Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Question Numbers 409-419)




  409. Can I welcome you to the second session this morning. Could I ask you to identify yourselves for the record.
  (Mr Coulter) Good morning, Chairman. I am Jim Coulter, Chief Executive of the National Housing Federation, on my left is Liz Potter who is our Policy Director, and on my right is Aaron Cahill who is one of the policy officers in Liz's department.

  410. Thank you very much. Do you want to say anything by way of introduction?
  (Mr Coulter) I am conscious of the time constraints, but may I say very briefly that critical to our understanding of what needs to be done is a series of policy interventions and resources to back them which deal with strategies at regional, sub-regional, local authority and neighbourhood level because it is very clear from all the evidence that you have had that problems vary at each of those levels. So, on the one hand, we have spent a significant amount of time concentrating on the problems of failing markets and the need for market renewal, largely in the Midlands and the North, and on the other we need to be more efficient on stock use, particularly empty stock in London, for example, where the demands of homeless people are greatest. So there are very big contrasts and we want to work through those. We have made a significant submission to government in partnership with the Local Government Association and the Chartered Institute for Housing for the Comprehensive Spending Review next year and we would like to hand that to your Clerk as part of the supplementary briefing for you[1].

  Chairman: Thank you. Christine Russell?

Christine Russell

  411. Your evidence seems to suggest that every effort should be made to maintain existing stock rather than demolish and replace. Is that your view?
  (Mr Coulter) I t is a combination of things that we are saying. Clearly there is a requirement to get best practice and efficiency into the use of stock. In the social sector the evidence at the moment is that short-term voids are declining in their proportion, and longer-term voids are increasing. I think that points up to the problem I alluded to in the opening remarks that we see in significant parts of the country, particularly the North East, North West, Yorkshire and Humberside and the West Midlands, where there are growing problems of market failure. The Government has set a detailed programme with a decent homes standard for the social sector, which can be delivered with the resource base coming in if that is sustained in the spending review, but if we have a continued market failure across tenure then that is at risk in the social sector on the one hand and, on the other, hearing some of the evidence you have just had, you have got the problems of failing markets in some of those Northern and Midland cities and towns. There is a combination of policy actions required to maximise existing stock use but also, we think, to rationalise stock through the creation of what we have called a Market Renewal Fund, which does require new resources and new structures to get policy and resource interventions to balance the market and create more housing markets with positive value rather than negative value.

  412. In some areas properties are being demolished. In your view are the right properties being demolished?
  (Mr Coulter) There is a mixture there. Perhaps my colleague could add some more detail to what we have been talking about this issue.
  (Ms Potter) It is quite difficult to set the right balance between clearance, new build and refurbishment, and it will crucially depend on the needs of a particular area. It is also important that the area is not too small because otherwise if you have intervention in one area you can cause problems in other areas. The Market Renewal Fund proposals specifically talk about working across local authority boundaries looking at areas where there is a critical mass population of upwards of 100,000 and then looking at what the particular needs are that are appropriate for that area. That will partly depend on the level of economic activity in an area and it will depend on particular characteristics of the type of housing and review quite strategically what is sustainable and what is not. If I can give you an example of a Northern Metropolitan area. There is an inner core of about 75,000 properties which are particularly at risk, there is an outer ring also at risk but slightly less so, there are suburbs around that which have got very good prospects, and then there is some low demand peripheral areas where there are concentrations of social housing. For an area like that, it is important that there is a strategic review of what needs to be done with those different types of housing. The work that has been done in that area suggests that about 120,000 of those properties out of 150,000 are sustainable but about 30,000 would need to be cleared. It is important in clearing properties that you are clearing the right ones and also that you sequence how you do that clearance because you do not want to send an area into free fall, you do not want to clear it and then find that there are new build properties put in which then make the problem worse in other areas. It is about strategic intervention that is planned and agreed with stakeholders in the areas with regard to whatever business activity is possible, thereby providing sources of jobs and working with residents and stakeholders to agree a broader strategic plan before deciding where clearance is appropriate, where refurbishment may work and where new build may follow. Significantly it should follow rather than come ahead of refurbishment because that would accelerate decline.

  413. Do you have a definition of what is a sustainable risk?
  (Mr Coulter) I do not think anybody has that. That is the holy grail. We are not quite at the Monty Python stage. I think we are a bit beyond that with some of our policy proposals, but we will never take out absolutely all risk from those areas because the housing and economic market relationships will fluctuate.

