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



Examination of Witnesses (Questions 80-100)

NEALE COLEMAN AND DEBBIE MCMULLEN

WEDNESDAY 12 JUNE 2002

Ms King

  80. You heard me asking Lord Best why the net supply of social housing had declined. Why would you say it has been such a shocking decline in London?
  (Neale Coleman) Plainly we have seen very sharp reductions in the number of homes that have been produced by councils and that has not been made up by the number of new Housing Association homes that have been built. Right to Buy is a very significant factor in London in reducing the net supply of lettings. Our figures show that in April 1990 you had just over 720,000 local authority homes in London; that is now down to 526,000. So we have lost nearly 200,000 local authority homes. They tend to be family homes; they tend to be the better quality stock. Even though we have built over that period something like 130,000 Housing Association homes, we have seen, over that period, 66,000 social homes go. So we have had 6,000 a year loss in the last three years. In some of the years we have been seeing more than 10,000 lost. Obviously this does have a very substantial impact on the availability of new lettings.

  81. What reforms are you going to be asking John Prescott to make in the area of Right to Buy?
  (Neale Coleman) I think it is time for a review of the policy. The Government did look at discounts.

Chairman

  82. There is no point in reviewing it unless you have some idea of what you want.
  (Neale Coleman) Among the areas we would like to see covered in a review obviously is the level of discounts which was looked at by the Government before, but quite a time ago now and obviously prices have come up since then. There must be issues about discounts again. The London boroughs say that there is significant evidence of abuses of the scheme, particularly in regeneration areas where companies are getting involved and buying up properties on people's behalf and just getting the money in from the re-purchase by local authorities. I think that is a very important issue. We do have some areas of London where there is very heavy demand for family units and where there must be issues about whether we can afford to see further depletion of the family stock of housing in those areas because it is creating devastating consequences, particularly for some black and ethnic minority communities who simply cannot get the housing they need and are suffering from terrible levels of overcrowding.

Chris Grayling

  83. But blaming Right to Buy is a little bit illusory, if you do not mind me saying so. Surely the reality is that if you have a family in an affordable house, who live in that and buy it, the supply and demand situation in London does not change in the slightest. The reality is that the problem is a lack of stock right across the board, and a lack of housing in both the public sector and the private sector. It is the lack of housing in the private sector that is driving house prices up, and a lack of availability in the affordable sector because there has been a drop-off in the amount actually built. Targeting Right to Buy does not make any difference at all. It may be a nice political target for some, but in reality it does not change the fundamental problem that there is not enough supply to meet the demand available.
  (Neale Coleman) I would agree that the most fundamental issue is the lack of supply; there is no doubt about that, I completely agree with that and that is more important an issue than the Right to Buy. I do not think it is right that we do not lose stock through Right to Buy because ultimately obviously those homes get sold on to the market. In the London market now they immediately move outside the reach of people on low to moderate incomes. So there may not be an immediate loss, but over time there is a very significant loss and that is reflected in the decline in the number of lettings. We see things happening in London where Right to Buy purchasers let out their dwellings at very high prices to homeless households so the local authorities are in the absurd position of not being able to let the property and then having to pay rents of 200, 250 pounds a week to put a homeless household into a property that they used to own. If there was the ability to re-purchase or the ability to replace, that would also be something that would have—

Chairman

  84. There is the ability to re-purchase, is there not?
  (Neale Coleman) There is, but only if you have the financial resources to do so, obviously. So you get back to the issue around public subsidy, and so on. I do not want to over-play this. I do agree that the issue of overall supply is a far more significant issue than this, but in some parts of London—in particular where we are losing a lot of family stock—this is having very serious effects. I think that the level of abuse that the boroughs report, particularly in areas where there are re-generation schemes, is something that needs to be looked at.

