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

Examination of Witnesses(Questions 200-219)



  200. Returning to SEEDA's buy-out, what are the funding obstacles to be overcome in order to make this work?
  (Mr Dunnett) Receiving funding to our bottom line to enable it to happen, being blunt. We are capped as a regional development agency as far as funding is concerned and our principle challenge is attracting funding to get it kick-started.

  201. How many homes do you think it can deliver?
  (Mr Dunnett) I believe that, when it is up and running, it will take three or four years to build up obviously a sufficient bank of housing. It should well be able to deliver 3,000 to 5,000 affordable homes per annum.


  202. When you say that the problem is funding, is it going to happen or is it not going to happen?
  (Mr Dunnett) We have debates and discussions in with the department as to how our funding line can be enhanced at the moment. We are looking to use some additional funding we have in Hastings to start this particular approach from a Hastings perspective.

  203. But, if you do not get the funding, then it is not going to happen? You do not have the resources?
  (Mr Dunnett) We do not have a specific commitment in the next six months to handle it. The South East Development Agency is going to have to either cut other parts of its budget or continue its discussions with the department.

Mr Cummings

  204. Do you believe that the affordable housing targets in regional planning guidance are meaningful if they are rarely achieved?
  (Mr Bevan) At the moment, an overall indicator in the South East is 12,000, but that is not really based on anything but a guess as far as we can tell. A housing needs study needs to be undertaken regionally in order to get a much stronger basis for a target and we are discussing a joint approach to that with the Government Office. So we hope that in the review of regional planning guidance, we will have a tougher, stronger based affordable housing target. It is extremely important to have an affordable housing target.

  205. Why do you think it has proved impossible to meet the affordable housing targets in regional planning guidance? Is there a blockage somewhere in the system?
  (Mr Bevan) Over the past year, we have undertaken, as our evidence suggested, a range of work analysis and work with local authorities and RSLs throughout the region to identify the blockages to affordable housing delivery. We came up with 46 action points and 20-odd of them were with Government and I am sure you do not want me to go through them now but it is to do with the speed of local plan making, resources from Central Government, the rules applied to right to buy and all sorts of issues. Within that, affordable housing targets are, I think, important for four reasons. First of all, they set a benchmark for provision and help other agencies involved in affordable housing to plan according to that benchmark such as the Housing Corporation. They require a follow through and development plan, so that is where the real leverage comes in local plans and structure plans. They assist local authorities in negotiating with developers for affordable housing evidence to new housing developments and they provide the basis for subregional targets because it is the subregional targets where a real housing need study can be undertaken that will provide a much stronger basis for affordable housing targets.

  206. Let me try and simplify the matter. Would it not be the case that affordable housing targets in regional planning guidance should be based on what authorities think can be provided rather than what is needed? Would that not be a much more realistic approach?
  (Mr Bevan) I am sorry, what local authorities think . . .?

  207. That they build what they think can be provided rather than be burdened with targets that just cannot be realised.
  (Mr Bevan) I think we need to address the reasons why the targets cannot be realised. What is the point of a target if you are just going to put as a target what you think you are going to achieve? Targets need to be based on an assessment of what the need is to deliver the sustainable community and the well-being of a population for which local authorities are responsible.

  208. But the Committee have been informed that it is proving quite impossible to make affordable housing targets in the planning guidance? Are you not placing an impossible burden upon the providers of housing?
  (Mr Bevan) It may be a stretching target, but I think they are based on a sound assessment of what housing need is and therefore it would be foolish simply to abandon them on the basis of what people think they can deliver.

Mr Streeter

  209. I just wanted to make sure that we had an answer from the South West team as well on affordable housing targets.
  (Councillor Clarke) We would like to pick up the brownfield issue where, because we are not predominantly an industrial region, we have limited availability. We wanted to put forward through our RPG 36 per cent and we were forced up to 50 per cent brownfield against the national average of 60 per cent. In affordable housing, we are back to the kind of market forces I was talking to you about because, when you sit down now with your 106 agreements to get the roads infrastructure and the school places and then you want affordable housing as well and you have this massive price gap because of the two-tiered nature . . . I was thinking when you were touching earlier on some of the pressures elsewhere, if you take the example of Cornwall, Cornwall is likely to be the only place in Britain which will continue to have Objective 1 status at the next review. It is a very low wage area, but it is one of those areas which is the most attractive for relocation and second homes. It has been put on the map by the Eden Project: two million visitors a year. You now have a massive gap. You are looking at a number of £300,000 and £400,000 houses which are totally out of the reach of locals. Apart from that, the two-way pressure is (1) the availability but (2) this market gap between all these other costs and what actually makes the price affordable. We have one calculation in here which we can leave with you where, to be affordable in many of our locations, the price needs to be around £70,000 but, when you put all these other components together, you cannot construct a house and make the land available for less than a selling price of £110,000.

Sir Paul Beresford

  210. Can I come back to the South East. SEEDA made a comment about variations between the economic climates within its own area. There is an argument that one could use with planning, with co-operation with the DTI, through Government influence, through SEEDA et cetera that one ought to be concentrating on moving jobs, demand and so on and so forth into those areas that have a low economy and that you ought to be tightening up on those areas with the high economy and high demand and, to encourage them to do so, we could actually reduce the tax in the house for affordable housing so as to encourage it elsewhere. Is there any sign of the Government helping at all?
  (Mr Dunnett) There are two halves to that, if I may. The second half I will put to my colleague who is responsible for that. The principal issue about getting greater activity in areas such as the Thames Gateway, Kent and East Sussex is infrastructure to them. Clearly you cannot create communities unless people can commute in and out or actively work within those communities. The number one priority in the regional strategy has been to provide infrastructure, not just physical but virtual with respect to broadband, and also with respect to skills.
  (Mr Bevan) In those areas of economic success that we are talking about, it is simply reproduction of the society you have got. We are not talking about a huge expansion of jobs or a huge expansion of populations but we are accommodating the children and grandchildren of existing populations.

