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

Examination of Witnesses (Questions 160 - 179)




  160. I understood you could have gone on doing it and he could have taken you to court, the other way round.  (Lord Falconer of Thoroton) My understanding was the reverse, but can I check that? My understanding was that, once they had ruled, we could not unless we went to court but let me find out what the right answer to that is.

Christine Russell

  161. Now that the responsibility for the RDAs has been transferred from DTLR to the DTI, does that mean that all the focus of the RDAs will now be on economic development and issues like housing and mixed use developments in regeneration areas will be lost?  (Lord Falconer of Thoroton) No. They have a statutory responsibility for promoting regeneration in their regions. They also have a statutory responsibility to produce a plan for economic regeneration for the area. They will still have an obligation to regenerate. Indeed, at meetings that they have had with the Deputy Prime Minister and the Chancellor, they have reaffirmed their commitment to regeneration. Does the moving of sponsorship for the RDAs from the DTLR to the DTI which occurred immediately after the last election make a difference? I do not think it does, because I think everybody would accept that economic prosperity is a vital element in regeneration.

  162. Can I ask you about compulsory purchase and the policy review and whether you accepted all the recommendations of the advisory group or which ones you rejected?  (Lord Falconer of Thoroton) We will be issuing a consultation document about compulsory purchase at about the same time as we will be producing documents in relation to the planning report.


  163. You have been consulting for yonks, have you not?  (Lord Falconer of Thoroton) You are absolutely right. We have been consulting for years about compulsory purchase.

  164. It is too difficult for you to take decisions about?  (Lord Falconer of Thoroton) No. What we are going to put forward in the consultation document is specific proposals in three areas. One, you need to simplify the powers that people have to make compulsory purchase decisions. That means the bodies that have them at the moment need to know much more clearly when they can use them and that, in particular, means local authorities. Secondly, you need to make the process by which compulsory purchase decisions are made much quicker. Thirdly, you need to address the issue of whether or not the levels of compensation are correct for people who are affected by compulsory purchase orders.

Christine Russell

  165. What about a fourth one, that local authorities should be given the same powers that the RDAs have when it comes to CPOs?  (Lord Falconer of Thoroton) That is my point one, because they have powers under the Town and Country Planning Act at the moment, which are quite complicated; whereas RDAs have much simpler powers. We need to look at ways of simplifying the position for local authorities.

Mr Betts

  166. We went to visit the north west and you have been there as well. One of the things that concerned us was the frequent indications from people we talked to that common practice was that, as areas ran down and houses became vacant and nobody wanted them, they were changing hands in the pub for £1,000 or £2,000. Landlords, who were hardly probably the best landlords, were buying them up and putting in tenants who were being asked to pay quite outrageous rents in terms of the local rents but, because housing benefit backed it up, the landlords were making an enormous amount of money and the public purse was paying for it. How are we going to stop that practice?  (Lord Falconer of Thoroton) I think licensing of private landlords in areas of low demand is the answer. You have to have a means by which you can prevent landlords in areas of low demand in effect not giving a damn as to what the quality of the tenant is, not giving a damn about the quality of the house, getting housing benefit money and, in some cases, I was told—in quite a large number of places, not just in the north west but the north east as well—waiting for the government to move in as voids appear and the area is abandoned and ultimately compulsory purchasing. The final, glorious pay-off for the man in the pub is he gets a great wadge of capital to repay the amount he paid at the start. Stephen Byers has already produced a consultation document approximately two weeks ago with proposals for allowing local authorities to introduce a scheme for licensing private landlords in areas of low demand, where the sanction would be, if they do not deliver reasonable standards, they can be deprived of either the right to be landlords or certainly the right to receive housing benefit money.

  167. Have you any idea of timescale for that?  (Lord Falconer of Thoroton) We will not be able to legislate before November 2002 because we do not have a slot at the moment. I do not know whether or not we would get a slot in the next legislative programme. It would depend upon what other pressures there were.

  168. In the meantime, is there anything we can do with the The Rent Service to try and put some pressure on them to stop agreeing rents which appear outrageous? The only reason there is a market at that sort of level is because housing benefit is creating one. Manchester Council, for example, were telling us that they bid to get the approval of these levels of rents stopped and received no help at all.  (Lord Falconer of Thoroton) We have set up The Rent Service to try and focus people on accurately assessing what the rents are. Accurate assessment of the rent is very important. We are also trying to encourage local authorities to engage private landlords in voluntary schemes where minimum standards are set, but we are told that those sorts of landlords who engage in those sorts of voluntary schemes are not the sort of landlords you are trying to reach with your private landlords licensing schemes. One makes some progress with the voluntary schemes but they do not reach the parts that licences have to reach.

