Examination of Witnesses (Question Numbers
WEDNESDAY 5 DECEMBER 2001
420. Was that part of your submission to the
(Ms Potter) Yes it was.
421. What other information did you give to
the Department during the consultation exercise which would obviously
help to influence this statement?
(Ms Potter) One of the things we said is that the
factors that are used and the calculations that are used tend
to have a push-pull effect so there is always an issue about dampening
the different factors that are then used so you end up by balancing
the effect. What we said was there should be a clear government
decision on the amount of resources that should be used for regeneration.
That should be applied using factors that just relate to the need
for regeneration and renewal and the same for new housing need.
422. Have you anything to offer as to where
resources should come from other than public funds to meet that
£5 billion gap?
(Ms Potter) Part of the way in which that £5
billion over ten years has been calculated is specifically to
have a long-term strategy over ten years in those areas, so that
you start to send some signals to the stakeholders in those areas
and you start to increase the value in those areas so that you
can then draw in private finances. The thinking is that it will
probably take 20 years to really renew a failing market and in
the first ten you need that investment. You do not need very much
in the early stages where you are developing the strategic plan,
you then need to step up to around £500 million a year for
about 12 areas.
423. Regeneration means more than just renewal.
What do you have to offer for a kind of approach to an area where
there is a decline in the housing market? Regeneration means more
than just renewing housing. What do you have to offer for that.
(Mr Coulter) There is a range of initiatives in which
housing associations have been involved, both capital and revenue
programmes, so increasingly you will see housing associations
at the local level not just renewing housing stock and replacing
it but involved in employment initiatives and in other community
based initiatives, child care promotion and health promotion and
so on to take, using the cliché, an holistic approach to
local community requirements.
(Ms Potter) The aim is that you bend mainstream funding
to fit with a broader strategic approach so you are actually working
with RDA strategies and all the rest of it.
424. What do you think are the costs and benefits
of applying a reduced VAT rate for work to existing social housing?
(Mr Cahill) We certainly think it would be beneficial
in an empty homes context because the repair costs to bring a
unit back into use would be subject to VAT if it was within the
three-year limit set by the Chancellor last year. In that very
crude case it would be a very beneficial figure of 17½ per
cent saving. In the broader regeneration context, it is certainly
something which many parties have agreed on for some time. It
is invidious that 17½ per cent is charged on the cost of
refurbishing a building on a brown field site and yet a similar
charge is not made on a new build cost on a green field site or
425. I certainly agree with that. Would you
say that there might be a risk that VAT harmonisation at five
per cent could significantly reduce the level of brown field new
(Mr Cahill) Not necessarily. Brown field sites will
vary according to each one. Some will have existing buildings
on them and some will not. Even on the sites where there are not
any buildings at all, there are very significant costs regarding
bringing the brown field up to a standard which is acceptable
to the local authority environmental health people. So very much
I would say swings and roundabouts. I do not think there is any
definitive answer to your question but certainly I think if we
are serious about re-using existing buildings in a more sustainable
way really the VAT issue has to be addressed.
426. Is low demand the most significant problem
in relation to empty properties or are there other significant
problems in other areas?
(Mr Coulter) Low demand is a clear driver
in significant parts of the North and Midlands and, if you look
at the data, it is very clear the further south you move the less
empty housing there is, and we get to the point where the natural
friction in the market for change is where you see the size of
empty stock. But even there we still take the view that there
is a combination of both management and other actions which need
to be taken to maximise that stock so, for example, in London
there is a significant use by housing associations of temporary
leasing schemes to support local authorities' homelessness strategies.
Those schemes are made extremely difficult by the way in which
housing benefit is currently administered and delivered in far
too many London boroughs and we have made proposals to Government
to streamline that, not simply to support the Government's attempts
to get better administration of housing benefit but to introduce
a streamlined system of bed and breakfast related housing benefit
payments to diminish the strain on the public purse of bed and
breakfast costs by having more cost-effective use of housing benefit
and temporary leasing schemes. There are ways in which, even where
property markets are tight and there are reasons that owners do
not want to sell or let themselves directly, that social housing
organisations can be involved in positive strategies that will
assist other social and public policy objectives.
427. That is one policy change you would like
to see. Are there any other policy changes you would like to see
that would address this problem?
(Mr Coulter) That is the principal one. Others we
feel clearly relate to the planning field. If I could go back
to what my colleague was saying, that one of the problems in the
North in particular is the over-supply of planning permissions
for new housing at a time when there is lack of demand, and there
needs to be a clear focus in the revisions to PPG 3 (which are
prospective again with the Planning Green Paper) in making sure
that local authorities are empowered to take out the excess supply
of planning permissions to incentivise moving back to brown field
428. If you were to remove those planning permissions
would not people rush and put half a house on the site to indicate
they were going to do it?
(Mr Coulter) I guess that is a risk but it depends
on what the existing and extant planning permissions are in relation
to the outline permission, which may have been given some time
ago and perhaps too easily gets renewed automatically without
any consideration of the inter-relationship between these different
factors that we are talking about.
Chairman: On that note, can I thank you very
much for your evidence.