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


Examination of Witnesses (Questions 280-299)

RICHARD WAKEFORD AND JO LAVIS

TUESDAY 2 JULY 2002

  280. Should it not be directed at larger sites?
  (Mr Wakeford) In a place of 3,000 or less population, say, you do not really want a housing development of too large a scale. You need a more organic approach. So it is not very easy to then say, "Let's have a large site and let's have a slice of affordable housing within it". That approach works in market towns, but it does not work so well in villages.

  281. So what can be done to replicate the process in more places more quickly?
  (Mr Wakeford) Getting the Rural Exceptions? Getting more rural affordable housing in place?

  282. Yes.
  (Mr Wakeford) We believe that being much more honest about it and getting the planning system to work well in small communities using the social diversity policy would be a good start. The Government has actually put a lot more money into the Housing Corporation in order to fund rural affordable housing. The challenge is on the planners and the Rural Housing Enablers is to get the sites together to do it. In market towns there is a slightly different challenge which is actually getting the numbers of units in place. There it is not so much the planning—because there you can do a sort of quota approach with a big developer there—but it is actually getting the finances in place to pay for the number of affordable houses that are needed.

  283. Do you believe that Rural enablers are worthwhile?
  (Mr Wakeford) We certainly do.

  284. Do you believe that costs could be reduced without reducing standards?
  (Mr Wakeford) I am not sure that we have a view on that. Jo, do you have a view on that?
  (Ms Lavis) No, but I can offer some examples of where housing built to a high standard of design actually does not cost significantly more than housing which is provided to a lower standard. It is all to do with the way that materials are used within the locality and it goes back to the point that we feel very strongly about, that new development should respect the local character of the area. That is true whether it is affordable housing, market housing or any other form of development.

Chairman

  285. There are some examples, are there not, in the National Parks where there has been insistence on traditional materials and they put up the cost. And yet perhaps five or six years later when the weathering has taken place it is very difficult to see the difference between traditional materials and some rather cheaper materials.
  (Mr Wakeford) Yes, there are a lot of good examples but I am not sure we can actually give you formal evidence on what the balance of costs were. We were involved in a less scenic area in a village design statement in Cambridgeshire which was stimulated from a development proposal that local people did not like the design of. The net result of the village design process was that the developer changed his design quite radically to meet the style of that community and made that development acceptable to the community. I do not think the developer would have done that if it had been a very much more costly thing for him to do.

Clive Betts

  286. Let us go on to the Right to Buy. You made comments about the Right to Buy and the loss of affordable houses in rural areas. You do not suggest any policy changes to address that problem. Why?
  (Mr Wakeford) Just listening to the earlier evidence that was being given this morning, it struck me that the Right to Buy can be a very valuable way of enabling a household to actually get into the housing market, to owner occupancy, which seems to be a goal in this country. The problem is not so much the Right to Buy itself but the fact that we are not actually then replacing that house in order to make sure there is a continuing pool of affordable housing for those who are coming on to the market further back, the new households that are being formed. If you see it as a kind of moving staircase, as people use their Right to Buy to move up that staircase, then that works well as long as, through public intervention, new social housing is being built and is being made available. The difficulty comes in small villages where perhaps there are environmental constraints and even if they are designed as well as some of the housing which your Chairman is obviously aware of, nevertheless the capacity of that community to take new housing is quite limited. In those circumstances Right to Buy should be restricted. It is certainly restricted at the moment in communities of less than 3,000.
  (Ms Lavis) For a Right to Acquire on new housing association property, not on local authority owned property.
  (Mr Wakeford) If we go back, in a sense, to the stock, there were something like 91,000 homes from the countryside lost from the social rented sector between 1985 and 1990. In the countryside that was a really dramatic impact because of the balance of communities in the first place and the pressures of people moving into the countryside.

  287. Where there is not an endless supply of land in a community should there be some restriction on the Right to Buy because they cannot be replaced?
  (Mr Wakeford) That is the sort of approach that we have been putting forward and applies in smaller communities.

