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


Supplementary memorandum by English Partnerships (NT 25(a))

  Q1:  Additional Questions about the information provided in Appendix 1, Tables 1, 2, and 3

  Please provide by town, in hectares and values:

    —  land split by employment/housing

    —  housing land split by greenfield/brownfield

    —  Section 7(1) approvals split by employment and housing and greenfield/brownfield

  This information is appended at Supplementary Tables 1, 2 and 3.

  Q2:  Please explain how the clawback provision held by English Partnerships works, with examples.

  Q2.1  The new towns were developed at no cost to each local authority through a series of central government loans to development corporations. As community centres, schools, parks, playing fields and open space are completed they are transferred to the local authority (or other appropriate recipient body) as a "Community Related Asset".

  Q2.2  The majority of Community Related Assets (CRAs) are endowed with money or income-producing property at the time of transfer to ensure the effect on the recipient is fiscally neutral. If the recipient then develops the land for a commercially more beneficial use, the community benefit of the asset is lost but the local authority saves maintenance costs and can retain the endowment. Treasury advice, in the form of Financial Guidance to English Partnerships, requires English Partnerships to clawback a fair share of the uplift in value for return to the taxpayer by whom the original benefit was provided. With regard to income-producing property transferred in order to balance the cost of maintaining public assets, this income stream is not hypothecated; local authorities and other recipients may dispose of these for a capital sum unaffected by clawback or other restriction.

  Q2.3  Clawback is therefore a Treasury required mechanism whereby the monetary value of local amenities, provided from the public purse, can be protected for the benefit of the public sector. Contractual clawback arrangements, however, can act as a disincentive to Local Authorities to dispose of Community Related Assets which have been provided as an integral part of each town and neighbourhood.

  Q2.4  "Qualifying Events": Change of use or a sale which removes the asset from public benefit incurs clawback payable to EP at the rate of 100 percent of the proceeds in the year following transfer, reducing thereafter at a specified rate per annum. A typical annual rate for public open spaces is two percent per annum. A public park transferred to a local authority in 1992 with an endowment (generally 15 times annual maintenance costs) and sold in 2002 would generate 20 per cent income for the local authority and 80 per cent income for EP.

  Q2.5  English Partnerships already approaches the DTLR for the waiver or removal of clawback where that is helpful to an individual new town in light of the circumstances of a particular development. When considering area-based regeneration schemes, for example, it is sometimes appropriate to make use of Community Related Assets in order to bring about a change for the better. In these instances, English Partnerships encourages dialogue in order to find the most cost effective means to progress the regeneration plans. For instance, English Partnerships is actively seeking to make use of clawback in a constructive way by working with the local authorities, housing associations and the Housing Corporation to re-invest the value of clawback into estate renewal. In Basildon and Telford work is well underway to achieve this outcome.

  Q2.6  There are generally three kinds of clawback in operation:

   (a)  Community Related Assets (CRAs): Parks, Open Space, Amenity Land, Schools, Community Centres

  The freehold of amenity land is transferred to the recipient at nil cost accompanied by an endowment of cash or balancing property assets. Amenity land, highway verge, land under highways, etc forms a diverse portfolio and these sites are usually grouped into "parcels" negotiated with the local authority or other recipient. The value of the endowment required to "balance" the parcel must also be agreed with the recipient. Cash endowments and property assets are not hypothecated. Receipts from sales of balancing assets are unencumbered and may be used as the recipient's own policies dictate.

  English Partnerships recently completed a CRA transfer to West Lancashire District council in relation to land in Skelmersdale. The Transfer parcel totalled about 21 hectares: 17 hectares of land at White Moss and some 60 separate sites totalling 4 hectares. These last four hectares were supported with an endowment of £274,000; the land at White Moss is subject to agricultural license and adjacent to land controlled by the Council. The Council wished to control the use of the land at White Moss and required no balancing endowment for these 17 hectares. Standard clawback applies at the rate of 100 per cent uplift in value in year one, reducing at the rate of 2 per cent per annum in future years. There are no restrictions on the use of the endowment.

