TUESDAY 15 OCTOBER 2002
Andrew Bennett, in the Chair
Mr David Clelland
Examination of Witnesses
COUNCILLOR MICHAEL KEITH, Deputy for Regeneration, and MS MAUREEN McELENEY, Head of Housing Strategy, Tower Hamlets Council, examined.
(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 London Partnership.
(Councillor Keith) We are happy to go straight to questions.
(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 Rackman - a landlord appears effectively renting out that stock to some of the poorest communities in London.
(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 Hamlets - that 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.
(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 State 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.
(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
(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 -----
(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.
(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.
(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.
(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.
(Ms McEleney) Yes.
(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 them.
(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.
(Councillor Keith) In terms of some of the Estate Regeneration Challenge Fund Programme, yes, we do.
(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.
(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.
(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.
(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 in particular.
(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 employment sectors.
(Councillor Keith) Yes.
(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.
(Ms McEleney) It can be very high quality, and it is capable of being quality-checked before it arrives on site, which is great.
(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.
(Councillor Keith) About £230 million.
(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.
(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, will also be excluded from the Decent Homes Standard, 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.
(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.
(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 incentives 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.
(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
(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.
(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.
(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 years 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 -----
(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 ----
(Ms McEleney) Yes.
(Councillor Keith) And the scale of demand.
(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.
(Councillor Keith) I think it was about 500 units, off the top of my head.
(Ms McEleney) Yes, it is around that number.
(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 -----
(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?
(Councillor Keith) Yes.
(Councillor Keith) I think that is a question which almost needs to bounce back to national legislation. I think it is an absolutely fair question, but I think it is also something that many of the registered social landlords, who will be the major players in this, need to answer and it is a question which also potentially triggers off debates about the quality of new build within an urban renaissance and thinking back to issues of Parker Morris standards and so on which opens up another debate which I think is a very important debate, but maybe not one to capture in two sentences. I do not think it is one that you could expect again a single authority or a single social landlord to respond to, but I do think it is or it should be encumbent if those resources are made available that the quality is radically different from what we saw in the 1960s and 1970s.
(Councillor Keith) I think there are examples of high-density new build, stuff Piers Goff has done recently in Scotland, where you can get high density and affordability. I think it raises major questions of design as much as major questions as to the specifics.
Chairman: I think we can leave it at that. Thank you very much for your evidence.
Examination of Witnesses
COUNCILLOR DAME SALLY POWELL, Deputy for Regeneration, MS ELAINE ELKINGTON, Director of Housing, and MR NIGEL PALLACE, Director of Environment, Hammersmith & Fulham Council, examined
(Councillor Dame Sally Powell) I am Dame Sally Powell, and I am terrified!
(Ms Elkington) I am Elaine Elkington, Director of Housing.
(Mr Pallace) And I am Nigel Pallace, Director of Environment.
(Councillor Dame Sally Powell) Straight into questions.
(Councillor Dame Sally Powell) Well, I will ask Elaine to do the detail, but in principle we currently have 450 families in bed and breakfast. Every year we do a housing need survey which is done by Fordham's and we currently estimate that we need 8,354 new homes to meet the needs of all the people in the borough.
(Councillor Dame Sally Powell) Principally two things which are land value and lack of resources. We have got sites, but we do not own them, they are in the private sector, so land value and resources from the Corporation.
(Councillor Dame Sally Powell) We have done amazingly creative things with the private sector. The St George's Imperial Wharf development is a model of a private-public partnership where we have achieved 50 per cent private sector housing and 50 per cent affordable and not just straight RSLs, but it is discount market rent, discount market sale, student accommodation, elderly people and RSLs, but there are huge problems dealing with developers. One is they are not interested in open-book negotiations. Some are, and I would commend Chelmsfield. They are absolutely superb. I would criticise enormously St George's. They are not interested in open-book negotiations, and there is another problem in terms of the associated section 106 agreements in terms of what comes first and we need the affordable housing first, whereas obviously the developers want the private housing first, and the affordable housing does not always then get delivered. For example, and I will ask Nigel to explain, we are just having huge problems with St George's because they have just cancelled a contract with Eugema(?) Housing Association because we refused to give them additional planning permission.
