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


Examination of Witnesses (Questions 440-459)

MR BOB OSBORNE AND MR CHRIS BROWN

WEDNESDAY 5 DECEMBER 2001

  440. Is this being fair to the person?
  (Mr Osborne) We have been in detailed consultation in this particular instance with all the people in the community. There is a local community group working on this and they are basically forcing us down this line.

Mr Wiggin

  441. Do you not think Salford Council to a large extent is responsible for this unfortunate situation? They promised all this regeneration and now they are only prepared to pay a pittance for the house.
  (Mr Osborne) To answer your question in reverse, Salford Council can only offer open market value for the property. The open market value is only low because of the extant housing market. Salford Council takes part of the blame for the situation. Can I remind you that Government money was withdrawn back in the 1970s from housing action areas and general improvement areas halfway through the Seedley and Langworthy regeneration project. Salford Council has worked very hard with the local community to try to get a solution for people trapped in negative equity. Local people are saying to us, "Find us a way out of this". This is the best solution we have at this moment in time.

Chairman

  442. It has taken 18 months and so far six people are about to move. Is that process good value for money?
  (Mr Osborne) If I tell you it has taken 12 months with the Council of Mortgage Lenders and the Local Government Association and the Department to get to where we are now in terms of negotiation about the process, it has taken us three to four months to get Counsel's opinion and District Auditor's opinion to say that this process is legal. We are trapped within the cycle of decision-making in order to facilitate this process.

  443. Right, so a great deal of money has been spent in all of that process without at the moment helping very many people?
  (Mr Osborne) We have acquired a number of empty properties for clearance and we are at the point where we are about to acquire properties for home swapping. The first clearance area declaration 28 day notice is up on Friday. I have already approved 250 improvement grants in the area of properties that are remaining and which we hope can be sustained. Whilst some progress has been made, you are right to say on the ground it has not happened yet. That is down to the range of hoops and hurdles that local government has to go through.

  444. Do you feel frustrated by all those?
  (Mr Osborne) Yes I am. To give you an example. We went for Single Regeneration Budget status in the area and went through a process there, and we have now had to go to clearance process and get that again, so why can the process not be agreed through one regeneration channel once and then we have got flexibility to do things in an area?

Chris Grayling

  445. You mentioned in your memorandum the issue of the 30-year business plan. If that were to be done, how would you calculate the contribution that the private homeowner had made to their own property over that period? How would you quantify that in the business plan?
  (Mr Osborne) I have used the basis of the Stock Condition Survey which we are required to carry out every five years in local government, and that would take into account the demographics of an area, household income, household composition and also the cost of repair, renewal and possible removal of obsolescent dwellings. The basic idea would be to plot out in broad terms what financial contribution that person is currently making to housing costs in their area and to try to find an equitable way of bringing in private finance to support that. I recognise that public money on its own is not enough. If you ask me for a percentage this morning, I could not give you one. It would depend on each neighbourhood and each area, whether in the city I work in or across the country. You have to plot out very carefully in broad terms how money will be spent and where the various sources are coming from.

  446. What role do you think the Housing Corporation should have in supporting local authorities in this whole area?
  (Mr Osborne) I am frustrated by the fact that the funding mechanisms that are used to support housing associations do not recognise over-supply of dwellings. The Housing Corporation, in broad terms, tends to support the development of new housing but not the removal of old housing. A good example is the Zzara Street project in Higher Broughton where we are working closely with housing associations and taking out something like 300 terraced dwellings but replacing them with 150 new houses. We are reducing the density. We could do with a targeted funding stream to deal with that sort of project. In my borough I only get about £3 million a year from the Housing Corporation to support housing associations. They have 7 per cent voids, the highest in the North West, and that should be recognised. The Housing Needs Index score for Salford assumes that that over-supply of dwellings is something that can be let and therefore assumes that no additional money is required for new homes. But it cannot be let and, if there is no money coming in with that over-supply, there is not enough money coming for Salford to deal with the unwanted empty homes. That is replicated in other boroughs.

  447. What do you feel about the Government's proposals for compensation in renewal areas?
  (Mr Brown) I think probably they are a step forward. They are phrased in an enabling way rather than a rules-based way and we have always had this problem in this country where we like to give people rules within which to operate rather than tools to operate with. From my point of view—and I was very interested hearing some of Bob's answers—it seems to me the principle should be "a home for a home". I recognise that presents the system with significantly more costs of acquiring properties but for a home owner I cannot imagine being in the position of having my home taken away and being forced into negative equity. I feel a home for a home is a basic principle that in compensation we should be seeking to achieve.
  (Mr Osborne) I feel there are a number of people working in the sorts of areas that I am working in who are buying up properties in order to make a quick return—carpet bagging. The view expressed in a previous Local Government Association paper was that people who are not contributing to the neighbourhood, not adding to the value of the neighbourhood, letting properties stand still, should be compensated less than people who are genuine home owners. I think that needs to be looked at.

  448. To what degree? How much?
  (Mr Osborne) I could not give a specific number but if you bought a house for £3,000 and thought you were going to make a quick return on it, you should not get open market value, you should get the £3,000 back.

  449. How much would you need to provide in assistance to have a real effect?
  (Mr Osborne) I can only talk for the city I work in which is Salford, and the housing stock condition survey for the next 30 years suggests we need £1.6 billion to clear obsolescent loans and repair and renew buildings, so that is about £50 million a year. If you assume that 50 per cent of that comes from the private sector—£25 million a year—the current allocation of capital programme I am working to is £10 million. That includes Single Regeneration budget and New Deal for Communities money, so the answer is "not enough".

