Examination of witnesses (Questions 40-63)
WEDNESDAY 24 JANUARY 2001
RT HON JOHN PRESCOTT, RT HON HILARY ARMSTRONG, RT HON NICK RAYNSFORD AND DR PAUL EVANS
40. I am just suggesting to you that in some of those areas those problems are being addressed but it is this fear that if you buy a house in the that neighbourhood and you cannot sell it in four or five years time, which means that suddenly a whole area becomes one where people are reluctant to purchase houses.
(Mr Prescott) It is how the area begins to develop. Can I go back to my own experience in Hull, in the New Deal community we have there we have a river going through it and it is called a drain, because it is a flood plain area and it is an effective drain system. If that was a river going through the centre of a private estate people would say, "This is very up market". What we have found since we began to adjust the drain to make it look like as if there is a river, with trees, etc, an awful lot of the empty houses are being filled because people want to live in the area. We have changed the feeling of the environment and done something about it. That is true whatever it is. I do think that monies that were announced by the Chancellor in the conversion of shops, and things like that, and stamp duty and the conversion money have all helped to improve property in inner city areas, which does show if you get it right it does attract people into them.
41. Secretary of State, the two papers that were published, the Urban White Paper and the Rural White Paper are welcome and a base to build future planning and the destinies of authorities. Obviously this is a matter that people take seriously. Are planning authorities complying with your policy to de-allocate land identified for housing which no longer meets the requirements set down by your initial approach? I refer to where there was land assembly before 1997 and those areas would not now qualify under PPG recommendations. Are you de-allocating that land for housing in greenfields?
(Mr Prescott) I am not sure. I wonder if I can ask Nick Raynsford to answer that.
(Mr Raynsford) The answer is we are taking a number of very significant steps to affect the change from the development of greenfield sites to the concentration on brownfield sites. PPG 3 set the framework. We have issued detailed guidance to local authorities arising from that, particularly on undertaking urban capacity studies and managing the release of sites so as to avoid all of the greenfield sites being seized when there are brownfield sites available for development. We have imposed a direction requiring local authorities to notify us of any proposed developments that involve greenfield housing on a significant scale. We have already had a significant number referred to us under that direction. There is already in place a direction which requires authorities to notify us of any departures from their plan, where there is a proposed development on a greenfield site that is not in conformity with the plan. We are answering a question today which will be giving the detailed figures, and that will be on the record as from tomorrow, which demonstrates that we have called in developments proposed, which have been referred to as under these notification requirements, 20 applications relating to around 320 hectares of land. I am confidant that the new procedures are beginning to bite and really will make a difference.
42. How are they monitored locally? Where there is a borderline case, where the application should have been rejected but because it was near to before the PPG 3 was published and it was likely to go forward, how are they being monitored?
(Mr Raynsford) The policies are being monitored locally by the local authority, which is required to look at any development proposal in relation to its existing plan. Secondly, by the government office which will, if necessary, serve a holding direction where there is doubt as to whether a development should proceed. Thirdly, by our department looking at all of the cases that are referred to us under the notification procedures that I have outlined. I am confident that there are good monitoring arrangements in place and as these policies bite, and they are biting, we will see the figures proving the change in emphasis and development patterns.
43. Secretary of State, you did outline the importance of urban renewal, the fact that we have to improve the quality of housing in our areas. The minister did refer to funding for housing and he referred to council housing, what are the options for funding for council housing, because there is a great deal of concern of the situation as it is at the present time, and fear, in some local authorities, that they are going to lose their landlords, ie housing authorities?
