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

Examination of Witness(Questions 440-459)



  440. Have you any idea at the moment what percentage is likely to be given to bringing existing homes up to standard, building new homes and regenerating failing areas?
  (Lord Rooker) No. At this point in time the answer is no, simply because we are still working on how we "divi" up the money. John has made it absolutely clear in the statement that he made on 18 July to the House of Commons that he is looking for a step change in output. We do not mean fiddling marginal figures; we are looking for a step change in housing production in this country, which by and large has fallen behind what we need to produce by a very long margin indeed. We need to get the best value for the money that we receive from the Treasury, using all innovative schemes that we can, such as issues related to the Challenge Fund that you have heard about this morning.

  441. You were obviously listening to the answers that Bill O'Brien had about the worry that some of us have who represent seats in the North about the majority of housing monies being diverted down to London and the South East. I do not want to put words into Bill's mouth, but he was speaking from the perspective of a Member who has a problem with abandonment in his constituency. Does the department recognise that other northern cities, like Chester and York, face exactly the same problem as London and the South East, for example, that house prices have rocketed and key workers and first-time buyers cannot afford to buy in those cities? How flexible will the allocation of the new money be?
  (Lord Rooker) Let me make this point absolutely clear. I understand the thrust of what Bill was saying. Firstly, in the year 2003-04, which we have already announced for the development programme of the Housing Corporation, every region will receive more. That is after we have top-sliced the £2 million for the Challenge Fund. Everybody will get more that year than the previous year. Norman Perry gave you the reasons for the £15 million—it looked like a cashflow situation—but it did not deprive anybody of anything. So every region will receive more. We are concerned that because the biggest amount of pressure is on London and the wider South East—by the "wider South East" I mean going beyond what we normally mean by that term to include as far north as Northampton and the Milton Keynes area—and because the numbers are bigger, the prices are bigger and it is what most people talk about. That does not mean to say that the department and Ministers are not concerned with national responsibilities and the abandonment in the North. Of course, there are hot spots in the North where it is very difficult for first-time buyers to get into the market. So we have some major problems of national importance. Unfortunately, this is an unequal country in terms of our economic regions. Nevertheless because of the pressures and the numbers being bigger in the South East, people may tend to think that we are ignoring the North and the Midlands, but far from it. Every region will receive more. We have to deal with the pathfinder areas in terms of abandonment and find ways of rebuilding those housing economies that have collapsed. Recently I have stood in streets in some northern towns that are full of abandoned houses. Literally every house is empty for three or four streets around; no one knows where the people have gone; and the houses have been sold in pubs sometimes by crooked landlords for £1,000 a time. There are some major problems to deal with. We are not ignoring the problems of the North and the Midlands. The necessity is because of the pressure on the South East and the sheer numbers and it tends to be what the media and Ministers talk about.

  442. Having listened to the responses from the witnesses from the Housing Corporation, are you confident that the priorities within your department are reflected in the priorities of the Housing Corporation?
  (Lord Rooker) Yes. Particularly for the pathfinder areas and for growth areas designated in the South East, we are looking at the way in which the department will organise itself to manage and to push that forward, including ministerial accountability for those areas.


  443. Are you doing it or is the Housing Corporation doing it?
  (Lord Rooker) the Housing Corporation does what we ask it to do. It is a very good deliverer and we have absolute confidence in it being able to deliver and to be a lever of change for the Government or the department. There is no question about that. They have a good track record of governance in the area that they look after. There is a huge amount of private money going into it in the Housing associations—some £24 billion of private sector investment. So it is fundamental that we have good regulation and that we do not have any problems that frighten off private investors. This is not just a matter of public money. There is a big mixture. We have confidence that they will be able to deliver what we require and when we set targets they have a track record of delivering on them.

Alistair Burt

  444. Earlier you spoke about the step change in building. In order to accomplish that you have to ensure that you have enough people with the skills to carry out the job. Earlier some of the witnesses talked about the problems that we have and the national shortage of skills in the construction industry. If you talk to those who teach them and represent them, you find that everyone is seriously concerned about the situation. Do you have a view on it? How will we tackle this?
  (Lord Rooker) I have a view on some of the background as to why it has happened.