(Mr Pallace) Yes, planning permission was given following extensive negotiations and having granted permission and commenced the development, the developer has now come back, saying, "We would like planning permission for some more units". This was not possible given that we already, we felt, allowed the maximum levels sustainable in that area and we were in effect told that unless we were supportive, then they would not accelerate the delivery of affordable housing. The agreement that requires the phasing of the scheme requires that they provide certain tranches of affordable housing linked to the amount of market housing that they are providing. The delays in the scheme meant that we were unable to use up housing allocations that the housing corporation had made available, so it effectively slowed down the progression of affordable housing once planning permission had been made.
(Mr Pallace) It is a very complex issue because of the complexity of the legal agreement.
(Councillor Dame Sally Powell) I think it is fantastic that the Government is putting so much money into housing. I had a meeting yesterday with the Corporation about the regional housing allocation programme and their new policy and there is a real difficulty in that my criticism of the Government is that they are into the numbers game, which they have to be because there is such a huge housing need and all the predictions are that we need X thousand homes in the next ten years or whatever, but my concern about numbers is that you are then pressed into the value-for-money argument and high land value areas do not represent value for money. The total cost indicator is such that I think we are about to embark on doing what we did in the past, like building boxes which are not going to be suitable and/or building unsustainable communities. The unsustainable community bit is about we want mixed communities, that is what we aspire to, we want mixed communities. Now, I also have this conversation with Sir Robin Wales from Newham because, if you like, London is such an interesting microcosm of policy and the policies of Newham have to be different from the policies for Hammersmith & Fulham. We need affordable homes because we have got so many people in need. They need much more private sector housing so that they have less dependency on social services provision, et cetera. Therefore, in London you have to have a different policy for different local areas. My concern about the Corporation is that they have almost a blanket policy for London and they do not understand some of the dynamics and that what we will end up doing is building the numbers game down the Thames Gateway and then you do not have a sustainable community in Hammersmith & Fulham because it is going to cost more there, so there are two things. Either you do something about land values, which I do not think any government will ever do, it is a bit radical doing something about land values, or you pay more money to high land value areas so that you have got key workers and these are not people just on benefit, but virtually everyone is employed now, so this is for key public sector workers near big hospitals, Chelsea, Westminster, Charing Cross, Hammersmith. They all need nurses, administrators, occupational therapists, et cetera, and we need more houses in high land value areas.
(Councillor Dame Sally Powell) Yes.
(Councillor Dame Sally Powell) We have got sites.
(Councillor Dame Sally Powell) I might need to bring Nigel in, but I would just say first of all that we have never CPO-ed a piece of land at all, but if we wanted to, we have got the powers to do it and now that we have got the London Development Agency, that has been incredibly helpful in bringing a bit more weight to it.
(Councillor Dame Sally Powell) Yes, it is a very useful threat, I have to say. I often ask Nigel, "Can't we CPO that land?", and he always comes back and says, "No, we can't".
(Mr Pallace) There are three key points here. One is that the planning policy framework may not actually seek housing where we try to secure housing because of our exceptions policy approach, which has been very, very effective, but the land that we are talking about is usually dedicated for employment, so a compulsory purchase set against that back-drop would hit the first snag.
(Councillor Dame Sally Powell) We use our employment policy to ----
(Mr Pallace) It is partly a means to an end and it is partly to protect the genuine need for employment land. The policy would not have been sustained if we did not need employment land, but the policy is effectively saying that we have such an important and pressing need for affordable housing that we are prepared to compromise delivery of the employment policy to a degree, but only in order to achieve affordable housing where the need exists. If we did not have that, there would be large amounts of market housing being developed on sites where we are able to protect it for affordable housing. This has effectively been a means of achieving a 100 per cent target for affordable housing which would otherwise not have happened and that is largely why we have secured so much affordable housing as a percentage of overall residential development compared to others.
(Ms Elkington) To answer your question directly, no, but to my knowledge not many boroughs do have that sort of information. What we are doing is working on a sub-regional level with local RSLs and our employers group, which was established through our local strategic partnership, to try and bottom out on those figures. In terms of occupational groups, we only have rough estimates. Obviously the sort of information the Council has from its own records is available to us, but we have found a reluctance from other agencies to give us that information and one of the reasons they are reluctant to do that is because we may then as a local authority say, "You, as an employer, have a responsibility to try and deliver some of this housing yourselves".