  Sites for the provision of education are transferred to the local education authority at nil cost for the sole purpose of education. Although there have been many forms of agreement for schools over the years, there is now a general prohibition of alternative uses for 10 years; a requirement to pay English Partnerships 50 per cent of the proceeds of sale is also imposed. This is done by means of a covenant attached to the freehold at the time of transfer. English Partnerships will seek to help the local authority to make best use of redundant or under-used assets where clawback acts as a disincentive to such action. In Peterborough, for example, the Ellendon Road primary school no longer requires some of the land associated with the school. English Partnerships has released the covenant in order for the land to be used for alternative purposes.

   (b)  Public Sector Housing

  The transfer of former Development Corporation Housing was undertaken in the majority of cases under the terms of the Local Government and Housing Act 1989. Transfer contracts for each Development Corporation vary to some extent but generally the recipient landlords paid a "tenanted value" for each property which they received following the tenants' choice ballot. A typical price in Milton Keynes, for example, was £6,000 per unit. If the tenant exercises the right to buy, the recipient landlord calculates the right to buy price, less tenant's discount, and deducts the purchase price paid (ie £6,000) from the proceeds along with an allowance for administration and legal costs. The remainder of the price paid by the purchaser, if any, is returned to English Partnerships. These arrangements are time-limited, extending for up to 25 years after transfer.

  This form of clawback may act as a strong disincentive to local authorities seeking to undertake stock transfer for major repair or regeneration schemes. English Partnerships has therefore invited all local authorities considering stock transfer to discuss the impact of clawback on their plans. In Telford, for example, the housing was transferred to a housing association without any action to receive clawback by English Partnerships because this was not deemed to be a Qualifying Event under the terms of the transfer contract. Reinvestment of clawback for public benefit is English Partnerships' preferred option. DTLR (and possibly Treasury) approval is required in each instance where English Partnerships would seek to waive significant clawback.

  English Partnerships and the Housing Corporation have recently agreed, in principle, a joint approach in the case of housing association sales to tenants under right to acquire legislation whereby the clawback is reinvested in affordable housing by the RSL in their own Disposal Proceeds Fund.

   (c)  Clawback or Covenants on Private Sector Development

  Clawback is imposed on some private sector developments to protect a restricted use such as care homes or facilities for people with special needs. It is imposed for a maximum of 21 years at a minimum clawback of 50 per cent. In Peterborough, for example, the mobility bungalows provided by Minster General Housing Association Ltd are required to be used for that purpose only. A change of use would act as a Qualifying Event and clawback would become payable.

  Some of the land associated with HM Prison Woodhill in Milton Keynes, owned by English Partnerships, will be used for the provision of a secure training centre. The Home Office will procure this by way of a Private Finance Initiative. English Partnerships will transfer the freehold to the private sector provider with an absolute clawback of 75 percent of the proceeds should the site change use in the future. Should the project not proceed, English Partnerships retains the right to re-acquire the site at the price paid.

  Q3:  How many hectares in each town are covered by clawback provision and covenants—split by vacant land/amenity space/housing/other?

  Q3.1  Clawback is applied to individual and groups of small community related assets and English Partnerships keeps a record of these. Clawback arrangements are recorded in numbers of clawback arrangements per town, hectares per town covered by clawback arrangements and numbers of restrictive covenants. A table to this effect is given in the Appendix at Supplementary Table 3.

  Q3.2  Sales to sitting tenants are not kept as a running total but English Partnerships estimates that approximately 20,000 houses in local authority and housing association ownership are still covered by clawback arrangements; the overwhelming majority of these are in Milton Keynes. The local authority's decision to sell property or change the use of a public amenity is an unplanned event and each instance is considered as it arises. English Partnerships has Ministerial approval to waive its clawback proportion up to £1,500 for low value transactions such as sales of garden land.

  Q4:  Looking at disposals since 1992, how many disposals (covering how many hectares) have been made at less than the highest price or less than the highest use value for the land, because a lower value disposal took greater account of the interest of the people living in the town?

