to be completed?
The National Audit Office has now completed its review of the Department's PSA and DSO data systems. This included indicator DSO 1.7 and looked at the wider systems for ensuring data quality as well as the reporting process. We understand that the NAO intends to issue its report in the next few weeks.
DSO 3: Prosperous communities The
Committee has noted the following progress with plans for improving the
physical, economic and social infrastructure of
(a) Have all the milestones by which indicator 3.1. is judged originally scheduled for 2009 now been achieved? Why did the delays noted above occur? What impact will those delays have on achieving the ultimate objectives by 2011?
The decision to
delay the publication of the Strategic Regeneration Framework (SRF) until November
2009 was taken by the Olympic host boroughs to provide sufficient time to
develop what is an innovative and challenging proposition. It is being followed
up a detailed multi-agency action plan, which is scheduled to be published in
Autumn
The MAA was signed on 17 March 2010 following final agreement between the boroughs, the Greater London Authority and the Homes and Communities Agency on how to take forward discussions on housing nominations. Some of the key agreements reached in the MAA, including the critical area of worklessness, were being taken forward in advance of the signing and are already delivering results. Following signature, all the remaining agreements are now being implemented. We expect the MAA's ultimate objectives to be delivered to the timescales stated in it.
The Olympic Park Legacy Company was incorporated in May 2009 as a public body with Government and the Mayor of London as the joint shareholders. The company became operational in September with its core staff on secondment form the London Development Agency (LDA) since July 2009. The Board met for the first time in October 2009. The company has completed the appointment of its six Executive Directors to support the Chief Executive. It is currently finalising its operational budget for 2010-11 and developing its first corporate plan for approval later in 2010.
A Legacy Masterplan Framework (LMF) was developed by the LDA and was subject to public consultation. The company is currently reviewing the LMF in the light of the responses and its own emerging thoughts. Key to delivering the long term legacy will be the balance of housing developed on the Park: especially the level of family housing, the long term use of the sports venues including the stadium and the role the emerging development in the Park should play in helping to deliver the SRF ambition of convergence. The aim is to conclude the review of the LMF by the summer and it is hoped that a planning application may be submitted by the end of the year.
(b) Given that performance against indicators 3.7 and 3.8 is not on track, what assessment has the Department made of the impact of its work to increase employment rates in Working Neighbourhood Fund (WNF) and Primary Urban Areas (PUAs)? The Committee has requested that the answer to this question be accompanied by a breakdown of the Department's expenditure by WNF / PUA in each year since 2007-08, together with the corresponding employment rate in each area in each year.
Indicator 3.7:
This indicator
measures the overall employment rate (working age) at neighbourhood level (in
deprived areas). Reflecting the Sub-National Review's (SNR) recommendations on spatial focus,
it monitors performance at the neighbourhood level and reflects the
Government's commitments to tackling worklessness in CSR07. It seeks to narrow
the gap in the employment rate between the deprived neighbourhoods and the rest
of
The Department recently published the WNF scoping study which provided an analysis of current conditions in WNF areas; an early understanding of whether and how the WNF is being used to tackle worklessness; and an understanding of how the governance arrangements and strategies have developed. The study found that WNF is adding value by focusing activity on worklessness at the local level - it has provided resources to make things happen that would not otherwise have happened, such as a coordinated response to tackling worklessness. It shows how local partners are coming together to tackle worklessness, in terms of designing, funding and delivering the worklessness strategy for the local area. In addition to this, we have commissioned a group of Local Improvement Advisers to provide the Department with some analysis of the impact of the fund and its added value.
The impact of the recent recession on unemployment has been less pronounced than in previous recessions. For example, ILO (International Labour organisation) unemployment during the recession increased by 2.3 percentage points. This contrasts with increases of 3.7 percentage points during the recession of the early 1990s and 6.6 percentage points during the early 1980s. Similarly, we also find that the impact of the recession on spatial patterns of unemployment has also been less pronounced than in those previous recessions.
This recession has been geographically much more evenly spread than that of the 1980s or 1990s. All areas have been affected, and while the employment gap between disadvantaged areas and the rest has increased, the differentials have been much narrower when compared to the unemployment rates of experienced in the 1980s and 1990s. However our analysis also suggests that the recession has had a disproportionate impact upon some of those places which have traditionally underperformed, exacerbating underlying economic challenges.
Data on expenditure and employment rates
The Working Neighbourhoods Fund (WNF) is paid to 61 local authorities with high levels of deprivation and low levels of skills and enterprise. Since 2008 £1.5bn of funding has been distributed through the non-ring fenced Area Based Grant to councils to decide how to use best to tackle worklessness. See Table 1 (at the end of this Annex) for the breakdown of spend by WNF area.