(Councillor Dame Sally Powell) I am sure we could get those figures for you and produce a one-sheet table, but what we have also done, and I do not think any other authority has yet done it in the country, but we are just about to launch it, which is that we use some of our Neighbourhood Renewal Fund to employ somebody to write a key worker housing strategy which we have developed in partnership with all the public sector and it might be helpful to you to have that because it is, I think, the first in the country and we are trying to get all the agencies to work together. I have a real problem both with the Corporation's definition of 'key worker housing' and I have a real problem with the Challenge Fund where they have top-sliced for the key worker because they have restricted the definition.
(Ms Elkington) Yes, I think we would always go for the bricks and mortar subsidy. One of the issues about the starter homes initiative was precisely that, that house prices would be inflated whatever the subsidy level was, £25,000 or beyond, so I agree that the issue is about subsidising the housing and having something in perpetuity for other people because, as Councillor Powell says, our housing strategy for key workers has indicated that you might be a key worker at one stage in your life with one need, but actually you move through the spectrum as you go on from being prepared to share with nine other people to actually aspiring to have self-contained accommodation on your own, so it is a continuum and I think the challenge for us is to actually design a strategy which meets the needs of all those life cycles, if you like, of the key worker.
(Councillor Dame Sally Powell) If I can deal with shared ownership, I have always been quite a supporter of shared ownership in that I own my own house and how ridiculous for me to be a hypocrite and say that no one else can have ownership of anything. I would be a much greater fan of some sort of equity scheme whereby a quarter of rent went into capital, you know, you got some capital out when you wanted to move and then you used that capital and purchased something or even purchased an equity share. The problem in my borough is that the cost of the equity share is such that working-class people cannot afford it.
(Councillor Dame Sally Powell) If you are a nurse, you earn how much - £16,000? To get into equity share, and we have a list of how much people earn, a weekly affordable housing cost is £106 a week, so you cannot afford the rental element and the mortgage element. You just cannot. You have not got the cash. You have not got the net income.
(Councillor Dame Sally Powell) Yes.
(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 ----
(Councillor Dame Sally Powell) No, we work in partnership with them. We go for a commissioning process and ----
(Councillor Dame Sally Powell) That is correct.
(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.
(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.
(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.
(Councillor Dame Sally Powell) They are making a difference in some parts of the country, but they are not working in high-value areas.
(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.
(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 Pallace says, the difficulty then is, even if they can secure that bit of the equity, they still have to pay the rent on top.
(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?
(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.
(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.
(Ms Elkington) Eight thousand nine hundred and thirty four.
(Councillor Dame Sally Powell) No, we are losing, because the Right to Buy means we have a net stock loss.
(Ms Elkington) As Councillor Pallace 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.
(Mr Pallace) This is back to the 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.
(Mr Pallace) It has led to a significant proportion of all of the development we have carried out over the past decade.
(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.
(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.
(Mr Pallace) The powers we have are broadly sufficient, provided our exceptions policy approach is supported and not attacked in government guidance. Because it is not widely operated, we sometimes find ourselves having to argue against proposals which may be helpful in other areas, for example, setting targets for affordable housing delivery at say 50 per cent or 60 per cent. We set a target of 100 per cent in our exceptions policy sites, so those targets undermine our approach to deliver affordable housing through that means.
(Mr Pallace) We have taken an approach where we do not want to set a numerical target. We have the maximum reasonable proportion as the target written into our development plan, which has been very effective. We have started from 100 per cent in negotiations in the planning context, and negotiated down from that. We have indicated that 65 per cent would be a benchmark monitoring target, because that is what we have achieved over a decade, but we do not want to set a target that becomes interpreted as a maximum by the market, which it would be.
Chairman: I am afraid we have to cut you off because we are running out of time. Thank you for your evidence.
Examination of Witnesses
MR PETER STUDDERT, Director of Environment and Planning, Cambridge City Council; MR KEITH DAY, Administrative Director at Addenbrooke's NHS Trust; MR DAVID GREGORY, Programme Manager, Keep London Working; and MR PAUL HAYLER, Research Co-ordinator, Keep London Working, examined.