  Q4.1  All disposals at less than best consideration, or which include special circumstances, require English Partnerships Board approval and DTLR consent. Lower value disposals (for health care, affordable housing, etc) which reflect the land use are considered to be the best consideration for that use. In order to identify all transactions undertaken to further the benefit of the community, it is necessary to check every transaction since 1992. This would have required a substantial amount of staff time; however, a brief description of the policies, which inform decisions about disposals, may be more useful. All sites are sold as serviced sites.

  (a)  Affordable Housing: Disposals to Registered Social Landlords are always at very low value or nil cost in order to maximise the resources available for new build. Houses range in price from low cost sale through shared ownership and public sector rent, appropriate to local need. For example, English Partnerships had agreed a scheme by Chiltern Hundreds Housing Association in Milton Keynes to provide 40 affordable rent and 42 shared ownership homes on 1.57 hectares at a total land value of £320,000; this equates to about £212,000 per hectare. Residential land values in Milton Keynes, for private sector development, are in excess of £2.3 million per hectare.

   (b)  Health and Education: In light of NHS changes to the methods of GP surgery procurement, land value is determined by a "value-less-cost" approach which directly relates to the use of the land. This is likely to be much lower than the alternative residential use. The sale of a 0.53 hectare site for the provision of a GP surgery in Milton Keynes was recently approved at a land value of £200,000, which is 20 per cent of the open market value.

  Q6:  Could you send us a disposal strategy and profile of the forecast receipts, by town?

  English Partnerships' Corporate Plan would normally provide this information; however, pending DTLR's advice on how to proceed following the conclusion of the Review, strategies are only in draft form. We will make this information available to the Sub-Committee once a clear indication of the way forward is given by DTLR and Ministers have agreed the basis for our new corporate plan.

  Q7:  When do you anticipate that disposal of assets will be complete?

  This is entirely dependent upon the timing and outcome of Stage Two of the Review, since English Partnerships does not yet possess the information necessary to produce an estimate.

  Q8:  When CNT was established, what was its estimated life?

  CNT was established in 1961; its life was to be as long as required by the Secretary of State, as specified in the New Towns Act 1981, until: "it appears to the Secretary of State that the purposes for which the Commission exists under the Act have been substantially achieved".

  Q9:  What type of joint venture do you envisage will be supported in future? What would be their scope and spatial scale?

  Q9.1  Two examples would be helpful here. In Milton Keynes the proposed joint venture with Milton Keynes Council aims to develop Central Milton Keynes over a 30-year period and covers about 40 hectares of development land. It sets out how both organisations will share responsibility for investment in transport and the public realm, how we will share the uplift in value arising from increased activity and development density, and links that uplift to regeneration schemes to the north and south of Central Milton Keynes.

  Q9.2  In Northampton, a joint venture with private sector developer, Wilcon Homes, sets out how costs will be shared and enables the inclusion of redundant NHS property, some of which is suitable for the provision of community facilities; this land extends to about 72 hectares. English Partnerships' land extends to about 258 hectares.

  Q9.3  The spatial scale of each future arrangement cannot be pre-determined, but will evolve to include the optimum for efficient and effective delivery of outputs.

  Q10:  What type of regeneration role will English Partnerships have in relation to the New Towns in future? Are they being considered as target areas for regeneration activity?

  Q10.1  This is dependent upon the outcome of Stage Two of the Review, but if English Partnerships concentrates on strategic projects its input in new towns and other local authority areas will be determined on consistent criteria: ie, new towns will no longer be treated as a special programme.

  Q10.2  The Stage One announcement regarding the Review of English Partnerships gave a clear indication of how we would progress our new role in the new towns. English Partnerships is able to take a strategic role in the regeneration of brownfield land and the responsibility to deliver socially and economically sustainable development and renewal. Millennium Communities in Milton Keynes and Telford, the Urban Regeneration Company in Corby, regeneration and renewal of Castlefields in Runcorn, sustainable town extensions in Northampton and Basildon and town centre strategies for Telford and Milton Keynes are all the types of projects we would expect to undertake in the new towns in partnership with the local authorities and appropriate regional development agency. As we discussed in our Memorandum, the new towns are highly relevant to the Government's agenda for sustainability and economic growth and English Partnerships has a role to play as a key partner, investor and enabler of that development.

