Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Minutes of Evidence


Examination of Witnesses(Questions 1-19)

COUNCILLOR MICHAEL KEITH AND MS MAUREEN MCELENEY

TUESDAY 15 OCTOBER 2002

Chairman

  1. Good morning. May I welcome you to the first session of the new Committee looking at affordable housing—although I want to stress that we are continuing with the evidence we received in the old Committee. Could I ask you to identify yourselves for the record.
  (Ms McEleney) Maureen McEleney. I work for the London Borough of Tower Hamlets.
  (Councillor Keith) Michael Keith. I am the lead member for regeneration in Tower Hamlets, and the Chair of Thames Gateway London Partnership.

  2. Would you like to say anything by way of introduction, or are you happy to go straight to questions?

  (Councillor Keith) We are happy to go straight to questions.

Mr Cummings

  3. Good morning. In your evidence you describe Tower Hamlets as having a growing population with high levels of poverty and overcrowding and a large proportion of the public housing requiring major improvements. Can you describe briefly for the Committee what you believe to be the causes of the housing problems in Tower Hamlets?
  (Councillor Keith) I think the most straightforward cause is under-investment in the housing stock over a sustained period of time; and that has generated a set of problems which produce a state of disrepair that is estimated in hundreds of millions of pounds in terms of trying to bring it up to decent standards. Also, alongside that, in terms of the quality of the stock, the level of overcrowding within that stock is the highest within the United Kingdom. The combination of those two factors make for a very difficult position. Alongside that, some of the worst stock has been bought out through Right to Buy and is being increasingly recycled as a new Rackman—a landlord appears effectively renting out that stock to some of the poorest communities in London.

  4. You do not believe that any of the fault could possibly lie with the previous policies adopted by the Council in relation to administration, in relation to repair of housing stock?
  (Councillor Keith) If that were to be the case I think you would find a situation radically different in Tower Hamlets from other parts of inner London. If you look at the demographics of the Borough, if you look at the history of inner London as a whole, I think the problems are not exceptional in Tower Hamlets—that is not to say any local authority is infallible. I think the structural quantum that is at stake here is a product of a part of London that was bombed to bits in the War and had massive new build in the post-War era; that post-War stock, as we know, across the country suffered from a lack of investment for a period of time. I think those are structural problems that are beyond one institution's competence or incompetence. That is the macro scale.

  5. Having said that, how do you believe Government should use the new funds in the Comprehensive Spending Review to address Tower Hamlets' housing needs?
  (Councillor Keith) I think Maureen might say a bit more in detail there. There are two straightforward points we would want to make. Firstly, I think there are continuities in the period pre-1997, and post-1997 for that matter, and we have explored through the Estate Regeneration Challenge Fund (and subsequently through other measures) housing choice, looking at partnership with major Social Landlords, trying to explore ways of getting investment in that housing stock. We are pursuing that very vigorously; but, in order to do that, it is acknowledged by housing experts across the political spectrum that the stock we have is a negative asset. We need a dowry in order to make that process of stock transfer fiscally plausible, if you like. Secondly, I think we would say that the impact of abuses of the Right to Buy legislation are so major, particularly in areas of housing regeneration, we need to examine the ways in which that Right to Buy process works, particularly in regeneration areas.

  6. Could you give the Committee an example of the misuse of Right to Buy?
  (Councillor Keith) If you take just one example in the New Deal for Communities area in central Stepney, at the moment there is approximately £21.5 million of NDC resources for the project overall. Just in the period from May to August, Right to Buys in that area will cost an extra £1.4 million for the New Deal for Communities Project. What is happening is the very advent of a regeneration project prompts a rush of Right to Buy applications; therefore, it pre-empts any serious debate about the degree of refurbishment or the degree of demolition that is best for that particular area. Effectively your options are closed down because your scale of Right to Buy means you have to potentially spend almost as much of your capital buying back the Right to Buys as on investment on the stock itself. If you take the calendar year 2000, New Deal for Communities in Tower Hamlets generated £850,000 for debt repayment through Right to Buy, which is actually more than the overall New Deal for Communities grant for that particular year.

Sir Paul Beresford

  7. You made a lovely sweeping statement that the Right to Buy properties are then handed on to the Rackman-like landlords. Bearing in mind in most of the country I understand the average stay of the Right to Buy purchasers is about ten years—in other words those people would have to have social housing and use the Right to Buy to continue in their current home—what is so different about Tower Hamlets that it does not apply?
  (Councillor Keith) I think the most straightforward difference is the fact that the London population (and we will await the exact result of the 2001 census) has grown of the order of 900,000-1,000,000 over the last ten years. A large chunk of that migration is low income migration. There is a new rental sector that has become apparent in inner London; a lot of that is in the worst housing stock. I accept the average figures you quote, the national average figures—

  8. What happens to the families who have bought?
  (Councillor Keith) I will give you a specific example of a logic which makes sense. We have the worst levels of overcrowding in the entire United Kingdom in Britain. If you are on benefits or full levels of poverty within a household in Tower Hamlets and you are from a Bengali family that is seriously overcrowded there is an absolute interest in taking up your Right to Buy, potentially getting a mortgage somewhere further out of London and passing on your property to an intermediary who will be a landlord who will rent to new tenants.

  9. They purchase and move out?
  (Councillor Keith) A large number of people purchase and move out. We have got examples which we can demonstrate of abuses to the system where some of those characters are actually soliciting Right to Buy in advance of both Housing Regeneration Programmes but also in terms of everyday circumstances. You will find numerous leaflets in English and in Bengali encouraging people to take up their Right to Buy and offering to facilitate that process for them.