(Mr Studdert) We need lots of affordable housing. I could not put a figure on it, but the demand is huge. We need all sorts of affordable housing, both social rented housing and shared ownership and intermediate housing, key worker housing, as well. The reason for that is because we have a very prosperous local economy. We are also an increasingly important regional centre as well - a lot of regional institutions are locating in Cambridge - yet within the city we have a very constrained land supply because of our tight Green Belt. The pattern of house building over the last 20 or 30 years has been a pattern of decentralisation of housing beyond the Green Belt, to expanded villages and to the market towns, but a lot of the jobs and other facilities are still back in Cambridge, which has obviously led to an increase in long-distance commuting and in traffic congestion, and also has put a very high premium on property within the city. The key worker housing study that was carried out for us last year I think has put a ratio of 1:6 for the average salary to the average house price. I think that has probably gone up to nearer 1:7, if not 1:8 in the last year, where house prices have gone up by something like 26 per cent between June 2001 and June 2002. So we have an increasingly dysfunctional city, and the availability of affordable housing close to where people need it, which is close to where the jobs are, is the main issue for us.
(Mr Studdert) The average house price overall is round about £150,000 now, so for a starter home it would be somewhat below that.
(Mr Studdert) I think it is right for government to try as hard as it can, but from the work that has been done looking particularly at the Cambridge economy, a lot of our growth comes from the cluster effect of high technology businesses in and around Cambridge, particularly the start-ups and spin-offs from existing companies, and those companies stick very stubbornly to Cambridge. A lot of it is to do with having access to the employment pool of specialised people; a lot of it is just for purely personal reasons, that that is where people already are and already have their families. So because of the dynamics of the high-tech sector and the start-ups - some of which fail, but some of which grow to be quite large companies - I think the Government could only influence that at the margins, and there is a danger that if one squeezes it too much at the Cambridge end, all that happens is a lot of that economic activity would relocate abroad rather than to another part of the UK.
(Mr Gregory) It is both things. We are providing a number of properties, up to 175 between now and early 2004, and we are researching them and organising other research programmes around that. We are about halfway through the research programme.
(Mr Gregory) We have been surprised by the findings of our own waiting lists and the people we have let properties to. One thing is that the key workers that we are letting to are older than we expected. When the SRB programme started, we had an idea of key workers as being largely professional people - nurses, teachers, police - at the beginnings of their careers, who needed initial help with housing. That is certainly the case, but we have found that almost half of the key workers we are letting to are over 35, and are looking for more long-term housing solutions, rented and shared ownership. Secondly, we have not been able to let to lower income key workers. Again, when we started, we imagined that key workers were probably earning starting at around £15,000-£18,000 a year and could afford about 35 per cent of their gross income as rent. What we have found is that we have not been able to let. We have only been able to let about two flats to bus workers. Bus workers' incomes start at about £15,000 and they get about £19,000 if they earn overtime. They cannot afford the rents we are offering, and they represent, we feel, quite a large working population of clerical and semi-skilled workers that are excluded from the housing provision at the moment, partly because they are not in severe housing need, and partly because the rest of the housing that is available to them is too expensive. This particularly affects families.
(Mr Gregory) A lot of them will be families. Hospitals have waiting lists. Human Resources departments at hospitals have waiting lists which have quite large numbers of families in ancillary work that cannot find housing. We have found that what people will afford - they will find other ways of coping in the short term - is about 25 per cent of gross income. That is what they pay on average as rent. Couples and people that share pay less, at about 22 per cent, and families pay more, at about 30 per cent on average. What is quite interesting is that we have found 30 per cent is about the limit to which private insurance schemes that insure private landlords will indemnify rent, and our experience has been that you get people defaulting on the rent much over 30 per cent of gross income.
(Mr Gregory) Yes, I am sorry to say. Yes, it is very important.
(Mr Gregory) One of the characteristics of people we are calling key workers is that they are employed locally. They are in service sectors locally.
(Mr Gregory) Yes, there would be scope for some.
(Mr Day) There is very clearly a direct correlation between our ability to recruit staff and our ability to deliver the services that we are charged with delivering. In the evidence we have quoted to you the impact of our inability to recruit staff and our having to close beds in consequence. Of course, I do not attribute the whole of our inability to recruit staff to issues of housing, but I would say to you that it is a very significant factor in that equation.
(Mr Day) Approximately one ward of patient capacity, yes.