Ms King

  85. Would you like to look at extending the length of time people have to wait before they can part sell on their Right to Buy, for example?
  (Neale Coleman) I am not sure about that. That might help. It is the case that over the years, if you go back to the Right to Buy scheme when it was originally introduced there were longer periods. It is quite interesting to track back the way in which when flats were brought in the discounts were increased and the period you had to wait before you had to repay the discount was shortened. One can understand why that happened at the time, but I think those things should be looked at again.

  86. Could you tell us how much of existing social housing needs to be replaced if we are going to bring it up to a decent standard? And how is that going to be paid for?
  (Neale Coleman) I think the figures are that London has 19.4 per cent of England's unfit local authority stock. That is just slightly higher than its overall proportion of stock of 18.9 per cent. So it is slightly poorer condition than the rest of the country. We do not have any London-wide estimates yet of how many homes do not reach a decent home standard. I think that is something the boroughs are working on, and that is important. I think there are difficulties in London because of the difficulties of trying to apply the whole stock transfer solution within London which, I think for a whole variety of reasons—one of the most important being tenant attitudes—many not be an appropriate solution for many London boroughs. I think that means at the same time doing partial transfers without additional subsidy through a scheme like the Estates Renewal Challenge Fund is very difficult because it hits the rest of the local authority stock. I think there are some very real problems about how we are going to achieve the decent homes target in London and it may be that we will have to look to more solutions along the Arms Length Management Organisation side. I know that there are a couple of boroughs in London who are actively pursuing those. I am conscious it is an issue which London Housing Associations are talking quite actively to Government about at the moment because I do not think, at the moment, we have necessarily got the right package of mechanisms in place to achieve a decent homes target in London.

  87. As I understand it, our Committee has agreed to a separate inquiry into stock transfer at some later point so I will not dwell on that now. I wonder if you could tell me about the 50 per cent affordable housing target. In how many places do you think that 50 per cent can be achieved? And how important is the subsidy from the Housing Corporation?
  (Neale Coleman) Our research suggests that in two thirds of the London boroughs 50 per cent should be achievable on sites in those boroughs, given the land values that there are. That will not mean it will be achievable on every site because some sites will have particularly difficult conditions with contaminated land, or boroughs may want other planning gain. We emphasise this must be applied flexibly. In the rest of the boroughs our research indicates that 35 per cent would be a more reasonable target. Nevertheless, if you take those targets as a whole, provided they were backed up by sufficient public subsidy—as I have already said our evidence is that would mean a minimum of an additional 150 million a year—it would be possible, assuming that you applied these requirements to all sites, to produce 50 per cent affordable housing from new build in London.

  88. Finally, how do you respond to criticisms that if you aim for this 50 per cent you are actually going to discourage development and reduce the overall output? The criticism has been levied that 50 per cent of nothing is nothing.
  (Neale Coleman) That is clearly right, 50 per cent of nothing is nothing. The last thing that we want to do is to discourage supply. As I said at the beginning the key to this is improving supply overall. That is why flexibility is crucial. There will be sites where you will not be able to get 50 per cent because of the factors that I have mentioned. Nevertheless, we think that it is a realistic target and we think there are some encouraging signs in the latest figures that we have for housing provision in London where we have seen in the year 2000—we have just had the figures—20,730 new homes built, the highest since 1994. Approvals for new homes run at 31,400, the highest since 1988.

Chairman

  89. How many of those were affordable?
  (Neale Coleman) I would not want to give you a figure for that because frankly the monitoring data that we have on that is not adequate.

Christine Russell

  90. Can I ask you how much harm you think the lack of affordable housing is actually doing to London's economy, particularly to London's services?
  (Neale Coleman) I think this is a very serious problem and you can see it if you look in detail at any individual service. There are still London hospitals which have 25 per cent nursing vacancies and that level of agency cover. That must have an impact on the quality of health services. There are London primary schools where classes get through five or six supply teachers in a term. That, again, obviously has a massive effect.