(Mr Prescott) The biggest challenge for us in housing at the moment is the need for housing in London, quite apart from the good quality of it in the south east, whereas in Hull and some northern areas the population has left us with a lot of empty houses. The real problem there is how do you deal with what is estimated to be something like £20 billion? How do we deal with that kind of rehabilitation and improvement and reinvestment in property. We made a decision to do that, the first time it was about £5.5 billion that we put in and then at a later stage another 2.5 million towards that. We have chosen to try and deal with that problem by giving former housing investment to them. Also in the repair programmes, of course, they have had something like £1.6 billion. I think the point you are referring to is causing some concern when the local authorities seek to find other ways of raising money, which started by the previous administration going to the private sector, coming to some understanding about it, losing their landlord status and passing the whole thing over. What we have done is to make clear we are not necessarily against that, and Nick Raynsford made an announcement to the House about that when we did the housing paper, we are prepared to do that. To give the qualification the tenants are going to have to agree, they cannot have it overridden, they have to agree whatever it is. We did go a little further in our housing paper, it always seemed a bit unfair to me that local authorities have a rent income, all you are doing with the private sector is giving it to the private company and they make a judgment about the rents as to whether they can refurbish and recover their investment. Why, if there is an income flow, local authorities could not borrow themselves using their income. We gave them an opportunity, Nick Raynsford will give you more details about that, to be able to raise the money, remain as the landlord, kind of one removed from that estate, but still keep their housing stock and use the private finance to improve it instead of waiting for how much money will be available from government. If the bill is £20 billion and if we wait to improve it each year it is going to be a number of years before you can achieve that. This allows them to do that on one very important condition, which we come back to, are there good authorities, bad authorities, bad standards or good standards? They have to meet certain conditions as an authority in order to be able to use that facility which does allow the public sector to retain its landlord role and, indeed, the tenants to have more say in their decisions and, indeed, hold the right to be able to make a decision as to whether they want to go through that way. Perhaps, if Nick could just supplement it.
(Mr Raynsford) There are essentially four options open to local authorities. Those who retain their stock within the existing arrangement will benefit from April from the new major repairs announced, which is funded to the tune of £1.6 billion nationally, which gives each local authority a sum related to the ongoing maintenance needs of each of their properties. The figure that has been agreed with the Local Government Association is very widely seen to be a generous settlement to ensure that authorities can maintain their stock. Secondly, the arm's length company option, which the Deputy Prime Minister referred to, is funded with a further £460 million over the coming two financial years, sorry not this coming year the two years after that, which will support those authorities who want to put their housing at arm's length, who achieve excellence, they will qualify for additional borrowing funded from those resources. Thirdly, we have allowed some £600 million for PFI credits following on the successful pilot projects under which eight authorities explored the option of PFI in relation to housing. The fourth is the large scale voluntary transfer option in which we have made provision for transfers of around 200,000 homes a year if local authorities and tenants want to pursue that option. The key thing to emphasise is it is the tenants and local authorities who decided but there are a range of options and it is all geared to achieving our highly ambitious target of ensuring the entire backlog of substandard council housing is brought up to a decent standard within a ten year timetable.
44. This will impact, will it, on the Cabinet Committee which is responsible for looking at urban development, the fact they are going to be looking at estates that need the face lift, they need money investing in that and it will be part of the urban development one assumes? Can I turn to the question of planning now.
(Mr Prescott) I do not know whether that is right. Could I just enquire about that. The Urban Development CommitteeWe get confused these days because we have the cabinet in local authorities and we have the Cabinet here. It will be the decision, of the Cabinet itself in the local authority to make that decision or the local body as it is. Our resources in this are additional to what has ever been used in I think the Urban Development Renewal Strategy. So it does not take any of those resources. These are additional to that and part of the housing finance.
45. I see. I am just going to refer to planning and the fact that under the Urban White Paper and the PPG3 that has been published there is a greater responsibility on some local planning authorities. What extra funds are being allocated to planning authorities to carry out the duties and the responsibilities that the Department is placing upon them?
(Mr Prescott) This was a concern of Lord Rogers.
46. That is right.
(Mr Prescott) Nick, could you answer that.
