Disposal of public land for new homes Contents

Conclusions and recommendations

1.The Department cannot assess whether the programme delivered value for money for the taxpayer. The Department’s view is that the success of the programme is defined by having disposed of land with the potential capacity for more than 100,000 homes, and that the value for money of individual sales is just the responsibility of individual departmental Accounting Officers. We do not accept these narrow interpretations. We do recognise that the Department sought assurances from land-owning departments that the land in question had a reasonable prospect of being developed, but this is no substitute for knowing whether the prospects actually materialised. The number of houses built or under construction is a common sense measure of impact, and is easily collected, but the Department chose not to monitor it. Furthermore, the Department has not recorded sale proceeds, or the commercial terms agreed for the land disposals, without which one cannot begin to assess value for money.

Recommendation: In taking forward the new target, the Department and the Homes and Communities Agency must apply a broader test of value for money, which must include sale proceeds and progress in the actual construction of new homes. Taxpayers deserve to know how many homes have actually been built.

2.We are sceptical as to whether departments achieved value for money from the sale of all individual sites. The Department stressed to us that responsibility for securing value for money on individual land sales rested with the individual selling departments. We are sceptical whether this was achieved because: departments could not readily produce for the NAO some basic information about the sales that would be essential to supporting any value for money case; this Committee has previously reported on the lack of commercial skills in individual departments and we have seen, for example, how the Royal Mail sale did not take full account of the market value of surplus property; and the Department was not even aware of the guidance departments should be following when disposing of assets and is therefore unlikely to have been able to monitor compliance with it. In addition, guidance from the Royal Institute of Chartered Surveyors (RICS) on achieving market value is based on being able to sell ‘without compulsion’; and the obligation to achieve a certain level of sales within a fixed timescale introduced an incentive to sell which increased the risk to achieving value for money.

Recommendation: We will hold the Department to account for the value for money of the new programme. It should, therefore, set out how it will gain assurance that all land-owning departments and public bodies have achieved value for money from all disposals.

3.The Department adopted a very wide interpretation of what it could count towards achieving its target. The Department claims the programme has sold enough land to support an estimated 109,950 homes. In counting the notional number of homes for which land had been released, the Department counted over 15,000 from land sold before the programme started, and over 10,000 from land which had simply moved outside the public sector (with the privatisation of Royal Mail and conversion to a charitable trust of British Waterways).

Recommendation: In taking forward its new target to release land for up to 150,000 homes between 2015 and 2020, the Department must only count the number of homes built, or commenced, on land disposed of during the programme. This should also include the number of affordable homes.

4.The Department was unable to confirm how many jobs the programme created. The press release launching the programme announced a target of 25,000 new jobs by 2015, but the “Build Now, Pay Later” guidance document referred to 200,000 jobs. While the Department cited evidence suggesting that each new home supports up to two additional jobs for one year, it is unclear how much employment has actually been generated.

Recommendation: The Department must set out clearer parameters for job creation and collect and audit data to ensure that claimed new jobs are in fact created.

5.The Department and the Homes and Communities Agency have not provided effective oversight of the programme. After the programme started slowly the Cabinet Office Implementation Unit intervened in 2012 and outlined some significant concerns about achieving the target. After the Cabinet Office’s report, government took various steps and there was an acceleration of disposals in the second half of the programme. However, the Department still did not collect basic information we would have expected for it to oversee the programme effectively - for example, copies of sales contracts - and other programme-level information was incomplete or inconsistent with the individual departments’ records. When we challenged the Department on what guidance it provided to land-owning departments on effective disposal of assets, it appeared to be unaware of the current guidance to departments on property disposals, and was therefore unable to reassure us that it had ensured individual departments had followed that guidance.

Recommendation: The Department must be clear with individual departments as to the guidance they are expected to follow, and must set clear documentary and data requirements.

6.There were significant omissions in the Department’s data collection. Most worryingly, the Department did not collect information on the number of homes actually built or under construction, or on sales proceeds, both of which are fundamental to assessing the value for money of the programme. We do not accept the Department’s argument that it would have been an unacceptable burden on developers for them to provide basic information on what they had done with assets bought from the public sector: all developers have data on housebuilding starts, completions and sales. Nor do we accept that the amount of any sale proceeds from the disposal of publicly-owned assets should be kept confidential–Parliament and the taxpayer are entitled to greater transparency than that. Individual departments were unable to supply the NAO with basic information required to monitor the programme and, where information was provided, the NAO found inconsistencies between programme- and department-level information. The Department also failed to record other key information required to run the programme, including the means by which sites were sold.

Recommendations:

In addition to setting minimum documentary and data requirements for all land-owning departments, the Department must design and implement a data validation process.

The Department should also review how it can increase transparency of agreed commercial terms for land disposals to provide greater assurance to the taxpayer that value for money has been achieved.

7.It is essential that the Department learn lessons for its new programme and deliver value for money from future land disposals. The Spending Round in 2013 included new targets for central government and associated bodies to deliver at least £5 billion from land and property sales between 2015 and 2020. In the Autumn Statement 2014 the government announced an increased ambition to release land for up to 150,000 homes in the same period. We welcome the Department’s commitments to take account of the NAO recommendations as it designs the new land disposals programme, and to improve its monitoring. But we are also concerned by its caution when challenged on whether it would be collecting information on the number of homes actually built. We recognise that homes might emerge over a number of years, but we reiterate our view that unless it keeps track of whether new homes are actually built on land sold, the Department will be unable to measure the success of the new programme. We will want to see how the Department and the Homes and Communities Agency plan to implement the new programme.

Recommendation: Alongside its usual Treasury Minute response, the Department should provide us with a fuller report on its progress with setting up the new programme, including objectives, how it will measure success and monitor progress, and how it has addressed the recommendations in the NAO report.