  91. Have you got any evidence that the main reason why people are leaving London is because they simply cannot afford to live here?
  (Neale Coleman) I think we have evidence from the sort of surveys that employers do—exit surveys and the like that individual employers do—that this is a major factor. It plainly is not the only factor, but it is a very major factor. I think you have to look even more broadly than that. If you look at the problems that there are, say, with child protection in London which has been the subject of major concern recently for obvious reasons. There are serious problems that all the London boroughs have in recruiting adequate numbers of social workers; there are huge levels of agency cover. That is a very bad situation. It is also something that hits the private sector. I was talking to a senior executive from Boots in London the other day and he was saying that something like 40 of their stores in London they could not get a manager for. He was putting this down exclusively to housing. He was saying that these stores are on the edge of viability. If they are not being managed properly they are going to close. To the extent that Boots are now actually talking about putting in more housing above their stores to address this very problem. I think a lot of private employers across the board are suffering from this problem.

  92. Can I ask you very quickly to say how you would you break down where the limited resources should go to between housing the homeless, housing the key workers and housing people in the intermediate need category? What percentage?
  (Neale Coleman) I think that is a very, very difficult question because the level of need is so high. We have chosen this 35/15 split and although I said earlier that to some extent our figures were not yet based on the sort of evidence we want, such research as we have done—and we have looked in detail at all the London boroughs' housing needs surveys—suggests that that is probably at the moment a fairly good guide for the sorts of levels we should be trying to produce. It is very much within the context of our policy that the last thing we want to see is more affordable housing being produced for the intermediate sector at the expense of the social rented sector. What we have to see is an overall increase and that making room for extra goes to key workers and the intermediate sector.

  93. What is your view on short-term housing for this intermediate market? There have been views expressed that perhaps we should resurrect prefabs and flat-pack furniture from Ikea, et cetera. What are your views on that?
  (Neale Coleman) I think it is rather unfortunate that journalists seem to love these prefabs for some reason. They conjure up the wrong image. There is scope for much more use of modular construction, new construction techniques. We can use those to build homes more quickly, more cheaply, but they can still be of very, very good quality. Those are some of the solutions I know a lot of employers, the health service are trying to do. That is good.

Mr Betts

  94. To what extent do you think the Government's suggested policy changes on planning obligations will help?
  (Neale Coleman) I think they are potentially very valuable. Certainly the Mayor has expressed quite strong support for these proposals in principle. I think perhaps one of the most important suggested changes is the suggestion that we should get affordable housing contributions from all developments, commercial as well as residential. We agree with the house-builders, it is wrong to single them out for making these contributions. Our only concern I think is that the tariff system is potentially very complex and there is clearly a lot more work to be done to make it work. We would like to see some changes immediately in the shorter term, around the existing circulars, to take down the thresholds, to deal with the commercial development point and so on. I think getting some short-term changes as well as the longer term ones is very important.

  95. One of the proposals you have made I think accords with what the Government is looking at which is the idea that authorities in the future may be able to allocate specific sites just for affordable housing. Is that not going to slightly cross the idea of having mixed communities?
  (Neale Coleman) Yes, I do not think we have actually placed great emphasis on that because I think we do want to see mixed and balanced communities. I certainly think that if you have large sites, a site of any scale in London, you would want to see a good mix of housing there. On the other hand, it is of course possible, if you are looking at a broader range of need, if you are looking at an intermediate sector as well as a social rented sector, to have a mix between those two types of housing. If you look, for example, at the Imperial Wharf scheme which is being built down on the river, there is private housing there and there is a broad range of different types of affordable housing for students, people with disabilities, sheltered housing, traditional social rent and stuff for key workers. I think that is the sort of approach we would like to encourage.