Christine Russell

  450. My question is really to Chris Brown. In the written evidence that you gave to the Committee you seem to be making the argument quite strongly that the existing compulsory purchase order rules and regulations, particularly in the context of empty homes and regeneration, are very slow, unwieldy, etcetera. How would you like to see the process improved?
  (Mr Brown) How long have you got?

Chairman

  451. Not a lot of time, I am afraid. If you want a supplementary note we will be pleased to accept it.
  (Mr Brown) The system has been described by the Law Commission as a "mess". The average timescale for CPOs over all CPOs is from start to end between 8 and 13 years. It is clearly a system that does not work. How to make it better? One of the things I have been reading recently is some of the Law Commission's initial papers on the subject, and it seems to me that from their point of view they think it is very easy to codify this mess of legislation into a single Act which is relatively clear, and understandable by the layman as well as by the lawyer. I think that would be a huge step forward. We have had also published recently (last week I think) a manual which purports to assist people doing CPOs. I have not been able to get hold of a copy. I do not know of anyone else who has been able to get hold of a copy.

Christine Russell

  452. Who has produced that manual?
  (Mr Brown) It is technically a Stationery Office publication, and even the authors, Drivers Jonas, cannot get hold of a copy. I would love to see what it says. I hope it is helpful. I saw an earlier draft which I was not impressed with. This is how we work the system. We are very amateurish about it and we have to get our act together, we have to be more professional.

  453. Do you think the work of this Compulsory Purchase Order Advisory Group has made any difference?
  (Mr Brown) There were a couple of people on that group who knew what they were talking about in terms of regeneration CPOs, but they were vastly outnumbered by the lawyers and the farmers. It was not a fundamental review. It did not understand the needs of regeneration in respect of CPO. It was more or less a waste of time in terms of regeneration CPO, in my view.

  454. So you do not have much confidence in this paper that is likely to be coming out at same time as the Planning Green Paper?
  (Mr Brown) That is a different matter because I think Government got quite a hard time when it went out into the regions talking about the report of the group. I heard a number of Bob's colleagues savaging some of the civil servants and I hope that has had an effect.

  455. Can I ask you two other questions. One is how much of a problem is the fact that the applicant usually needs to have obtained detailed planning permission for the re-use of the site after demolition or after a CPO Order? Is that a real problem?
  (Mr Brown) It is one of the two fundamentals. I think the best example I can give at the moment is the CPO that the North West Development Agency is promoting in Ancoats in Manchester. That is a potential world heritage site, it is a conservation area, it has got a huge number of listed buildings. The general opinion is that in order to be sure of getting the CPO you really should have planning permission and a scheme which can be financed. English Heritage are, not surprisingly, very unwilling to consider an outline planning application for such a sensitive area and the prospect of getting finance for such a project sorted out before the event is nil, it is just too complicated. You get caught in this vicious circle that you cannot get out of.

  456. Do you think an overall master plan ought to be sufficient?
  (Mr Brown) Yes. We had a system and, without commenting on the merits or otherwise of urban development corporations, they were given guidance by government in a Circular in 1984 which required them to consult on the designation of regeneration areas, which is a very important process to go through with the public but then, having consulted, that was a firm basis for taking forward a CPO, and that seems to be a much more sensible.

  457. Can I invite you to be rude about local government officers and say whether or not you consider that their inexperience often contributes to the delays in the present system?
  (Mr Brown) He is looking at me hard!
  (Mr Osborne) It is true.
  (Mr Brown) I think there are very few and it is only the major local authorities that have enough people with the skills required to do CPOs. The system fell out of use for a couple of decades almost. The people who used to be able to operate it retired. Very few people, and they are only in the large authorities, are still able to operate the process.

Mrs Dunwoody

  458. The trouble with the local regeneration plans and people like the development authorities under a previous government was that they had a very limited interpretation of where housing need ought to respond to the interests of the population as a whole. Frankly, is it reasonable that because there are lots of listed buildings to expect outline planning permission? I would not trust anybody that brought me an outline planning application that simply said generally "we are going to leave all these bits in place" Really?
  (Mr Brown) I agree absolutely and what is happening there is planning permission is not being granted at the time of the CPO. The process is these buildings are almost exclusively owned by speculators, the sort of people Bob was talking about. The process is to get the speculators (who are never going to invest in the properties) out of the system and get the interests into people who will make detailed planning applications which will respect the listed buildings and bring the buildings back into use.

Mrs Ellman

  459. You called for a definition of "obsolescence". What is it?
  (Mr Osborne) In short terms, property that nobody wants any more. I gave you the example of the Higher Broughton area of Salford, the Wiltshire Street area. A new home has not exchanged hands in that area for the last five years. Private landlords may have let properties willy-nilly to one or two but in essence because it is of its age, a built form (ie it has not got a garden, a place to park or enough power points) it is not fit in terms of repairs, and there is a choice of another property elsewhere within reasonable travelling distance, it is basically obsolescent. I would use the example of a new Brookside-type house. If you compare a two-up two-down terraced versus a three-bedroomed, semi-detached house you can buy for £50 down and £36,000 on the open market because of various factors, versus a pre-1919 house which is probably valued at £25,000 but does not compare in terms of quality of provision. In essence, it is "obsolescent" as nobody wants to live there any more.


 
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