The latest data assessing DSO 3.7 at a national level, taken from the Annual Population Survey (APS) conducted by the Office for National Statistics (ONS), show a slight widening of the employment rate gap between WNF and non-WNF areas.
During the baseline period (April 2007-March 2008), the employment rate
in the most deprived areas (also in WNF areas) was 56.7 per cent and this
compares to 76.4 per cent in the rest of
WNF money has been available only since April 2008. For July 2008 to June
2009, the employment rate in the most deprived areas (also in WNF areas) was
54.9 per cent, compared with 75.2 per cent in the rest of
The release covers the latest data for the most deprived areas in
Working Neighbourhood Fund (WNF) areas and the rest of
A further indicator of labour market activity, claimant count rate for worklessness in deprived areas, shows that even though the rates have increased for all areas since June 2009, the gap between WNF and non-WNF local authorities has not widened substantially.
Indicator 3.8:
This indicator measures the percentage change in the
employment rate in Primary Urban Areas. Employment
is a driver of economic output and this indicator, together with indicator 3.5,
is being used to monitor economic performance at a sub-regional level. It focuses
on Primary Urban Areas (PUAs) and monitors the percentage change in the
employment rate for each of the 56 PUAs (after taking into account the change
for
PUAs define
major cities by their physical extent rather than their administrative
boundaries. They cover 56 major urban settlements in
The new local authority economic assessment duty, which comes into force on 1 April 2010, will further help local authorities to respond better to the economic and employment challenges they face across wider city and sub regional markets.
Data on expenditure and employment rates
The Department is unable to provide a table of Departmental spending by PUA. Many PUAs go beyond individual local authority boundaries and include wards in neighbouring authorities in order to cover the continuous built-up area of a city. Data on Departmental spend are not available for such areas that would allow aggregated figures to be produced at PUA level.
Table 2 (at the end of this Annex) shows the employment rates for each PUA in 2007-08 and 2008-09. As with all estimates for local areas derived from sample surveys, caution must be shown when using the data. The sample sizes from the survey are quite small in many local areas and quite often there are substantial margins of error, or confidence intervals, associated with the estimates of employment rate. In a number of PUAs, the confidence interval around the quoted employment rate is wider than the observed change over the two time points. Analysis of new APS data later this year will help determine if the observed changes in employment rates were just random fluctuations or part of a longer-term trend.
More recent employment rate data, from the Annual Population Survey (APS) conducted by the Office for National Statistics (ONS), will not be available until later in the year.
A different indicator of labour market activity, claimant count rate, shows that though the claimant count rates have increased for PUA and non-PUA local authorities, the gap has not widened substantially since the time of the last employment rate update in June 2009.
DSO 4: Cohesive communities (a) What progress is the Department making in devising an appropriate measure for DSO indicator 4.4, on violent extremism?
Since the time of publication of the 2009 Autumn Performance Report, the Department has been continuing to explore ways to measure its intended outcomes and to ensure data quality standards are met. The 2010 Departmental Annual Report will set out the latest position on work on this indicator.
DSO 5: Planning
(a) With reference to indicator 5.1: How many Regional Spatial Strategies are currently up-to-date, and how many new homes are planned in these documents for each year until 2016? Please break the figure for new homes down by region.
To date, all regions with the exception of the
South West and
(b) What further assessment has the Department made, since the Committee's oral evidence sessions on the Departmental Annual Report, of the reasons for the slow progress by local planning authorities towards indicator 5.2? What progress has the Department made with action to bring the proportion of authorities that have done so to the target of 80 per cent by March 2011, and what further action does it plan to take?
The Department is in regular contact with local authorities and others to monitor reasons for slow progress in delivering Local Development Frameworks. In the past, the biggest barrier to progress was a lack of understanding in local authorities about the new process and in particular a lack of confidence after the first couple of LDF core strategies were found unsound. In response to that, we revised the regulations to make the process easier and revised the Planning Policy Statement on LDFs (PPS12) to make the requirements clearer and put in place an extensive programme of support to local authorities. Our view is that the original issues of understanding and confidence are now the major problem in a minority of places only. However in recent months, the most common reason given for further delay is local authorities awaiting the outcome of the general election. Conservative proposals to abolish regional housing targets and the binding Planning Inspectorate report on LDFs are key issues in this regard.