  Q11:  Have any evaluation studies been carried out, either on individual New Towns or the New Towns Programme as a whole since 1992? If so, please could you provide us with copies?

  To our knowledge no studies have been carried out on the New Towns Programme as a whole. Professor Colin Ward published a critique entitled "New Town Home Town" in 1993 and The Planning Exchange holds a library of information on new towns. Some new town local authorities participate in the European New Towns Platform (Forum) through which they share experience and consider issues of common concern. The Platform is currently drafting a submission to European Union on the value of New Towns in the future development of Europe, especially with regard to the nation states waiting to join.

  Q12:  What type of new partnerships do you envisage developing with the Housing Corporation and regeneration bodies in the New Towns? How do you see these partnerships developing?

  Q12.1  We are currently finalising details of a Memorandum of Understanding with the Housing Corporation, which describes how we will share programmes and expertise. It explores how we may be able to address regeneration issues together strategically especially when dealing with older, run-down housing, to demonstrate best practice and secure maximum benefit for the local community.

  Q12.2  When invited by the local community, English Partnerships is an active participant in Local Strategic Partnerships and sub-regional economic partnerships. In Telford, English Partnerships is working closely with Telford & Wrekin Council to secure the objectives of the community plan and the Local Strategic Partnership in Milton Keynes has recently extended a formal invitation to join them. We offer financial and professional support to the work of the Greater Peterborough Partnership and other local agencies in the East of England, to name but one region. We already work with RDAs to deliver their priorities at local level, the Omega project in Warrington being an example.

  Q12.3  English Partnerships envisages making a continuing contribution to the new towns through continuing to put into practice those principles established in the new towns: a long-term, master plan approach which will deliver balanced communities capable of sustaining themselves into the future. We aim to work with our more local partners to deliver area-based development and renewal strategies to achieve the town's aspirations for the future. We also aim to support towns of wider regional and inter-regional importance through a programme capable of delivery in the longer-term when English Partnerships' expertise and contribution may no longer be required. This approach is based on working with our partners as equals and moves completely away from the paternalism of the past.

APPENDIX

Table Q1

EMPLOYMENT LAND


Greenfield and Brownfield Greenfield Brownfield
Total 7(1) Remainder 7(1) Remainder 7(1) Remainder
Ha£000 Ha£000 Ha£000 Ha£000 Ha£000 Ha£000 Ha£000
Aycliffe-- --- ---- --- --
Basildon2912,860 --29 12,860-- 41,846- -2511,014
Bracknell-- --- ---- --- --
Central Lancashire264 22,40981,204 25621,2058 1,20425321,205 --3 -
Corby4529 --4 529--3 88-- 1441
Crawley16514,058 --165 14,058-- 16311,300- -22,758
Harlow75,332 --7 5,332-- *--- 75,332
Hatfield*6 --* 6-- --- -6
Hemel Hempstead325,637 --32 5,637-- 294,599- -31,038
Milton Keynes344146,793 258134,71086 12,083209129,926 3210,35049 4,784541,733
Northampton233,872 --23 3,872-- 233,872- ---
Peterborough4610,074 295,99517 4,079295,995 133,460- -4619
Peterlee-- --- ---- --- --
Redditch*64 --* 64--- --- *64
Runcorn697,054 375,87932 1,175375,879 301,175- -2-
Skelmersdale571,352 --57 1,352-- 48539-- 9813
Stevenage6900 --6 900--6 900-- --
Telford33829,773 21426,239124 3,53411313,951 992,310101 12,288251,224
Warrington30017,325 24415,35256 1,973187,289 411,776226 8,06315197
Washington1374,013 321,942105 2,07111768 1012,04521 1,174426
Welwyn Garden City-- --- ---- --- --
Total1,812282,051 822191,321999 90,730425165,012 84565,465397 26,30915425,265
*Less than 0.5a.


