Examination of Witnesses (Questions 160
TUESDAY 20 NOVEMBER 2001
QC, MIKE GAHAGAN,
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.
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
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.
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 toldin quite a
large number of places, not just in the north west but the north
east as wellwaiting 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
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
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)
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
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.