Despite these problems, the publication of Development Plan Documents, and particularly Core Strategies, shows an upward trend over the past six months, with the numbers of Core Strategies published being twice that of the previous six months. However, the publication rate is not sufficient to make up for previous lost ground.
We are continuing our programme to support the delivery of LDFs - key elements include:
· quality assurance and support visits to authorities by Planning Inspectors when documents are at a stage ready for comment; · continued support and engagement from Government Offices of the Regions; · a range of free support packages run by the Planning Advisory Service; · workshops run by the Commission for the Built Environment; · a spatial planning peer programme to link authorities with individuals who have delivered LDFs in their own area; · a grant of £25,000 paid to priority places when priority Core Strategy is published to help fund the final processes of consultation and examination in public; · visits by the Chief Planner and other senior officers to certain authorities to offer advice in the face of slow progress; · publication of the planning manual on the web to provide further advice, guidance and good practice to local authorities.
We have commissioned research to report on the effectiveness of the actions the Department has funded. When this reports at the end of March it will inform any further action we plan to take next financial year.
(c) Does the Department expect to reach the 90 per cent target provided for in indicator 5.3 by April 2010? What action is it taking to influence this figure?
The date for achieving the 90% target was incorrectly stated in the 2009 Annual Report and the 2008 and 2009 Autumn Performance Reports as April 2010. It is actually March 2011 to correspond with the current Spending Review period from 1 April 2008 to 31 March 2011. Following a commitment in the pre-Budget report, PINS have been carrying out comprehensive checks of local planning authority land supply assessments. The purpose of the checks are to test the robustness of the claims made by local planning authorities that 86% of them have a five year housing land supply (for the period April 2009 to 31 March 2014).
(d) Why has the percentage of major planning applications being processed within the target of 13 weeks (indicator 5.4) not increased since 2007-08? What measures are in hand to bring this figure up to 80 per cent by 2011?
The figures have remained steady at around 70% of major applications determined within 13 weeks. This has to be seen in the context performance up to 2002 where performance was steady at around 43%. The increase to 70% was the result of significant engagement with authorities by the Planning Advisory Service as well as significant rewards of Planning Delivery Grant for those who improved and naming as a 'Standards Authority' for those who failed to meet improvement targets. The incentive grant and 'standards authority' process have now been ended but it is indicative of the culture change that has resulted that the withdrawal of these incentives has not led to a fall in performance.
The presumption made when the target of increasing this to 80% was that there would be a much greater take-up of Planning Performance Agreements (PPAs). PPAs were introduced in 2008 and are an agreement between developers and local authorities setting out how an individual application would be dealt with - and in particular a tailor-made timetable. PPAs are aimed at the largest most complex cases which generally take longer than 13 weeks and where a PPA is in place the default 13 week target does not apply.
We are currently conducting research into the reasons why the use of PPAs has not been as widespread as we hoped. Initial responses suggest that many developers and local authorities have been trying to apply PPAs as a legally binding agreement which makes it expensive, inflexible and bureaucratic. Once the research is complete we will consider policy options to make PPAs with agreed timetables the route of choice for significant complex applications.
There have also been continuing concerns about perverse outcomes from the 13 week target. This was raised by the NAO and the Killian Pretty review into planning applications. As a result we are now piloting alternative indicators which include timeliness and the 13 week target alongside other measures of quality of service in a more holistic way.
In order to set the APR figures in context, the Committee has also asked that the Department supply it with the number of major planning applications in each quarter since 2007-08.
Numbers of major planning decisions since April 2008 are given in the table below (rounded to two significant figures):
(e) Are more up-to-date figures available for the overall percentage of planning applications that are subject to appeal (indicator 5.6)?
The figures for the last four quarters for which figures are currently available are
PSA 20: Long term housing supply (a) What is the basis for the change in the overall assessment of performance against PSA 20 from "Some progress" to "Strong progress", when the number of indicators showing improvement has remained unchanged at four out of six?
Treasury guidance allows departments the discretion to give themselves a lower (but not higher) assessment of progress than that warranted by the performance of the indicators. For the 2009 Annual Report, direct application of Treasury guidance would have also led to an assessment of 'Strong Progress', as a result of improvements on four out of six indicators. But in making its overall assessment, the Department took account of the fact that significant changes to the financial and economic environment since the most recent updates to the indicators suggested that the improvements would not be sustained. This resulted, on balance, in the use of "Some Progress" as an overall assessment. For the 2009 Autumn Performance Report, the Department decided to base overall assessments wholly on the latest information for the defined indicators, and reflect the expected impact of the downturn in the accompanying text. This was done in practice by quoting a recent reduction in the number of housing completions, which is regarded as leading indicator for the number of net additional homes provided (indicator 1).