Mr Cummings

  10. How do you balance the use of your housing resources between tackling the needs of homeless people, families in overcrowded housing and key workers? Can you tell the Committee why you decided to spend 80 per cent of your housing budget on social rented and 20 per cent on low cost home ownership?
  (Ms McEleney) At the minute that is very much the balance that we work on. We are trying to invest roughly around 20 per cent in funding Registered Social Landlords to increase the supply in the Borough.

Chairman

  11. The question is: why?
  (Ms McEleney) We simply have to balance our priorities. Our Housing Needs Survey indicated the extent to which there was an aspiration to ownership and the extent to which people could afford to exercise that ownership. That led us to look to put around 20 per cent of our resources into generating that form of ownership. We do at present get full take-up of our low cost ownership options from residents within the Borough, indicating that we are getting that balance about right at the minute. However, both what we have got in terms of the 80 per cent for investment in our stock or the 20 per cent we have got for new supply are inadequate to properly address the need we have. What we try and do is use the information that we have, the research we have got, to try and get the best balance we can; but you are balancing between competing priorities, all of which need vastly more than we currently have to fund them. It is one of the reasons we have embarked upon our Housing Choice Programme, where we are giving all residents the option of looking at the potential to transfer to alternative landlords; where we can, therefore, increase the level of investment going into the stock; because the resources coming through the Comprehensive Spending Review, whilst very welcome, when we look at our stock condition and the investment needed, indicates that will not generate the investment we need to remedy that stock repair. We need to look at other ways of levering in more resources into the stock.

Mr Cummings

  12. Are you looking at other ways?
  (Ms McEleney) Yes.

  13. Can you give an example of what solutions you have come up with?
  (Ms McEleney) The main avenue we are looking at, at the moment, is that we are working with each one of our 84 estates in the Borough, to work with them on the options available to them.

Chairman

  14. We do not want the options available. What we want is—specifically what are you going to do? Let us have one example.
  (Councillor Keith) The example is one of the estates that pioneered the use of the Estate Regeneration Challenge Fund to work with major social landlords which resulted in reinvestment in the stock, enhanced densities at local level and an increased total stock available in the form of social housing.

  15. You have actually got more dwellings built on the site of old housing?
  (Councillor Keith) In terms of some of the Estate Regeneration Challenge Fund Programme, yes, we do.

Mr Clelland

  16. Can we talk a bit about the Intermediate Market Housing sector. On the question of shared ownership and low cost home ownership, what role do you see that having in solving housing problems in Tower Hamlets?
  (Councillor Keith) I think they have a role but it is a partial role. It comes back to the question before in a sense, if you have a single housing register of about 8,000 on the waiting list, and you have about 10,000 hidden households in terms of overcrowded adult households, as a local councillor I have over 50 people on my books that have 12 or more people in a two bedroom flat. In that context, the number of hidden households and the very real need that those demonstrate means that you clearly need a mixture of different resolutions for them. The candid fact (which is fully accepted by us) is that the full resolution of those housing problems will not be found within a single borough in London. Part of the resolution is outside the Borough, as well as inside the Borough. In terms of a mixed pattern of tenure, what we would like to see is the possibility of a real life cycle option for any one individual where they can go through a set of different patterns of social landlord, council landlord, low cost home ownership, part ownership etc. What we like to see is a full range of options. What we have the problem of doing is balancing the scale of demand that, if not infinite, is massive against a patchwork of supply that recognises the need for a multiplicity of solutions. There is a part role for low cost ownership, as well as for self-build, as well as other mechanisms for providing choice. It is within an overall context of those, roughly, 18,000 households without anywhere to live.

  17. How realistic an option is low cost home ownership, given the expensive property in London which will require massive subsidies? How does it compare with the subsidy for social housing?
  (Ms McEleney) We built over 100 properties for shared ownership last year in partnership with Registered Social Landlords, and we were marketing them at a 50 per cent share, which comes out at around £75,000 for the purchase of that 50 per cent share. It is a question of controlling it on the proportions that people are buying and making it available for them to be able to buy fairly low proportions of those properties. Yes, it is becoming an increasingly expensive option in line with rising house prices. It still has a role that enables some residents to make that first purchase in terms of meeting their aspirations for home ownership.

  18. Is not one of the solutions to try and ensure you retain economically active people within the Borough? One of the problems is that people get jobs and then they move out. What are you doing to try and overcome that problem?
  (Councillor Keith) I think that, in part, is the point I was trying to make about having an escalator of options. What we do have, because of the particular history of the Borough, is a rapidly increasing number of people who are economically active, but they tend to be either the result of gentrification of some parts of the Borough, or new riverside developments which mean, realistically, you are not talking about a gradation but a chasm between some very rich people and some very poor folk at present in a very limited area of space. What we would say is that part of the resolution needs to be thought through beyond the boundaries of a single London borough. I think the only way to make sense of this problem is within the particularities of what is happening in London, in terms of the changing population of London, the growth of London, and the regeneration of east of London in particular.

Christine Russell

  19. Councillor Keith, you gave us a figure of 18,000 households currently in Tower Hamlets without a home. The Mayor's draft plan for the next 15 years said you will need to find 18,000 homes. Is the Mayor's plan a real under-estimation of what your real housing need is, if you are saying you have got 18,000 households at the moment without a roof over their heads, yet 18,000 is the figure in the Mayor's plan but over 15 years for new units for accommodation?
  (Councillor Keith) It would be if you assumed that the solution of Tower Hamlet's problems are to be delivered in Tower Hamlets alone. That was the point I was trying to make. That is not real. The scale of densification that is projected in the Mayor's plan is potentially real if it is accompanied by infrastructure investment, whether it is dowries around the social housing element or other forms of social and physical infrastructure that make the urban renaissance possible; but that needs to be thought through, in truth, as part of the resolution of the problems of the East End of London as a whole, as well as Tower Hamlets in particular.


 
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