(Mr Day) People frequently want to come to us, because they generally speaking think Addenbrooke's is a good place to work at. When they come for interview and start to look around, you can see the look of disappointment that comes across their faces as they realise they are either going to have extreme difficulty or they are just not going to be able to afford to come, and therefore they will either decline at the time or they may accept and fail to take up appointments. This depends on the staff groups. The position varies tremendously across the whole spectrum of people that we are dealing with. It is a totally different situation if you are talking about some professional classes at the higher end of the spectrum as opposed to nurses or indeed ancillary workers.
(Mr Day) I find it hard to think that we are doing things that it is not appropriate for us to be doing in Cambridge. Clearly, there is some scope amongst specialist services for those to be provided elsewhere, but then those services can only be provided where the expertise is, and a lot of our expertise in specialist areas is associated with our close relationship with the University of Cambridge. It is not something that can be simply shifted all round the country. Also, an awful lot of this work we are talking about is work for our local population, because as well as being a specialist centre, we do provide the vast majority of the district general hospital services for Cambridge and the surrounding area.
(Mr Day) Indeed so, and I would not hold that out to you as being the sole answer. Also, I would say nurses are an extremely mobile element of the work force, and they will simply move around depending on where the opportunities and advantages are. It is very easy to get into a game of tag or catch-up, where we pay a little bit more, people come to Cambridge, somebody else then of course suffers from that, and then they up the rates a little and more people move away. It is not a permanent solution by a very long chalk.
(Mr Hayler) Not at this stage; only broad comparators. We have taken the particular groups we have to try and get a cross-section of type of occupation and type of income, so bus workers, hospital workers through to professionals like teachers. We are conscious that turnover rates in other industries are not dissimilar in some questions, but I think it is the case that the extra pressures you get in London and the South East occur because of the structures of wage rates.
(Mr Hayler) Inevitably it is both things. The issue here is, I suppose, understanding, rather as was suggested by the hospital trust experience, that there is a range of people in different housing situations, in different occupations, who need different sorts of housing solutions. There are pay and conditions factors impacting on recruitment, but housing, particularly in London and the South East, is impacting on retention. The types of solutions and housing interventions you need vary according to where people are in their life cycle and in their employment cycle.
(Mr Hayler) I do largely agree with that. I think it is partly to do with quality, it is partly to do with travel-to-work arrangements, it is partly to do with being cheaper. Being cheaper is what they said. This is from the teacher survey.
(Mr Hayler) We do know that the majority of teachers who actually leave London leave predominantly for housing reasons.
(Mr Hayler) We think it is to deal with their travel to work and better housing.
(Mr Hayler) It is, but the principal reason they give us - and this is from surveys of actual leavers - is for housing reasons rather than promotion and job. So the reason why they leave London as a teacher and stay in the profession is predominantly because of housing factors. The kinds of housing solutions and interventions you then have to employ vary according to what type of position they are in their cycle. We argue that relatively small improvements in how long people stay in jobs, whether in the hospital sector or the teaching sector and others, makes quite a material difference to the quality of that service, and therefore we are not saying that you simply provide accommodation through an RSL at an intermediate rent and that stops people from leaving London - people leave London for quality of life reasons and all kinds of other reasons - but you can make a difference if in this range of workers, modestly employed people, you improve the social rented side, the low-cost ownership side, and so on, at different points where they are.
(Mr Hayler) Absolutely. There is a fundamental point here about what is the housing market for a key worker: is it borough-based or not? Clearly, it is not a borough thing. Not only may you not be able to solve housing pressures within your borough boundary, you clearly cannot tackle labour sectors from a borough perspective. You are going to have to think in terms of roles of boroughs not just in how they assess and understand but how they collaborate along with the GLA.
(Mr Studdert) From a Cambridge perspective, a range of solutions must be tried; there is no one panacea. There should be a lot more experimentation in different options which suit local circumstances, but I think also one must not forget that a lot of the problem is a question of supply. In places like Cambridge a lot of it is just to do with over-restrictive planning policies. I think where one can actually increase the supply without harm to the environment, one should certainly do it, and we need to be a lot more skilled in building well so that new development is seen as being an asset rather than a threat. By increasing the supply in places where it is needed, we are never going to bring prices down, but at least we will stabilise the market, and also, in releasing more land, that gives us more opportunities to release a proportion of that land for affordable housing, including key worker housing, and in Cambridge we are looking at up to 50 per cent of housing schemes that would fall into that category. I just think one has to try a range of solutions.