  445. I stopped witnesses earlier on the way in which there has been a destruction of the training boards.
  (Lord Rooker) I served for 27 years on the governing body of what used to be called Upton College and is now called Birmingham College in Birmingham. Essentially it is a building FE college. I know what happened when the further education funding council came along under the aegis of the previous Government. Virtually all the building courses disappeared, as they did out of most colleges because it was cheaper to run paper-based courses. We virtually snuffed out training in the FE sector in that way. That was a real problem. Notwithstanding that, the industry was not queuing up to send apprentices and trainees. That is a real issue. On the other hand, I see headlines in the media saying that bricklayers can earn £70,000 in Birmingham. So there is a future; there is money to be earned. It is a peripatetic industry; but it is less peripatetic if some modern construction methods are involved. People need to have faith in the future. If they know that there is confidence, that we want a step change, that we will fund it, that we will make sure that we get other funding and not just from the public sector, and that we change the structure so that there is confidence in the future, people are likely to invest in land, development, building and training and people will then invest their futures in it.

Alistair Burt

  446. Whatever may have happened in the past, there is still this sense of feeling down about vocational trade courses. Do you think that enough is being done to ensure that people who are in training feel that it is the right kind of career to go into and that there is enough support and encouragement for people to do it?
  (Lord Rooker) I do not think that there is enough done. I do not think that there has ever been enough done. You are talking to a formerly indentured apprentice toolmaker—true, he has lost his way! For people to go into manufacturing at any time, whether construction or conventional manufacturing, is difficult. Not enough people push or extol the benefits or the joys of creating things and making things, as well as making things happen in terms of management. We have a problem here.

Mr Clive Betts

  447. On fiscal incentives, does that have a role to play in terms of housing, such as attracting investment or are we encouraging employers to provide homes for key workers?
  (Lord Rooker) Absolutely. I took the advantage of reading some of the evidence that you have received—by the way I recommend that you all do that. I have the advantage in particular of Surrey County Council and local government associations, and the benefit of representations from a colleague in the House from one of the cities in Surrey. I looked at some of their documentation, and at what they have been doing as employers and facilitators and not just as an authority, to try to encourage the creation of affordable housing and to do it in such a way that they do not run the risk of subsidising the employee, so that the Inland Revenue comes along and says, "Benefit in kind". It is worth considering that, subject to your own deliberations.


  448. At the moment are you losing out to the Treasury in this area?
  (Lord Rooker) No. The department is in constant discussion with the Treasury about fiscal arrangements. The fact of the matter is that even the private sector has woken up to the fact in relation to key workers that they do not want to become landlords, or get involved in housing, but some companies want to be able to facilitate housing for their employees. Sometimes they do that through housing associations and through having nomination rights. In your own evidence you have examples of where that has happened. There are opportunities for doing that on a larger scale in the public and the private sectors.

Mr Clive Betts

  449. Should any specific fiscal incentives be introduced?
  (Lord Rooker) There are incentives now. Any employer, public or private, looking over a three or four-year period at their recruitment and retention costs can see the money wasted on that. If they could direct some of that money into some kind of housing pot or fund, as in examples given when people have taken a couple of years of pension payments and the employer has put it into a pot for housing. That is happening without extra incentives. There is always the possibility that the Treasury and others can find other ways of generating fiscal incentives. I think it would be a wrong strategy on my part to speculate on that.

  450. The Government have targets for virtually everything these days, but I have yet to discover one for the provision of affordable housing over the next 10 years. Is there one lurking away in the department?
  (Lord Rooker) No, there is not. We said in our note to you that the definition of affordable housing meant different things to different people at different times. I notice that the Committee, when it issued its press notice calling for evidence, did not say what it meant by affordable housing, which is probably why we have such a variety of submissions.


  451. Given that we have not solved the problem, would you like to solve it now by telling us what it is?
  (Lord Rooker) It depends—this is not a fudge—on the location in the country and on the type of housing. Say, we have a mixed geographical situation as regards housing costs, wage costs and other factors, we are looking for affordable housing for those who have incomes lower than the average—but maybe not the lowest—and we are looking at housing that may be at sub-market rent, low cost home ownership, shared housing, and a whole range of issues provided from different sources. If you want to put a figure on it, I suppose we would argue in terms, for example, of planning applications and looking at some of the figures in the planning guidance, and generally speaking we would expect perhaps a quarter of the kind of figures that we would use to be affordable housing. Then we know what we should be building on a regional basis according to the planning guidance; we know what we are building in total, which is somewhat less than the figures in the planning guidance, and, therefore, it is easy to work out a theoretical shortfall of affordable housing.

