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


Examination of Witnesses(Questions 60-79)

COUNCILLOR DAME SALLY POWELL, MS ELAINE ELKINGTON AND MR NIGEL PALLACE

TUESDAY 15 OCTOBER 2002

  60. Can we have those figures?
  (Councillor Dame Sally Powell) Yes.

Mr O'Brien

  61. On that question of affordability, looking at the definition in the evidence that you have submitted, you say that affordability is left to the market. You say, "This Council regards housing as affordable if its cost to the occupier . . . is equivalent to the cost of Registered Social Landlord accommodation of similar size and quality in the Borough". In other words, the market influences the question of affordability. How can we influence the market?
  (Ms Elkington) I think actually it is a question of definition. The litmus test is RSL rents, but they are themselves subsidised, so it is not really left to the market in that sense because we will only work with RSL partners who are committed to affordability levels that we find acceptable. The private market rents, where I am also responsible for housing benefits—

  62. Who sets the affordability level? On this occasion, it is the Social Landlords you refer to and you follow them.
  (Councillor Dame Sally Powell) No, we work in partnership with them. We go for a commissioning process and—

  63. Can I repeat what you said in evidence: "The Council regards housing as affordable if the cost to the occupier, however it is provided, is equivalent to the cost of registered social landlord accommodation of similar size and quality in the borough." That implies that you set the standard of affordability on what social landlords do in the borough.
  (Councillor Dame Sally Powell) That is correct.

  64. How can we influence that? It is going up all the time and, as you have just said, people cannot afford to become involved. How can the Government influence that market?
  (Councillor Dame Sally Powell) They need to increase the grant to RSLs in high-value areas where the market is getting out of control in comparison to the income of key workers.

  65. Increasing the grant does not control the market, does it? All it does is shove the prices up. What we are saying is that the answer to all the problems is more money, and obviously, if that is the way the borough sees it, there is no end to it, is there? What we are looking for is how we can introduce affordable housing into the London boroughs. You are saying there is no way the Government can influence the market other than by putting money into it.
  (Councillor Dame Sally Powell) I do not think there is any other way. We are talking about a housing market that is out of control.

  66. Should the Government be spending a higher proportion of its housing funds on intermediate housing rather than social rented houses?
  (Ms Elkington) No, because, unlike many other boroughs, our view about the intermediate housing market is that it is not a substitute for affordable housing. I cannot justify spending money on the intermediate housing market when I have 1,500 households in some form of temporary accommodation and 650 families in bed and breakfast, and a government target for next year and the year after that says I have to get that down to a minimum level of 50. So for us, the intermediate market only works where we cannot achieve affordable housing first.

  67. Are the government programmes for shared equity schemes and home buying making a difference? If not, how could they be improved?
  (Councillor Dame Sally Powell) They are making a difference in some parts of the country, but they are not working in high-value areas.

  68. In your particular borough, how could they be improved?
  (Ms Elkington) You will not like the answer, but the answer is higher levels of subsidy in order to make sure that what we are providing is housing that is local. If you look at the Starter Homes programme, which we supported with many RSL partners, we were unable, with the subsidy levels available, to achieve any affordable intermediate housing actually in the borough. We had to make a decision about what would be a reasonable travelling distance for teachers and social workers. Whilst I accept the argument that some public sector workers, for example, police officers, may not want to live locally, clearly for some shift workers it is an advantage to have them living locally to hospitals or whatever.

  69. How much subsidy is available to make shared ownership affordable to a nurse? Is it worthwhile, or could the subsidy be better used on social rented housing?
  (Ms Elkington) If we are talking about the Starter Homes initiative, the way it works is this: it is equivalent to a £25,000 interest-free loan but, as Councillor Powell says, the difficulty then is, even if they can secure that bit of the equity, they still have to pay the rent on top.

  70. How much?
  (Councillor Dame Sally Powell) It depends on the value of the property. It depends on what the price of the property is. If you wanted to buy a one bedroomed flat in Hammersmith & Fulham, it is probably about £190,000, so you get a £25,000 interest-free loan, then you have to find the difference of £165,000. If you are a nurse on £15,000 a year, and you can get three, three and a half or even four times your salary, so let us say £60,000, we are now up to £85,000—where does the other £100,000 come from?

  71. That is what I am asking.
  (Councillor Dame Sally Powell) You need another £100,000 on that example, but it depends what the cost of the property is. The Starter Homes initiative is not working in some London areas.

  72. So it is all ifs and buts.
  (Councillor Dame Sally Powell) No. It is about "can do, will do." That is my philosophy. We will do as much as we can do, but at the moment we are being hampered by the rising house market. We have done more than any other London borough. We have achieved pro rata the highest rate of affordable housing in London, and we have done it in high-value areas, but we need some more help. There are lots of families with kids.

  73. You still have 11,000 people on your waiting list.
  (Ms Elkington) Eight thousand nine hundred and thirty four.

  74. The question is, are you winning?
  (Councillor Dame Sally Powell) No, we are losing, because the Right to Buy means we have a net stock loss.

  75. So there is no future in the present system? That is what we are looking for. There is no future in the present system, so we are looking to how we can change that system to make it more affordable.
  (Ms Elkington) As Councillor Powell said, since 1979 we have lost 26 per cent of our housing stock through the Right to Buy. Even with our excellent record, our replacement level is 200-300 a year. We are losing that; we are haemorrhaging properties, 200-250 a year, through the Right to Buy, and we have no way of stopping that. So we are fighting to stand still. The net requirement over supply is about 9,000.

  76. How does your borough and its policy work on exception sites?
  (Mr Pallace) This is back to the first point I was making. The way in which we deal with it is that we protect employment land and community service land from change of use based on the need for land for community uses and land for employment development. We have an exceptions policy written into the Development Plan, based on the rural exceptions policy which operates in rural areas.

  77. How many affordable houses has it led to?
  (Mr Pallace) It has led to a significant proportion of all of the development we have carried out over the past decade.

Chairman

  78. How many?
  (Mr Pallace) I do not have the number off the top of my head. It is of the order of half. We can give you the details of all of the developments in that time period.
  (Councillor Dame Sally Powell) It is about 1,500.
  (Mr Pallace) It is of that order.

Mr O'Brien

  79. How can the policy of the exception sites ensure that mixed tenure communities are created?
  (Councillor Dame Sally Powell) We are talking about quite small sites. There will be 10-20 properties. For example, we closed St Mark's School and developed it. That is right in the middle of Parson's Green. You already have a mixed community because you have a bit of private sector rented, lots of very nice £4 million houses, and we put a bit of affordable housing in the middle of it. I have to say the public in the area did not like it very much, but that is a mixed, balanced community.


 
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