  414. Do you feel RSLs should have more scope to withdraw from an area where it is pretty obvious that the area is heading for housing market failure which is obviously putting that particular RSL's business at risk? At the moment it is quite difficult, is it not, for social landlords to pull themselves back?
  (Mr Coulter) There are conflicting pressures here. Clearly as independent organisations which face risks, it is one set of issues which boards and senior executives have to consider. On the other hand, housing associations are part of a community's fabric in the same way local authority housing is part of a community's fabric. The difficulty of unco-ordinated action is that you may resolve the business problem for one organisation but you will not necessarily resolve the fundamental area problem so there is a need for a strategic approach and joint activity and action. In Manchester, for example, the Federation, the Housing Corporation and local authority are seeking to establish a framework where we look at the impact of neighbourhood management policies and work together on how investment decisions or re-investment decisions are taken by the local authority and by the housing associations in the area, how new activity may be brought on stream to replace housing that has no longer got any use and also how services might be better co-ordinated. I would certainly, as the Chief Executive of the trade body, discourage our membership from taking individual decisions because they may solve their own problem but simply ripple out the problems to other organisations.

Helen Jackson

  415. Have you examples of associations within your Federation where the board has taken a decision that their continued operation in a particular area is not available and then found that that has led them into financial difficulties?
  (Mr Coulter) No. I think there are examples of organisations who are rationalising their stock in two separate ways. Some of the larger national organisations which work across the country—and I can give you the example of the English Churches Housing Group which works across two-thirds of local authorities—they are looking at a programme of consolidation of their stock into more effective management units and disposal helping to consolidate in some local areas the stock of other RSLs.


  416. Is that an excuse for them to get out of some of the more difficult bits of the market?
  (Mr Coulter) Their strategic approach is about making sure organisations on the ground whose property portfolios may not be large enough to manage those risks have a more consolidated portfolio. These are willing exchanges, they are not organisations who are dumping their problem elsewhere. The Regulator, the Housing Corporation, is involved with the technicalities of disposal consent to do that.

Mr O'Brien

  417. You refer to a strategic approach for areas of deprivation and the question of revitalising a housing market in areas is another issue that has to be addressed. Is there an effective body, either regionally or nationally, with responsibilities for ensuring revitalisation of areas either in the private sector or areas where the neighbourhood is in decline?
  (Mr Coulter) In our view this is the major policy gap—that there are different initiatives—but we are slipping down the middle of the different parts of local government and governance and national policy initiatives delivered on the ground. The evidence is that housing regeneration spending has been declining because the regeneration costs of capital and revenue funding have become more specialist and the creation of the single regeneration budget transferred to the RDAs has led to less housing spend through the SRB. You heard the evidence of the New Deal for Communities and the Neighbourhood Renewal Fund and how the housing connection for the neighbourhood is not being strongly made, so there are disconnections there, and the point which my colleague Liz Potter was making about the cross-boundary problems of markets is also something where there is not an established institutional framework to deal with that. So part of the thinking behind the market renewal approach is as the regional governance involves responsibilities at regional level to co-ordinate either through the local government offices in the regions or, where they become established, the elected regional assemblies, there should be a framework for strategic decision taking to co-ordinate these different activities and investment streams in order that we do not have these gaps.

  418. What does your research show the amount of money that would be needed at this moment in time to carry out revitalisation?
  (Mr Coulter) We have estimated figures over a ten-year period of up to £5 billion for this proposed fund.

  419. There is a statement by the Government on 16th November about the Generalised Needs Index. Does this show any indication as to the introduction of low demand areas and the problems that go with it?
  (Ms Potter) It helps a bit. It is not sufficient to deal with the sort of issues that we are talking about in terms of renewing a whole market. What it does is to increase resources towards the north by about two per cent, which is a redistribution factor of about £15 million, which helps a bit. It is slightly offset by the fact that the Housing Needs Index has gone the other way, resources for housing associations have gone the other way, so that there is a factor pushing investment for new build housing to the south. What we would like to see is the way resources are resolved for regeneration should be separated from how resources are agreed for new housing need.

1   Note by witness: Available on the National Housing Federation website: Back

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