  288. Or should there be restrictions about the conditions for selling on?
  (Ms Lavis) I think there are three strands possibly to answering your question. The first is that in some rural districts they can actually put a condition that when the house is sold into the open market the local authority have the opportunity to buy back that property under the Rural Designation—I think it is the 1980 or 1985—Act. The difficulty has been that because of the cost of housing increasing to the extent that it has the local authorities and housing associations are now finding it almost impossible to be able to buy those properties and take them back into the rented sector. I think putting conditions on it may be one way forward, but there has to be some acknowledgement in the funding as well to enable that housing to be brought back into the affordable housing sector. The other issue—which is one that actually also applies to low cost sale housing as well as local authority housing—is whether in fact it is possible, using the planning system, to restrict the price at which that housing is then passed on to the subsequent buyers. There are examples such as north Wiltshire where they are using section 106 agreement to make sure the discount is continued in perpetuity.
  (Mr Wakeford) In New Jersey—I hate to keep going back to New Jersey - part of the process actually limits who can buy housing in a particular market, people with particular incomes. The way in which the mortgage multiplier works means that there is a kind of market in housing which is only available for people whose income is in a band of between 60 per cent to 80 per cent of state median income. That market, actually, works quite well. That enables a market to function so that people can actually get some value, but it means that the price of housing does not go miles out of their reach. To bring it back to home, the Countryside Agency made a visit to Shropshire last week and in Ludlow we heard about a house which had been sold under the current condition that Jo just pointed out for £13,000 four years ago under the Right to Buy. It has just been offered back to them at £113,000 which is outside the cost indicators so the Housing Association now cannot get back—even though the condition was put in place—the unit which was liberated in that way.

  289. Can I ask about second homes which you also mention is a problem in these communities. It pushes up the price of houses which local people could otherwise have afforded. Is there anything that can be done about that?
  (Mr Wakeford) There are some interesting ways of looking at it. There are about 100,000 second homes so if full council tax was actually charged—instead of the 50 per cent discount at the moment—that would generate about as much money as the Housing Corporation is spending in rural areas.
  (Ms Lavis) It would be equivalent to the target that it is aiming for next year of 1,600 units.
  (Mr Wakeford) That would do quite a lot. But, on the other hand, 100,000 houses used as second homes is actually not terribly large when you compare it with the year on year demand, as it were, for rural people alone (30,000 units a year). It is part of the issue but it is not as big as actually dealing with the responsibility to provide decent housing for all the households we are bringing into society.

Chairman

  290. What you are suggesting is that if the discount was removed and local authorities used the income to go into the housing, that would make a significant impact.
  (Mr Wakeford) That is very strongly our position from the Agency.

Mr Betts

  291. Is there not an issue of the sites that are around in rural areas. Quite a lot of the larger sites are actually owned by public bodies. What do you think could be done to encourage them to look at releasing them for affordable housing?
  (Mr Wakeford) I am not sure that I have got a particular recipe there. There is also another section of sites which are effectively stymied by the options agreements that big house builders have put in place. Certainly there is some unlocking that can be done, but I do not think we are experts in that.
  (Ms Lavis) No, we are not. I think there would always be questions about the sustainability of some of those sites from a wider perspective in terms of environment, economy, social provision.

  292. So we are back to the planning system again?
  (Mr Wakeford) Well, we are.

  293. Are there any changes there you want to see?
  (Mr Wakeford) The same would apply to some of the redundant farm buildings. People have said "Wouldn't it be nice to replace those with housing which we need" but those sites are quite often remote and not accessible to communities.

  294. Are there changes to the planning system then?
  (Mr Wakeford) In terms of encouraging the disposal of some sites, I am not sure that the planning system is as good as it should be about incentivising people to bring land forward and enabling development to take place. This is broadening out the enquiry a bit I guess, but one of the things we believe the planning system does not do is to make sufficient links between the vision that the planning authority has for its area and the spending and investment plans of all the other bodies who will deliver, in particular the quasi public sector investment in that plan. Is the Housing Corporation taking a sufficient interest in the structure of the local plan? Are the regional development agencies taking a sufficient interest? Are all of those who are going to invest taking a sufficient interest? There is a real job to be done in reforming the planning system to make sure that it is actually about setting out a vision for society in ten years' time and engaging properly all of those who will then contribute to that vision. It may be, at the end of the day, we need some other kind of approach, perhaps looking on the tax side instead of always looking to the planning policy to resolve everything in life; to incentivise the bringing forward of sites or perhaps to penalise those who are sitting on sites with planning consent and not bringing them forward for development.