(Mr Studdert) We are. We are putting in a bid to the current Challenge Fund for an intermediate scheme that also involves some pre-fabrication as well. That obviously has to be done very quickly, within the timescale that we have been allowed. So we are taking all the opportunities we can. But I think there are issues, particularly in areas like Cambridge, where local employers can be put under some pressure to contribute towards providing housing for their employees - and that would be private sector as well as public sector - and there should be opportunities to do that as well.
(Mr Studdert) I think it could, but particularly if we are being smart in how that money is used in the intermediate sector, from the evidence we have put in, we have quoted a figure of 60-70 per cent of social housing cost comes from government subsidy, and that is obviously a very high proportion of subsidy for that sort of housing. One can obviously get an awful lot more low-cost home ownership in intermediate housing for a given amount of money than one can social housing. So in areas where there are particular pressures for this intermediate sector, I think we need to look at intelligent ways of making that money go as far as possible. That is certainly a great help.
(Mr Studdert) I think it comes back to this problem of trying all sorts of different arrangements, and using local knowledge, local institutions who have ideas. I think one should be trying as many options as there are, and it is obviously a new field. We are very much newcomers to this game, as a lot of other people are, and one should not be putting too many restrictions. There are things like self-build, etc, which I think can be quite important as well - at the margins, but these are other things which should be tried.
(Mr Studdert) As I said, we are putting in a bid. I think there are difficulties with the way that Fund has been set up. We were only given six weeks' notice to put in a bid. We put in a joint bid with Bedfordshire Pilgrims Housing Association and one or two other local housing associations to provide housing on what is currently a private sector site, which is going through the planning system, to provide within the 30 per cent of affordable housing that we will negotiate a mixture of shared ownership and rented housing, using a pre-fabricated, timber-framed system. The difficulty we have in putting together bids like this at such short notice is because of our shortage of land, and because of our dependence on the private sector to bring forward the sites. We are not wholly in control.
(Mr Studdert) Yes. What would be great would be to have a three-year rolling programme, which is obviously happening in other sectors, so that one can plan properly for that money being spent, and obviously the Challenge Fund is very welcome, but as a "quick fix", it is obviously only going to go so far. We welcome particularly the idea that a lot of this funding is going to areas that are under pressure for growth. In a way, I think the over-centralised system of local government finance has discriminated against places like Cambridge. For instance, we raise something like £55 million a year in business rates but we only get £5 million of it back to spend. It is about time that places like Cambridge were recognised as being in need of some help.
(Mr Studdert) As I say, we have within six weeks put together this one bid, which was pretty good, I think. We have to move as smartly as we can in relation to the opportunities that come forward, but if all our sites are coming forward on the back of private sector schemes, there are always going to be timetable problems. For instance, our largest brownfield site at the moment, which is actually on a site owned by the Government, which is going to deliver something like 380 units altogether, of which 30 per cent will be affordable, has been held up for about three years with the PFI scheme. We would have had that site coming through three years ago if it had not been for the wonders of that mysterious process. We do the best we can.
(Mr Studdert) I cannot say off the top of my head.
(Mr Day) No; they have been modernised. We modernised them in conjunction with a housing association, and they are suitable for the sort of staff that use them. That is mainly either medical staff who have to be on the site because of their service commitments, or students, nurses and doctors in training, and increasingly overseas nurses, who are recruited and coming into the country and find it preferable to live in the hospital's accommodation whilst they find their feet in the local community, or indeed decide whether or not they will stay in the local community or go back whence they came.
(Mr Day) There is absolutely no scope within the hospital estate at the moment. We are in the process of acquiring further land for essential hospital building. Part of that process will include housing.
(Mr Day) The exact amount is to be determined.
(Mr Gregory) Yes, it is, but the most efficient way to use pre-fabricated schemes is to put them on to quite large sites, though, as you say, there are school sites and hospital sites and other small sites where we can use pre-fabricated buildings.
(Mr Studdert) I have had a figure passed to me by a colleague of 120 in the last 12 months.
(Mr Studdert) In terms of figures of property on the ground, it has been very modest. Over the last 10 years it is only about 84 houses, but we have a lot of others, several hundred, in the pipeline that are coming through; some of these slightly larger brownfield sites that have been held up for one reason or another. So what we have at the moment is modest, but we have aspirations for more coming through.