Chris Grayling

  96. Can I turn you to Thames Gateway and firstly to some of the practicalities about extracting the potential of some of the large brownfield sites in that area. There are issues around the actual cost of reclamation. Can you tell us a little bit about your perspective on those costs and also whether you believe it is actually possible to deliver affordable housing in areas where you have high reclamation costs?
  (Neale Coleman) I think that where you have land that is of low value and you have the sort of high reclamation costs that you are talking about, there are difficulties. There is often also a difficulty around transport infrastructure and the biggest site we tend to focus on is the one down in Barking. You probably cannot do the sorts of things you want to do there unless a new transport link is put in. We do need to think more imaginatively and think of some new mechanisms or re-visit some that we have stopped doing, whereby we can put public money in up front in these sites to deal with issues like remediation and transport infrastructure in a way that is, over a period of time, going to get land values up so that we are going to see the private sector coming in there, we are going to see the sorts of development that we want. I think, to some extent, our approaches are the wrong way round. If we can find ways of getting public subsidy or public investment in in the right way up front and then allow, at the back end of the development when the land value has gone up, to see the public sector getting some return on that. English Partnerships did a good deal at Silvertown just like this with private housing and mixed housing. I think that is the kind of approach we are going to have to adopt to bring these sites forward.

  97. What do you think the potential of Thames Gateway is? If you go back ten years it was being talked about as a new city that really would provide much of the additional resource needed in the south-east. From today's perspective what do you think the potential of Thames Gateway is?
  (Neale Coleman) I think it still is absolutely critical. If we do not build the homes we need in the Thames Gateway we will not succeed in addressing all these issues in London. That means we have to get the transport infrastructure in, we have to have to the money to deal with reclamation, we will need more money on schemes to deal with a range of problems like all the overhead power cables we have out there on some of these sites. It will probably need more public investment, but it will also need a determined working together to bring these big sites forward. We are not just in the outer Gateway, there is the inner Gateway as well. We are seeing a lot more being built there. We are seeing some of the big schemes come forward and it is certainly one of the GLA's and the Mayor's biggest tasks to work with Government, to work with the Housing Corporation and others to bring forward the big sites and, indeed, the smaller sites in the Gateway.

  98. How many houses do you think could be put on this Thames Gateway?
  (Neale Coleman) Forty, fifty thousand homes. It is so difficult. If we just take the Barking site, at the moment, if you are looking at it as it stands, you can probably only get four, four and a half thousand homes on that scheme. If we can put the transport in there we can probably get ten, eleven thousand homes on that scheme. It is getting those fixes that can really make a huge difference to the sort of quanta that we can get in the Gateway as a whole.

  99. A lot of your attention has been on the industrial sites. Do you have a strategy in relation to provision in suburban areas?
  (Neale Coleman) Yes, I think we are very keen to see—and I think this will be reflected in the London Plan—appropriate intensification of development around town centres in suburban areas. I think we are very encouraged, for example, by the scheme which Redbridge have come forward with for Ilford town centre where they are talking about perhaps six or seven thousand new homes being produced in a residential redevelopment of Ilford town centre. We are also beginning to get house builders coming to talk to us about doing high density, mixed use developments on land in places like Barnet, the sorts of things people would not have been coming to talk to us about at all a little while ago. I think there are some encouraging signs. I think getting this right in outer London and working it through with local people, with the local authorities so they understand the benefits of these developments and intensification can bring—as well as the downside—is really important.

  100. Given all of the pressures, does it actually make sense to continue to try to attract businesses to Central London? Ought the process not be the other way?
  (Neale Coleman) I think the problem is—and I missed Will Hutton who may well have talked about this—that if you look at the structure of the London economy now and you look at our employment projections, we are projecting huge job growth in London in the finance and business services sector and a continued decline in manufacturing. These are trends which are heavily entrenched in the structure of the economy and it is the structure of a global economy. The jobs that are coming into Canary Wharf and places like this—and will come inevitably—if they did not come to us a few might go to Leeds, it is true, but the great majority would probably go to Frankfurt and Paris. There is nothing, really, that regional governments or national governments are going to be able to do about those sorts of forces. I think we have to accept that and we have to work with those trends and use them for the benefit not just of London but for the benefit of the rest of the country as well.

  Chairman: On that note can I thank you very much for your evidence. Thank you very much indeed. Thank you to the Committee.

 


 
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