  169. Another aspect of the visit that concerned us was the negative equity problem, first of all, for people who already live there. You often see people in their fifties who, 10 or 20 years ago, spent quite a bit of money on their home to get it up to a very high standard internally. It is now worth virtually nothing. There is a real problem and the only way they can get market value is by moving to another property elsewhere. At the same time, there is no confidence in an area that starts to go down. Nobody wants to move in and buy property because they fear it will carry on dropping in value and they are simply going to lose out. That therefore just speeds up the decline. Is there any way you can put floors in that by giving people a guarantee they would get something back for their properties in these areas?  (Lord Falconer of Thoroton) You mean the state should give a guarantee that the property will not drop below a certain value?

  170. Yes.  (Lord Falconer of Thoroton) I think that would be incredibly expensive and untargeted. If you look around the country, there are some schemes where local authorities in particular have addressed this problem. In Salford, there is that very problem. What the local authority has been doing in quite imaginative ways is addressing with individual owners who have gone into negative equity in areas where the market has completely collapsed, there are great voids and the area is irrecoverable and they are seeking to agree with them arrangements whereby they give them the compulsory purchase money, which is quite low because the property value is quite low, also they give them disturbance money and find another property in an area where the local authority is seeking to regenerate and transfer the mortgage there. I do not think guaranteed, limited, minimum values is the way forward but imaginative ways whereby you can, with the consent of the people, move people from one place to another, transfer their mortgage, ensure that the compensation that is given is adequate to allow that to happen is probably a more productive way forward than minimum guarantees.

  171. It does not seem very fair. You have the person who has invested quite a bit in that area over a period of time. They probably bought their house for 20,000 and they suddenly find they are going to get less than half that back in compulsory purchase but the landlord in the pub has bought the house for 1,000 and speculated and he will get more than he has paid out. Is it not all wrong somehow?  (Lord Falconer of Thoroton) It is. The landlord in the pub should not be compensated in the way I have described and the licensing of private landlords will hopefully deal with that. How you deal with the problem of property markets dropping because areas have totally lost confidence is much more difficult. I do not think that guaranteed, minimum prices is the way forward. I do not think that will be affordable or deliverable. One has to target more how one helps individuals in particular areas where there are regeneration schemes going on.

Miss McIntosh

  172. I believe your department is consulting on delegated powers for parish and town councils, delegated from borough and district councils. Is this joined up government if you have one department consulting on that, which has implications for the RDAs as well?  (Lord Falconer of Thoroton) That is a local government issue, I think. Delegating it from the RDAs to parish councils?

  173. No, from district and borough councils. You say it is a local government issue but there is a rumour going round that the government wishes to dispense with county councillors. Would it not have been better to get one department responsible for all local government regeneration issues?  (Lord Falconer of Thoroton) The DTLR is responsible for all local government. RDAs are now sponsored by the Department of Trade and Industry. The RDA is responsible for the economic strategy for a region. I do not think there is any inconsistency between the RDAs being with the DTI where economic prosperity is an important issue for RDAs and it is at the core of the business of the DTI.

  174. Can I politely suggest that you look at the document? You will see some of the delegated powers are arguably of an economic nature.  (Lord Falconer of Thoroton) I will.


  175. Can you tell us anything about stamp duty and relief from it?  (Lord Falconer of Thoroton) The Finance Act 2001 contains a provision which allows exemptions to be applied in support of regeneration in deprived areas. Discussions are going on about precisely where you target it and how within government.

  176. When would you think those discussions would be completed?  (Lord Falconer of Thoroton) I hope the discussions will be completed very soon.

  177. You would not like to define "very soon" for us?  (Lord Falconer of Thoroton) I would like to but I think it would be unwise to.

  178. Where are we up to with Sellers' Packs?

  ( 179. Lord Falconer of Thoroton) We remain committed to Sellers' Packs. We did not get a slot in the first legislative programme. Prior to the election, as you know, the Homes Bill had both the homelessness provisions and the Sellers' Packs provisions. Because of pressures on the legislative time, Sellers' Packs were knocked out and homelessness alone went ahead in the Homelessness Bill that is now in the Lords. We would wish to use the first legislative opportunity to reintroduce the measures on Sellers' Packs because the evidence is so widespread that the process of buying and selling houses is a complicated, difficult and often very upsetting process. Sellers' Packs are a means that seek to reduce one of the pressure points, namely trying to reduce the circumstances where, when you are in a chain, information comes late which then knocks the chain out after a long delay.

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