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


Examination of Witnesses (Question Numbers 420-428)

MR JIM COULTER, MS LIZ POTTER AND MR AARON CAHILL

WEDNESDAY 5 DECEMBER 2001

  420. Was that part of your submission to the consultation exercise?
  (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.

Ms King

  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 any site.

  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 build housing?
  (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.

Mr Wiggin

  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 properties.

Chairman

  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.


 
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