(Mr Raynsford) Local authority funds for planning are part of the overall framework of local government finance. There is not a separate stream specifically ring fenced for planning purposes. We encourage local authorities to ensure that the planning service is operated in an efficient way and we do issue guidance to help local authorities deal with applications in an efficient and prompt way. I have to say that not all achieve a reasonable standard. There is an enormous variation in the performance levels which cannot be explained by workload. We have looked very carefully at the performance figures and authorities with very comparable levels of applications achieve fundamentally different turnover times in terms of the length of time they take to deal with cases. So we have, under the Best Value Regime, set performance standards for those authorities who have over the previous two years failed to meet the target of 50 per cent of all applications dealt with within eight weeks. Our actual target is 80 per cent to be dealt with within eight weeks and it is an indication of how far some have fallen that they have not even managed to achieve 50 per cent. Those authorities have been notified that they are subject to a performance standard which will require them to achieve 65 per cent in the coming year. We hope that will both encourage those authorities to improve but send a message to local government that it is right that local authorities should deliver an efficient service and if they achieve the performance of the best it is well within their capability.
47. I can accept that there should be no ring fencing of this. The situation is that in local authorities when they have statutory responsibilities for housing, social services and all the rest of it, and the allocation for that purpose maybe four per cent but it is costing six per cent to do it, the money which should be spent on planning is channelled into other heads of expenditure. It is unfair to say that where local authorities have missed out in meeting targets without proper examination that action is going to be taken against them. I think that matter should be looked at, would the Minister agree?
(Mr Raynsford) As I said, when we looked at the figures it was clear that authorities with very comparable workloads operating in very similar circumstances were achieving radically different levels of performance. Talking to both councillors and officers it is quite clear to us that there are different emphases in the degree of importance attached to planning by different authorities. We think this is regrettable because planning is fundamental to achieving in the long term the economic development of the area. A business that is kept waiting for several months before it gets a planning permission may decide to go to another area, so it is counter-productive for authorities to run down investment or expenditure on their planning side on the grounds that they have other priorities. It will actually work against their own interests. We are engaged in discussion with the Local Government Association about funding and we are not unsympathetic, but I have to say our evidence is that those authorities who achieve a high standard do so without the need for additional resources, they manage their service well, and if others match the performance of the best performers they would achieve considerable improvements in their standards.
(Mr Prescott) We tried to prevent, I think, your general fear, that when we talk about targets it is to almost determine the priorities for local authorities by saying "that is your order and you have got to put your resources to meet those targets". It is always a difficulty in giving resources to local authorities. What we try to do is to look at the performance of similar authorities and ask "Why can you not do it there" and I think that is what we try to do rather than determine the priority by setting the targets and then making it more difficult for local authorities or determine their priorities and expenditure. It is a balance, some are good, some are bad. We want better standards.
48. If I could just follow on, also continuing with planning and transport. PPG13 has been suggested, it has been highlighted but not published, why is that, Secretary of State?
(Mr Prescott) That it is not published? It is true that we have been involved, I think, in it since 1999 on this controversialIt is controversial, yes, because we are talking about lots of planning requirements, probably the one about car parking is the one that gets most controversial in it. It is about transport. Because we have produced our transport plans and we have extended some of the consultation about it, it is controversial but you are going to have to make a judgment about it. We hope shortly to be able to publish the plan. Nick, perhaps you could say the date of publication?
(Mr Raynsford) The consultation took place around a year ago. It was a very full consultation with a lot of responses and, not surprisingly, some widespread differences and opinion in response to that consultation. So it has taken longer than ideally we would have liked in reaching conclusions on how we take this forward but we are at an advanced stage and we hope to be able to publish in the very near future.
49. What do you call the "near future"?
(Mr Raynsford) How long is a piece of string?
(Mr Prescott) It will be quite near. Can I just give you one difficulty we have been looking at in this. People say you want less regulation rather than more regulation and there is always this balance. Government departments who have the responsibility of saying there should be less of this naturally say "Are you not actually making this more difficult in regard to regulation?" We have to say it is important in the planning and the kind of environment that we get a proper standard. So do you actually make it a recommendation or do you make it a standard that you have to implement in your plans? That is controversial not only outside but sometimes inside Government.