(Mr Studdert) At the moment it is 30 per cent. There is another opportunity that we are taking advantage of to the west of Cambridge. There is Camborne New Settlement, which is in South Cambridgeshire district. That is about eight miles outside Cambridge, beyond the Green Belt. We do have nomination rights into 50 per cent of the affordable housing that is coming through that scheme, which will deliver about 400-500 houses in total over the next 10 years. That is where a lot of the development is happening.
(Mr Studdert) No, there is no evidence of that. For the schemes that are coming through at the moment we are also trying to ensure that the affordable element is pepper-potted within the scheme rather than being a ghetto in the back corner of the site, so that there is a genuine mixed community and there is no external evidence of different sorts of tenure, which we think is quite important. Developers are responding positively to that. Also, developers are beginning to respond quite positively to the increase. I had a meeting with a developer yesterday about some of the potential Green Belt release sites that were coming through, and they seemed quite happy with the idea of talking about 50 per cent affordable housing.
(Mr Studdert) It is difficult. Quite a lot of our stock is relatively low-density, semi-detached houses that were built during the Thirties or during the Fifties at densities well below 20 to the acre. We have taken opportunities where we can to redevelop and to densify some of these sites, but obviously, where you have existing sitting tenants, that becomes difficult to do on a large scale, but we recognise that there is potentially more that could be done to make more efficient use of some of the low-density areas of Cambridge.
(Mr Studdert) No, it has not. There are sites around within the sub-region, particularly Ministry of Defence sites, one of which has now been identified as a new settlement site at Oakington as part of the current Structure Plan review, where a large part of that land is owned by the Government, and obviously that is being brought forward, but the way in which that is being marketed will be as if it were a private site, I suspect. The developer who will be developing that for the Government will, I imagine, still only expect to put a maximum of 50 per cent affordable housing, and that the Government would reap the benefit of the receipt from the value of that land.
(Mr Studdert) We have done an urban capacity study and we have identified some brownfield capacity within the city at something round about 6,500 properties. A lot of those are on difficult sites, and quite a large chunk of that would involve redevelopment of our sewage works, which is not going to be an easy matter. The strategy does allow for the maximum use of what few brownfield sites we do have, but the target that we have been set through regional planning guidance for the sub-region as a whole is 2,800 houses per year to 2016, which is something like 40 per cent higher than the rate we are building them at at the moment. So 6,500 units within the city is only going to be a small proportion of that sub-regional need. We have identified sites to come out of the Green Belt that would provide another 8,000 houses up to 2016 and also a reserve of white land for use beyond that, so that whatever new Green Belt boundary we define is robust for the next 25-30 years. So we look longer than the current planned period so that we do provide some certainty for the future definition of the Green Belt. Obviously, the new settlement which I mentioned at Oakington is also part of the package, and that is beyond the Green Belt. The main site that we are looking at within the Green Belt is actually Cambridge Airport, which is on the east side of Cambridge, which we are seeking to relocate within the sub-region and Alconbury is seen as being one of the most likely places that it could go. So technically that qualifies as a brownfield site anyway, and that site alone would have capacity for up to about 10,000 houses built at an urban density. So we feel that there are obviously some parts of the Green Belt which certainly we would never want to see developed, but through a fairly careful analysis of the opportunities, we feel that, particularly on the east side of Cambridge, which is relatively flat and characterless, there are opportunities to expand Cambridge, as long as we can do it well. It comes back to this quality issue: obviously we have to do it to a high quality, but we feel the opportunities are there, so we should take them.
(Mr Studdert) I think there was a suggestion at a debate in this House only four months ago that Jim Paice precipitated, and I think he was suggesting that Cambridge should expand somewhere else and the university should expand somewhere else. I think the university see it differently. Interestingly, the colleges have built at quite high density and give us quite a good model for how we might expand Cambridge.
(Mr Studdert) There are still violent objections, but we try to ride them out, or reasonably anyway. Densities are going up certainly above 40-50 to the hectare, sometimes even higher in very central sites. But one should not under-estimate the amount of local opposition that one gets, because people are concerned about the densities. If it is going to lead to more traffic, particularly if we are cutting down on car parking, people then say everyone will park their cars on the street outside their house. It is no easy matter to increase densities on urban sites whilst maintaining some sort of democratic input from the local community.
Chairman: On that note, can I thank you very much for your evidence.