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


Examination of Witnesses(Questions 20-39)

COUNCILLOR MICHAEL KEITH AND MS MAUREEN MCELENEY

TUESDAY 15 OCTOBER 2002

  20. Can I ask you about the effects of the gentrification of parts of Tower Hamlets. Has that been a doubled-edged sword? What has it done to local land values over the last few years?
  (Councillor Keith) Clearly the average price of a house is well over £200,000 in Tower Hamlets, and the median income, as opposed to the average income, is extremely low. The average income is in some ways higher because of the gentrification. There are problems of escalation of the property values. I think it has moved on slightly, but in two or three of the years at the turn of the century the highest price rises in the UK were seen in Tower Hamlets itself. That makes the progression from the early stages of your life, to buying a house, to settling in the Borough incredibly difficult because it means aspirations tend to be out of the Borough, regardless of the policies taken by the local authority. At the same time, it has to be said that some of that gentrification, both in terms of old houses being done up and also speculative investment in river front properties, creates disposable income that has had beneficial impacts in some of the employ ment sectors.

  21. If the arithmetic does add up and you can find a site that is affordable to housing associations to build on, is there then an issue of finding the skilled labour to actually build the new homes? We have been given evidence that finding skilled construction workers in the East End is a problem. Is that your experience?
  (Councillor Keith) Yes.

  22. Finally, could I ask you what your views are on prefabricated homes—the return of the prefab?
  (Ms McEleney) We have got very limited experience of it so far; but our own experience is that it can be a very useful tool, especially on small in-fill sites, in tight urban sites, maybe small bomb sites. It can be a very useful tool, in that it does reduce construction time; it does bring advantages in terms of noise and construction; and we think there is a potential future for that.

  23. What about quality and design?
  (Ms McEleney) It can be very high quality, and it is capable of being quality-checked before it arrives on site, which is great.

Dr Pugh

  24. You may not have enough homes by 2010, but will they all be Decent Homes? Will you meet the Government's Decent Homes Target by 2010?
  (Councillor Keith) I think that very much depends on the success of our stock transfer programme, and that depends, brutally, on us achieving a dowry that goes with that stock transfer.

Chairman

  25. How big a dowry do you need?
  (Councillor Keith) About £230 million.

  26. Could you just repeat that, so we get it clear?
  (Councillor Keith) About £230 million. Price Waterhouse Coopers, as well as many other experts in other equivalent parts of London, have valued the stock at a negative value of that order.

Dr Pugh

  27. Suppose that happens, and you get the Decent Homes Standard, is that a job done or is the Standard in itself not a proper indicator of success? It does not deal with things like overcrowding, does it?
  (Councillor Keith) No, there are social dimensions which are absent from the Decent Homes Standard. I think the principle, the floor target of basic quality housing is extremely sound, but there are aspects and the nature of any kind of capitalisation is that certain things are missed out so that, for example, 60s and 70s new-build, which was concrete walls which are, in engineering terms, problematic, are excluded from the Decent Homes Standard until they are 80 years old, so no measure is going to be perfect and clearly there are social dimensions particularly around overcrowding which are also not measured, so certainly there are problems.

  28. Are you confused or helped by the variety of targets?
  (Councillor Keith) I think the notion of setting goals for steady improvement is one that is laudable as long as we can find the resources objectively, not in terms of some hypothetically infallible local authority, but objectively create realistic aspirations for a local landlord, whether it be the local council or whether it be other registered social landlords.

  29. You have spoken already about the abuses of the Right to Buy. Now, if you had your way, what new powers would you, as a council, want in order to prevent these abuses?
  (Councillor Keith) Well, the most simple process, I think, would be a suspension of Right to Buy in areas of regeneration so that the sorts of abuses around communities and the sorts of abuses around other areas where there is likely to be investment in housing stock are prevented. There are also other measures that we would welcome at their most straightforward, such that also the level of discount on Right to Buy could either be abolished entirely or, at the very least, made directly equivalent to other registered social landlords, so that Right to Buy, Right to Acquire effectively had the same discount. In total, there are financial effects that I think were not intended by anybody in the Right to Buy process to have such a major detrimental impact on our housing revenue account.