  452. What would that shortfall be in fact?
  (Lord Rooker) All I can give is the figures from our published documents. In London we reckon we have delivered 4,000 affordable dwellings and 6,000 in the South East, compared with what we would have expected in London of 6,000 and 13,000 in the South East. I get those figures only because the 6,000 and the 13,000 are roughly 25 per cent of what the planning guidance figures would have given. London was about 24,000 and the wider south East was round about 39,000.

Mr Clive Betts

  453. Could you produce a note for the Committee, region by region, on what we should be achieving?
  (Lord Rooker) Yes, based on what was in the planning guidance we could. I would be happy to provide that. You have to have a figure otherwise you cannot have a meaningful discussion.

  454. It is a guideline.
  (Lord Rooker) Yes.

Sir Paul Beresford

  455. You have given us a brilliant definition of "affordable housing". Another phrase is "key workers". Can you give us a definition of "key workers"?
  (Lord Rooker) Everyone is a key worker.

  456. Exactly.
  (Lord Rooker) I do not accept that there is any such thing as an unskilled worker. I do not accept that as a moral approach. On the other hand, in more general terms key workers are taken to be workers in the health service, primarily in the National Health Service, teachers, police officers and in some respects those in the fire service and in social services. On the other hand, one could argue that the Government does not necessarily do that, but there is no such thing as a public sector nursing home and yet nurses in nursing homes are as much key workers as nurses in hospitals, but that does not come under the general definition. The starter homes initiative, for example, goes a bit wider than the public sector for stage one. Stage two is confined to the public sector employees. It is horses for courses.

  457. It depends where one stands. If one stands in Sainsbury's the key worker may be the girl who works behind cash desk.
  (Lord Rooker) Or the person who stops your car being stolen, or someone who comes into this building early in the day to switch on the heating.

Mr Bill O'Brien

  458. You and I have been around this place for nigh on 20 years discussing housing. Today we are discussing some issues that were discussed many years ago. I am concerned about the approach that we have to regional imbalance. If we build more homes in the South, surely we shall simply create a greater problem for increasing inward migration as people from the North move down to the South because the facilities are there. If we build houses in the North, with communications, it will be easier for people to travel to Doncaster, Wakefield or the Midlands, than to somewhere in the South. Are we tackling it in the right way?
  (Lord Rooker) It would be to everyone's advantage if we had a more balanced regional economy in the country, so that inward investment had its first port of call in the Midlands and the North, rather than in the over-pressured South East. However, some years ago we gave up trying to redirect industry. From my own experience I know that industry was directed away from Birmingham but later failed in many respects. It does not work that way. There is the argument that if industry and development cannot go where it wants it may not come here and it will go somewhere else. At the moment there is pressure on the South East, simply because of the geographical location in Europe. We need to improve vastly the transport infrastructure, as we are on course to do, and the serious work on river crossings with the Thames Gateway programme, which is a national not a regional issue, will be as vital for the North and the Midlands as it is for the South East. The rail and traffic infrastructure will be phenomenally improved for investment. In the mean time we have to deal with the situation as we find it. Therefore, there is pressure in the South East. It is not a matter of all of the South East. We have designated four growth areas: the Stansted-Cambridge corridor, the Thames Gateway, which was designated a long time ago by Michael Heseltine, Ashford, where I made a brief visit on Monday, and the Milton Keynes-south Midlands area. Those areas have been so designated so that we can develop the growth in the South East in those areas and stop it happening in an unplanned urban sprawl manner in the rest of the South East. That is not to say that there will not be any building, but we will have growth policies in growth areas, so that we can grow communities and not just housing estates. They have to be job led rather than just housing led. Therefore, we can get a better balance and ease the pressure in particularly the London area of the South East. There is not one policy that you can operate on the basis that it will solve the problem simply by saying, "Well, we will build in the North and put all the jobs in the North". There is not the directional power, and in the past it did not work.

  459. That is part of regional government.
  (Lord Rooker) Yes.

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