Chairman

  295. If we are talking about ones belonging to public agencies, is it not better to actually give clear indications that all telephone exchanges, electric sub-stations—which in some cases in rural villages were pretty large in the past—those small pockets of land are ones that ought to be released.
  (Mr Wakeford) Yes, exactly right, and in fact somebody is proposing to do that in the place where I live at the moment so I know exactly what you mean.

Chris Grayling

  296. Can I refer you back to the comments you made in your evidence about the need for changes to the mechanism whereby the resources are allocated for affordable housing. You put forward a number of thoughts. Can I ask you to elaborate on them?
  (Ms Lavis) You are referring to the housing needs indices, the general needs indices and our comments on Total Cost Indicators, just to start. We have had concerns for a number of years that the way that the indices are used to allocate capital funding to local authorities do not pick up the problem of access to affordable housing. From a rural perspective they do not pick up the absolute shortage of supply, the fact that people are actually leaving the area because they can no longer afford to live there. What we have been doing is working with—a strange bedfellow—the Association of London Government on an access to affordable housing indicator which we would like to see incorporated into the HNI. We have discussed it with the ODPM and they too are interested in what we can do. What we have said is that alongside the access to affordable housing indicators there also needs to be something which picks up what the supply of affordable housing is both in the open market and the supply of social housing within the area as well. That is the HNI GNI bit. The other issue about the allocation which we raise, but partly because it was flagging up a concern at the moment we are still awaiting further details from the Department, is the issue about the use of capital receipts. What we are aware of is that a lot of local authorities who are now debt free because they have transferred their stock are using that money to be able to invest in new affordable housing provision in their rural communities. We would be concerned if they had that ability taken from them. As I say, at the moment we are waiting for more information from the Department before we really want to give a firm comment on that. In terms of the Total Cost Indicators we have done some work with the Housing Corporation and a number of housing associations which illustrates that in some areas of particularly high demand it is very difficult to make particularly social rented housing stack up and although the review last year of TCI's is very helpful, there are still some places where it is very difficult—such as Wealden, such as the Lake District—and that affects both new build and also the possibility for purchase and repair and existing satisfactory properties. What we would like is some way in which the regional offices for the Housing Corporation are able respond to those particular hot spots, but recognising that they still have to get value for money from any scheme which comes forward.

  297. How well structured is the supply of resourcing in the sense that the Government tends, where it can, to move financial resources to the more deprived parts of the north and the midlands, for example? In housing terms that is actually where the supply is, and the pressures are in the less politically fashionably shire countries and so forth. Do you think housing suffers as a result of that?
  (Ms Lavis) I think there is obviously a need to provide a decent home and a decent home might be a home of sufficient standard and quality. It may also be—as in the shire areas—to provide a home which is affordable. I think there is a concern if too many of the resources are switched over to areas of poor housing condition at the expense completely of those areas where there is a severe shortage of affordable housing.

  298. You referred in the memorandum to, and I quote, "guidance should be provided for local authorities on how they can retain low cost sale housing in perpetuity" which caused us to scratch our heads a bit. Can you elaborate on that?
  (Ms Lavis) That goes back really to the point that we were making before that often a local authority will negotiate for a proportion of affordable housing. Often the housing which comes forward is low cost sale which means that the local authority do not have the control through a registered social landlord of retaining it in perpetuity. But what they are concerned about—a bit like local authority housing—is that once that housing has been sold on by the initial purchaser it is then outside the affordability of those people on low or modest incomes within the area. So for a lot of local authorities they need to do something to make sure that houses still remain affordable. There are two ways which seem to be being followed up. I think what local authorities would really like is more guidance and more backing from the Department for these sort of approaches. First, an example of which is North Dorset, they actually set within the local plan an affordability formula so when a developer comes forward and proposes low cost market housing what the local authority is looking for is "Is that at a price which is affordable in accordance with the formula which is set in the local plan?" That sort of secures it in the first stage. The second is, "What do we do on resale"? That is the north Wiltshire example where they say "In future sales we would need the same proportionate discount on resale and subsequent sales as we did when we first let the housing go as low cost market housing."

Chairman

  299. Does the Housing Corporation really do a good job in rural areas in actually facilitating low cost housing?
  (Ms Lavis) We are delighted that the Housing Corporation has certainly taken on board its rural proofing role and has made this commitment in its rural strategy and rural policy—


 
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