  30. I am playing devil's advocate here. Does this not slightly conflict with the sort of desire that everybody has got to make people feel that they are stakeholders in their own community, and the Right to Buy ought to do that in an area of deprivation where people may feel quite alienated in a way?
  (Councillor Keith) I think the goal of making people stakeholders in their own areas is laudable, but the fact that one section of the community had MIRAS for many decades which is effectively a subsidy in ownership and some of the poorest folk in Britain did not is also a very strong case for Right to Buy. I think it was never intended by anybody in the Right to Buy process that what would happen is that the benefits of the discount were effectively taken by second players who do not have an interest in the area, but as the properties move on to other landlords, they take over some of the worst housing stock in Britain and rent it out in a very bullish London rental market.

Sir Paul Beresford

  31. Should they be targeted rather than the Right to Buy applicants?
  (Councillor Keith) I think that is an interesting question and it partly raises questions about primary legislation, parliamentary time, regulation of landlords and those sorts of things.

Chairman

  32. So what you are saying is that the Right to Buy can be dealt with by regulation, whereas controlling those landlords needs primary legislation, so we take the easy option?
  (Councillor Keith) I think what we as a local authority in Tower Hamlets would say is that we would be pragmatic and work with whatever was available.

Christine Russell

  33. If I can move on to planning agreements, what successes have you had in Tower Hamlets in getting affordable housing via the planning agreement route?
  (Councillor Keith) I think we were one of the local authorities that pioneered the process by which 25 per cent of all new developments over 15 homes were handed over to social housing on the 80/20 per cent mix that we touched on earlier, but I think that was again in line with pre-1997 or post-1997 broad national objectives. That has been challenged by one or two private developers in the courts and that has been sustained in the courts. I think we are interested in exploring aspirations above 25 per cent and how plausible those are is something that again—

Chairman

  34. How much social housing have you got in Tower Hamlets as a result of this?
  (Ms McEleney) Last year around 150 units were produced as a direct result of the planning process. The rate of applications in the borough at the minute does mean that section 106 agreements that have been signed are increasing, although obviously—

  35. But it is very small compared to the scale elsewhere?
  (Ms McEleney) Yes.
  (Councillor Keith) And the scale of demand.

Christine Russell

  36. Have you even attempted to try and persuade developers, other than housing developers, to make a contribution towards affordable housing?
  (Councillor Keith) Absolutely. If you take the case of Spitalfields Market right on the edge of the City of London, part of the planning gain practice which came out of the Spitalfields Market proposals was a contribution of social housing.

Chairman

  37. How many?
  (Councillor Keith) I think it was about 120 units, off the top of my head.
  (Ms McEleney) Yes, it is around that number.

Christine Russell

  38. So if you were being challenged now in the courts, how would it be helpful and what changes would you like to see in order to strengthen your case when you are negotiating with developers? Would you like to see it enshrined in the law, a figure like 25 per cent, or would you like that left to individual local authorities to determine?
  (Councillor Keith) I think your own Committee has received evidence from Professor Evans about the balance between economists and planners in addressing issues of affordability and my personal line would be that I think that the planning laws that are there are about as far as you can go. I think what is needed, however, though, and the Green Paper does offer potential for this, is to think through the regional possibilities of East London as a whole in the context of the growing economy of London as a whole and think through a solution, a housing solution, which is about affordability and social housing across a larger patch—

  39. So you would be happy to transfer to other London boroughs if you could get an agreement? In Tower Hamlets you would be happy to see those affordable units actually built in other boroughs?
  (Ms McEleney) As long as that matched what the need was and the aspirations of residents and we got the right to nominate people to those dwellings.
  (Councillor Keith) One very important point is that we are not about moving people out of the borough, but if their aspirations are in line with that and there are sites available that are in line with that, then that is fine.

  Sir Paul Beresford: What is your unemployment and how does that compare with your neighbours?


 
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