Examination of Witnesses(Questions 1-19)|
TUESDAY 15 OCTOBER 2002
1. Good morning. May I welcome you to the first
session of the new Committee looking at affordable housingalthough
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
(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
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.
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 Rackmana landlord appears
effectively renting out that stock to some of the poorest communities
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
(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 Hamletsthat
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 yearsin
other words those people would have to have social housing and
use the Right to Buy to continue in their current homewhat
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.
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.
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.
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
14. We do not want the options available. What
we want isspecifically 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.
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
(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.
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