Dr Pugh

  211. Can I take you to the Regions White Paper which suggests changing the funds up from the Housing Corporation to regional bodies or to regional assemblies. There are two parts to this question. Do you think the regional assemblies will do a better job than the Housing Corporation? If they do that job, is there a danger that they will reinforce tensions that already exist within the regions?
  (Mr Dunnett) With respect to provision of funding in the South East, I personally feel that the provision of a particular body is less important than the present players working together holistically. Whether or not it has a structural body to me is a bit irrelevant. What is absolutely important is that the Housing Corporation, the Assembly and, for example, English Partnerships and the local authorities work together to come to a holistic solution.

  212. And the second part, tensions within the regions, between London and Surrey, that sort of thing?
  (Mr Dunnett) The biggest issue between London and the region is the region's housing problems are largely the result of wealthy people exiting London and taking up the brownfield sites which are available in the South East, causing additional pressure by taking away the opportunities for housing for people who actually live there. We have a migration out of London problem in the South East.

  213. Is the Assembly sensitive to that sort of problem?
  (Mr Dunnett) The Regional Assembly is already working closely with the LDA to try and tackle some of those issues.

Sir Paul Beresford

  214. Would you not agree there is also a flow the other way in that the middle age group, 20 to 35, is actually moving out of the South East into London?
  (Mr Dunnett) Very much so. Whether or not they are moving out of London, they are moving out of the South East and the biggest problem we have in public sector retention is people from 25 to 35 who cannot afford to have a home. They start off in their first job and they move outside the South East and therefore we are losing all that vibrant early stage skill.

  215. They are not moving because of the attractiveness of London?
  (Mr Dunnett) No, because that age group tends to be starting with a family and they want to have a larger home to build their family.
  (Mr Bevan) We do share with London the objective of providing sufficient homes for people who need them.
  (Councillor Clarke) I believe it will help, not least because it will assist to integrate housing strategies with other strategies and you need them together. In terms of the tensions, the last RPG was taken through when the pressures we have talked about this morning were beginning to be apparent and they have developed the skills there. I think they will be able to cope with this.
  (Ms Houlden) From the South West's perspective, the important thing to remember is the rural nature of the region so Countryside Agency funding is also vital so we have a coherent approach to sustaining rural communities. In terms of the migration point, I think the South West would argue that many people over the age of 45 are moving down to the South West, that is our fastest growing population, and we are losing quite a lot of young people, and that is back to the affordability issue.

Mr Clelland

  216. Can you tell us a bit about what is happening in terms of your regions and the intermediate sector and what you regard as the best forms to meet your needs?
  (Ms Houlden) From the South West perspective we need a package approach. As Chris Clarke mentioned earlier, one of the problems with shared ownership in the region is that even if you are only paying half the market price and rent the other half, you cannot actually afford it. In Bath, for example, the average house price is about £140,000 which means a shared ownership of £70,000, and for many people a mortgage of £70,000 is out of their reach. A package approach would help in small pockets but we need a mixed ownership approach.
  (Mr Bevan) I would concur with that. In part of our findings that I mentioned before was the reintroduction of do-it-yourself shared ownership instead of Homebuy, which has a much more flexible approach to the percentage of equity that you can take. One of the key issues at the end of the day is the flow of such properties into the market where ultimately they are lost for affordable housing.

  217. Do you think, for instance, local authorites do enough in this sector or do they concentrate too much just on the rented sector?
  (Mr Bevan) I think they would like to do more. Talking to our local authority, they would certainly like to do more and they find the change of arrangements frustrating.
  (Ms Houlden) One of the other things local authorities would like to see more of is incentive schemes for getting people to downsize from larger houses, which is a particular problem in some of the villages.
  (Mr Bevan) A key reason for the frustration of local authorities is right-to-buy receipts. 90 per cent of local authorities in the country are in the South East and the proposal to pool right-to-buy receipts and reallocate them is very worrying to them. Those with debts have to pay 75 per cent back to repay debt and obviously that limits the amount they can put into this sort of work, but if those who are debt-free are going to be at risk of losing their allocations in the areas where affordable housing is probably one of the most pressing issues, that is a key problem.

  Mr Clelland: I have a question on right to buy but that is coming up later.


  218. Can I just go back to the question of shared ownership. What you are really saying is anyone on average earnings cannot afford to pay the rent and something towards the mortgage, but what do you do? Do you have to subsidise the building of the property?
  (Councillor Clarke) Yes, it occurs to me that one of the things that may need to be done is for an amount of money to be made available either as an income stream or a capital sum which is detached from the rest of that particular house and whether that would have some kind of reversion to the local authority. I think the other point to make is the pace of this has been absolutely breathtaking. We have got several graphs which show the rate of this. For example, Taunton became the tenth fastest increase in Britain and West Somerset is amongst the very highest population increases revealed by the recent Census figures.

Dr Pugh

  219. Can I take you back to this issue of key workers—nurses, teachers and police officers and so on. In the South East we are agreed that that is not a nearly good enough definition and it needs to be wider and more flexible; is that right?
  (Mr Dunnett) Yes.

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