50. Can I look forward to it in the near future?
(Mr Prescott) Pardon? I tell you, I will write to you about that.
51. Thank you very much.
(Mr Prescott) I will write to the Committee.
52. When will you have agreed a replacement for Gap funding of the European Commission?
(Mr Prescott) This is a very difficult one. It concerns us a great deal. Hilary has been very much involved in negotiations. It affects right across many of these programmes, as you well know. Hilary, can you tell us where we are on that because some countries in Europe certainly agree with us, there is a lot of discussion going on with the Commission, but it has had an effect on a number of the programmes as you know already.
(Hilary Armstrong) I can tell the Committee that the Commission have informally indicated that they have approved the Direct Development Scheme and written confirmation is due imminently. Once it has been received RDAs will be able to begin operating that scheme. As you know, there are two other schemes that we submitted to them, the two Gap funding schemes and whilst it is always risky to give a specific date when the Commission is involved, nonetheless they have said we can expect a decision on the schemes by the end of February. They have recently approved two schemes from the Welsh Development Agency that are very, very similar and so we do not anticipate that there are going to be any problems and we see no reason why they should not be approved by the end of February as indicated. The other two schemes that we have proposed to them, Neighbourhood Renewal and Environmental Regeneration, are still being considered by the Commission and again we are pressing them for early positive responses.
53. How will this affect the 32 schemes from the Merseyside Objective 1 programme which are currently in the State Aid Unit of the Department of Trade and Industry? These are essentially schemes with private sector involvement which have been held back for the same reasons as the reasons for the cancellation of Gap funding. One of those schemes is a Beatles-themed hotel in Liverpool, the other is a business centre in Toxteth and I understand there are great difficulties about the private sector elements of those schemes waiting, what I was told only this afternoon, would be several months before those schemes could proceed. How will the statement you have just made relate to those projects?
(Hilary Armstrong) I obviously do not know the detail of those schemes and I do not know whether these schemes link into the criteria which we have applied for the schemes that we have sought approval for. The RDAs do know the criteria, the shape of those schemes. The public knows now because the Welsh Development Agency programmes, as I say, have been approved. The Gap funding schemes will be ones that are applicable certainly in the Objective 1 area because they are specifically for those areas. I do not know those individuals schemes, but if they have been prepared knowing that the earlier Gap funding scheme is not possible and they have been prepared within the remit that there is this time, then they will be acceptable. If they involve direct development, they will be acceptable. However, as I say, the individual programmes will have to be assessed alongside the new overall programmes that we are submitting and seeking approval from the Department for.
54. I am a little concerned because your answer suggests that those are not of any particular concern to you. Those schemes were worked up by the Government and the Government Office, they are not the responsibility of the Regional Development Agency. Could I ask you to investigate that programme
(Hilary Armstrong) I am really sorry.
55.A major part of the European Objective 1 programmes. Those schemes were put together before the Gap funding ruling and discussions have been taking place ever since. Could I ask you to look at those? I have been pursuing this elsewhere, as you are aware, and these are major issues for regeneration in Merseyside.
(Hilary Armstrong) Of course they are and I am not taking this lightly at all. As you know, I have been pursuing this fairly vigorously for some period of time. What I do not know is the individual details of those schemes, that is all. I am putting my hands up and saying I do not know the individual detail so I cannot give you an answer which deals with that, but I know that people are looking at that very carefully. Yes, I should have said that the Government Office as well as the RDA are very involved in all of this, and certainly I will have another look at it. What we have been trying to do all the time is to make sure that whatever proposals we have we see how they can be adjusted to fit within new rules.
56. Why do you think it was that the Welsh Development Agency and the Welsh Assembly were able to find a solution to the problems of regeneration in Wales sooner than central government was able to find a solution for problems in the North West region?