PSA 21: Cohesive, empowered and active communities
(a) How does the Department intend to influence the figure for the percentage of people who have meaningful interactions with people from different backgrounds (indicator 2)?
The Department adopts a broad approach - recognising the importance of promoting all forms of interactions, including those which occur between different generations, and social classes. It is committed to working in partnership with local authorities, voluntary organisations and other agencies to develop an effective approach to supporting meaningful interaction.
The Department has produced a programme of work to deliver the meaningful interaction target of PSA 21 Building more cohesive, empowered and active communities.
'Meaningful interaction' is positive interaction between people from different backgrounds which goes beyond the superficial level and is sustained. It leads to reduced prejudice and stereotyping, along with greater trust. Communities can benefit hugely from initiatives that actively encourage people to interact. The evidence also indicates that meaningful interaction can greatly improve people's life chances and their health and well-being.
The Department adopts a broad approach - recognising the importance of promoting interactions between different generations, and social classes. It is committed to working in partnership with local authorities, voluntary organisations and other agencies who also wish to support meaningful interaction. To support them we have issued guidance on how to promote more meaningful guidance and have commissioned research on the benefits of meaningful interaction.
We are
also supporting initiatives that provide more opportunities for people to
interact with others who are different to themselves. As part of this strand of
work we have supported the Big Lunch, Living Libraries and What percentage figure will represent a statistically significant increase on the baseline of 80 per cent?
It is estimated, on baseline data, that a minimum change of 1.5 percentage points is needed to yield a statistically significant difference on this measure from the baseline, and so a figure of 81.5% would represent a statistically significant increase above the baseline.
Value for money savings - CSR07
New Affordable Housing Supply
(a) What is the latest figure for the level of savings delivered by the Homes and Communities Agency's New Affordable Housing Supply initiative?
To date there have been no value for money savings reported in the provision of affordable housing through the HCA's National Affordable Housing Programme. The target is to deliver £734m in 2010-11 - see below for further details.
Has the Department completed its analysis of the savings deliverable over the remainder of the CSR07 period? Why was there no report on progress in summer 2009?
Our review of the new affordable housing target, which included input from HCA, has been completed and shared with Treasury as planned.
We planned to achieve £734m of VFM savings through the Homes and Communities Agency maximising contributions from the private sector and improving the competitive process in its investment programme. The analysis showed that there is a considerable risk that we will not achieve VFM savings at this level through this particular programme due to the downturn in the housing market and the reduction in contributions from private development. Whilst there is still a high level of uncertainty over the future housing market, we remain committed to maximising VFM in this programme. The HCA is actively monitoring the situation and driving down grant rates wherever possible.
(b) The Committee understands that the Department measures progress on this target by comparing the level of grant needed to supply a home during 2008-11 with that needed for an equivalent home in 2006-08. The Committee requests that the Department provide these figures for each six months since 2006.
The table below shows the national average grant per unit for Social Rent and Low Cost Home Ownership, in six month periods, based on the date on which a scheme started on site.
Grant is fixed at the point of allocation and once agreed does not change during the life of a scheme. It is paid in two tranches, the first at start on site and the second on completion of the scheme. All projects receiving an allocation will start within the programme period (two years for the 2006-08 programme; three years for 2008-11) but not necessarily in the six month period when an allocation was made.
In the efficiency calculation in the Value for Money Delivery Agreement, the savings achieved in the 2008/2011 National Affordable Housing Programme are calculated against a baseline of the average grant per unit across the whole 2006/2008 programme to which a counterfactual position is calculated by applying increases to take account of inflation and other policy driven changes that would impact on the average cost of delivering a home in the 2008/2011 programme. These tables show actual average grants with no counterfactual applied.
(c) If the level of grant per new affordable home increases, is the Department obliged to report this as a negative value for money saving against its overall target?
The Department is not obliged to report negative value for money savings against its overall target. In accordance with guidance, only positive value for money savings contribute towards the Department's value for money target.
(d) The Committee notes that, in its Value for Money Delivery Agreement (January 2008), the Department acknowledged the risk of a decline in house and land prices, but did not explain how it would manage this risk. It also did not include the wider risk of an economic downturn or how this would affect the proposed savings. Why has the Department's risk management strategy for these value for money savings has failed to work? Why was the risk of an economic downturn not included when the value for money agreement was published in January 2008?