Table Q2

HOUSING LAND




Greenfield and Brownfield Greenfield Brownfield
Total 7(1) Remainder 7(1) Remainder 7(1) Remainder
Ha£000 Ha£000 Ha£000 Ha£000 Ha£000 Ha£000 Ha£000
Aycliffe9486 --9 486--9 486-- --
Basildon466,487 --46 6,487-- 304,789- -161,698
Bracknell-- --- ---- --- --
Central Lancashire298 40,1456430,944 2349,20164 30,9442289,201 --6 -
Corby-- ---- --- ---- -
Crawley614,257 --61 4,257-- 544,057- -7200
Harlow70252 --70 252--58 252-- 12-
Hatfield141,401 --14 1,401-- 141,401- ---
Hemel Hempstead243,041 --24 3,041-- 232,743- -1298
Milton Keynes514251,374 302172,570212 78,804263155,142 21078,22839 17,4282576
Northampton32848,932 --328 48,932-- 32848,932- ---
Peterborough3535,453 102,071343 3,382102,071 3433,373- -*9
Peterlee-- --- ---- --- --
Redditch149,453 --14 9453--13 9,401-- 152
Runcorn10018,883 3816,04762 2,8363816,047 582,836- -4-
Skelmersdale552,309 --55 2,309-- 522,280- -329
Stevenage2711,956 --27 11,956-- 1311,846- -14110
Telford31164,495 23052,21281 12,28312522,713 5511,393105 29,49926890
Warrington27477,548 4655,345228 22,2033950,738 21319,2067 4,607152,997
Washington10184 --10 184--10 184-- --
Welwyn Garden City221,664 --22 1,664-- 181,664- -44
Total2,530548,320 690329,1891,840 219,131539277,655 1,729212,272151 51,5341116,859
* Less than 0.5ha


NOTES TO ACCOMPANY TABLES Q1 AND Q2

  English Partnerships provided three tables of data with the Memorandum to the Committee:

  Table 1 detailing land sales, cash receipt and payment for the years April 1996 through March 2001;

  Table 2 listing land assets as at the annual valuation of 31 March 2001; and

  Table 3 listing development land with S.7(1) approval as at 31 August 2001.

  The following notes are in clarification of data provided here in response to Supplementary Questions of the Committee dated 27 March 2002.

  1.  The tables describe land held for employment and residential development; they do not include land held for other purposes. English Partnerships owns land allocated for uses other than employment and housing, for example open space, roads etc. Therefore, the total land shown in the above tables will not agree with the total hectares in Table 2.

  2.  The data reflects transactions completed in the latter half of 2001-02. Therefore, the 7(1) totals shown in the above tables will not agree with the information previously provided in Table 3 which was based on data as at 31 August 2001. Land Subject to Building Agreements has been included within the column "Remainder" because the S.7(1) authorisation has been used.

  3.  The land values mainly reflect the annual valuation of assets as at 31 March 2001 to accord with the values in Table 2. However, certain sites in Telford have moved forward in planning terms and the values have been enhanced to reflect the increased development potential. The variance in the land valuation for Milton Keynes between Table 2 and the above tables is mainly due to the accounting treatment of deferred plot sales. The reduced value for Northampton has resulted from the disposal of an employment site valued at £11.6 million.

  4.  As a result of the impact of the Housing Direction 2000, the value of the greenfield land allocated for housing has fallen considerably and the reduction in value will be reflected in the annual valuation of assets as at 31 March 2002.

Table Q3

OVERVIEW OF ALL CLAWBACK AND COVENANT ARRANGEMENTS BY TOWN
ClawbackClawback Covenants
Town(No) (Hectares)(No)
Aycliffe3.07 4
Basildon7375.83 210
Bracknell113.01 71
Corby813.46 104
Crawley54.73
Cwmbran30
Harlow1639.38 18
Hatfield411.05 90
Hemel Hempstead715.41 57
Milton Keynes448425.58 1,195
Northampton11278.00 89
Peterborough228.13 141
Peterlee20.01 1
Preston &Central Lancs167 302.25155
Redditch2849.09 304
Runcorn3383.72 10
Skelmersdale3639.39 11
Stevenage74.74 341
Telford819538.00 514
Warrington10592.15 7
Washington1562.31 24
Welwyn Garden City25 48.12192
1,8482094.43 3,538




 
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