(Hilary Armstrong) They withdrew the Gap funding scheme earlier. They just decided they were going to move earlier, that is all.
57. Could I turn
(Hilary Armstrong) I was criticised last time for having moved at all.
58. So devolved governments move quicker, earlier and more effectively than central government?
(Mr Prescott) That is not necessarily so, not even by the evidence.
(Hilary Armstrong) They simply took the decision earlier. They may decide to put their hand up earlier, that is all.
59. Could I turn to the question of the Urban Regeneration Companies, like Liverpool Vision. What powers do the Urban Regeneration Companies have which distinguish them from any other partnership such as the Single Regeneration Budget partnerships? What makes them different?
(Mr Prescott) Hopefully in Liverpool you saw the differences(inaudible) is involved in the one and of course the other one now being advocated is the kind that the Heseltine innovations played some part in, but the fundamental difference, of course, is that a criticism was made by Committees in this House that just dealing with this as an economic problem is not a satisfactory way of dealing with urban renaissance, you have to deal with social investment. Of course, the Urban Regeneration Companies involve the community and not simply the local authority or one body that is basically the Government taking consultation and that is one of those differences. We now have the ones in Liverpool, Manchester, and wherever it is. Hilary, would you be able to give a more definitive response?
(Hilary Armstrong) An SRB largely deals with one community. The Urban Regeneration Company is covering a much wider area and is looking specifically at brownfield sites that need development which very often in the past would be developed without any consideration of the context that the Urban Regeneration Company is operating within or the development would be operating within. What the Urban Regeneration Company has been able to bring, and this is certainly what people said in Liverpool when I was there, is that they are able to think about development which will be of better quality and so on because it is not spec development, it is not somebody coming in quickly because nobody else is around and watching. It actually is how do you get a strategy which covers more than one site, but that means that what you develop on one site actually feeds into the overall development that you are looking for. I think in that way certainly Urban Regeneration Companies are bringing that added perspective which, when you are looking at the development of a single neighbourhood, you get in very different ways.
60. The Rogers Report recommended that the Urban Regeneration Companies have more powers. You seem to have rejected that. Could you say why?
(Hilary Armstrong) We did because those powers in many ways intervene with the powers of local government and there were lots of criticisms of the Urban Development Corporations, the previous vehicles, precisely because they interfered with the planning powers of local government, and so we believe that rather than take those powers again from the local government and give them to URCs we should look for a more partnership approach involving the local democratically accountable body, making sure that they still had those overall planning powers. That will be a matter of judgment. We are looking at this very carefully. There is real enthusiasm in the rest of the country to set up URCs but we are watching that and monitoring it and talking to the URCs at the moment about whether they think the vehicle is sufficiently effective.
(Mr Prescott) That accountability issue is a real issue in Liverpool. When we came in with all the bankers and the businessmen they picked out the economic projects but there was not a great deal of accountability for that. Lord Rogers has gone somewhat further than that but at the end of the day it is still an issue of accountability. Where it is public money, elected representatives should have some say in it. We tried to mix it in the strategies by bringing in businesses and different communities into these partnerships.
61. Can you tell us whether you have defined the areas that are going to be exempt from Stamp Duty yet?
(Mr Prescott) No, I do not think we have.
62. How soon?
(Mr Prescott) You have caught me. Can I write to the Committee?
(Hilary Armstrong) It is a matter for the Chancellor.
(Mr Prescott) That is obviously the answer I should have given automatically, in time for the Budget, but I will gee it up and make sure and write back on that. If it is just the line "wait for the Budget", well, we are nearly there.
63. What about harmonising VAT rates on refurbishment, is that a dead duck?
(Mr Prescott) The same answer really. When I appeared here before I said I was an advocate of trying to get a better situation on VAT, as you well know. We made some steps towards it and we will keep on pressing the issue.
Chairman: On that note can I thank you very much for your evidence.