Market conditions have made delivery of affordable housing much more challenging because of the reduction in contributions from private development. We have responded to the economic downturn with real action over the last eighteen months with a range of measures to maintain delivery of affordable housing. The new investment announced in Building Britain's Future, alongside the steps already taken to bring forward investment, will allow us to deliver 20,000 more affordable homes than would otherwise have been possible and deliver over 112,000 affordable homes this year and next. As part of the range of measure employed to ensure continued delivery and support of jobs in the construction industry, we have allowed the HCA flexibility to increase average levels of grant.
The value for money target was negotiated as part of the 2007 Spending Review. Whilst some indicators were turning down in late summer, Autumn 2007, other indicators such as GDP falls and sharp house price falls were not evident until spring - summer 2008, and the Bank of England started cutting rates in Autumn 2008, long after the publication of the Value for Money Agreement.
Administration
(a) How does the Department intend to generate £43 million of administrative savings by March 2011, given that it was unable to deliver any during 2008-09?
During the first half of CSR07 (and in agreement with HM Treasury), the Department incurred significant and one-off 'invest to save' costs relating to estates rationalisation and office refurbishment. These costs offset savings that would have otherwise been generated in 2008-09 alone. However, the investment has enabled the Department to a make permanent reduction to estates costs from 2009-10; these will significantly contribute towards achieving the CSR07 value for money target.
The Department's CSR07 Value for Money Delivery Agreement sets out the methodology for measuring savings made from the administration budget. Applying this (and HMT and NAO guidance) the Department projects it will meet the £43 million savings target. Savings have been (and continue to be) made across a range of areas, including estates rationalisation and better use of remaining office space, pursuing reductions in the use of consultants and agency staff, reorganising the Department's delivery structure, and through rigorous vacancy management discipline.
Contingency
(a) In view of the significant shortfall expected, has the Department identified any other sources of efficiency savings that will contribute to the overall £887 million target for efficiency savings? Why did the Department not plan alternative means of delivering savings to mitigate against such shortfalls?
In CSR07, the Department undertook extensive reviews across CLG programme spend to identify scope for savings and established ambitious targets - especially for affordable housing. As a result of the credit crunch, and its impact on the construction industry and housing markets, we are facing increased costs of intervention in housing and regeneration programmes which constitute the bulk of CLG spend. However, we did identify £100m of additional savings through more effective use of funds in a range of programmes across the Department (for example, the Housing and Planning Delivery Grant) and these were announced at Budget 2009 (and published within the Value for Money Update on the Cabinet Office website).
Given the scale of the credit crunch and its impact on the housing and regeneration markets there is no short term mitigation strategy that could have delivered significant alternative savings. In the longer term, CLG's contribution to the Government's fiscal stimulus has helped stabilise markets and maintain delivery of affordable housing. The HCA continue to actively monitor the position and through its competitive bidding process trying to drive down grant rates where possible.
Value for money savings - Budget 2009
(a) The APR states that the Department is on course to meet the £100 million target but provides no information on savings made to date, or on the three elements where savings have been planned. How does the Department intend to meet this target? What impact are these savings having on service delivery?
At Budget 2009, CLG agreed to deliver further reforms which will deliver £100m savings in 2010-11 to contribute to the additional £5bn savings across Government that were announced in the PBR. These reforms include:
· £65m of vfm savings through more effective use of funds to tackle the problems of the most difficult housing estates, by concentrating on supporting local authorities in their work with communities, local and regional partners;
· £20m of vfm savings from the Housing and Planning Delivery Grant (HPDG), through reassessment of priorities in the light of changed economic conditions, and a tighter focus of spending in support for Local Authorities to deliver more housing and build planning capacity; and
· £15m of vfm savings from a range of programmes across the Department. These include savings from planning budgets, which will be re-profiled to deliver better value for money, whilst preserving outputs.
The Department is confident of achieving the £100m of vfm savings as it has implemented effective financial controls to ensure the savings are achieved in the target year (2010-11). In accordance to HMT guidance, these savings will be quality neutral, that is, they will not impact on service delivery, as evidenced by the Department's progress in achieving its Departmental Strategic Objectives and Public Service Agreements.
Relocation of staff
out of
(a) How many
full-time equivalent posts have now been relocated out
of
As part of SR04, the Department agreed a target to relocate
240 posts outside
Although it is likely that these relocations have generated some financial savings (for example, in costs of accommodation), there has been no requirement for the Department to measure financial savings as a result of relocations.
Relevant to DSO 3.7:
Table 1- Breakdown of the Department's spend by WNF area since 2007-08 (£)
Note:
Figures for
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