Memorandum submitted by Office of the
Deputy Prime Minister
Examination of Witnesses(Questions 285-299)
TUESDAY 22 OCTOBER 2002
285. We are pleased to see you. Can you introduce
yourselves for the record.
(Mr Gahagan) I am Mike Gahagan, the Director of Housing
in ODPM. My colleague is Henry Cleary and he is head of what used
to be the Affordable Housing Unit. I say used to be because since
the DPM's statement of 18 July, with the recognition that we needed
to look wider than the provision of affordable housing to the
provision of housing in general, it is now formally titled the
Planning, Housing and Growth Unit, so it is the same thing with
a wider remit.
286. Is that your opening introduction or do
you want to say anything more?
(Mr Gahagan) No, that will do.
287. What have you been doing since you were
first set up under whichever title and what is the biggest issue
that you have stumbled across and how are you going to tackle
(Mr Cleary) We were set up at the end of last year.
We were looking at affordable housing supply issues, how the system
is working, how it could be improved, and we really focused on
three areas: the first is the supply of sites, the land available,
and how that comes forward; the second is the planning and negotiation
of affordable housing schemes; and the third is new approaches
in the areas of construction but also finance and other respects.
So in general terms we were looking across the piece along the
supply chain. We worked openly with partners. The agenda has now
changed, as Mike has said, and we are now working to the DPM's
agenda as set out in the statement of 18 July.
288. Can I ask one question on that under the
heading of new approaches. Do you agree that one of the problems
with affordable houses to buy is that whilst you might put some
subsidy up front and the young local couple or person buys, the
issue has always been that in two or three years' time they sell
it on in the open market and it is no longer affordable housing
so-called. Have you been looking at that particularly in relation
to possible new forms of legal tenure or other ways we might create
to buy a property with subsidy which remained affordable housing
on a long-term basis?
(Mr Cleary) There are instruments available, for example
those used in rural areas to help keep the housing in use for
the local community. Our perception was that that was not a primary
obstacle to the supply of affordable housing. It was a useful
area to examine but the issue really is up front in how much housing
we can provide.
(Mr Gahagan) I think there is an additional element.
In schemes like low-cost ownership or Homebuy, when the property
is sold, the equity share that the housing association provided
reverts back to the housing association so the money is not lost.
There is an issue about restricting subsequent sale because the
lenders obviously are nervous about that.
289. All those schemes require a third party.
I am talking about some kind of new scheme or new idea or new
legal tenure that may not require the presence of a third party
or retained equity in any way but nonetheless does the job we
want it to do. I am not saying you have got an answer but you
guys are very clever people and you are paid a reasonable sum
of money to come up with new ideas.
(Mr Gahagan) I like the word "reasonable"!
290. Are you a key worker? Please tell me you
are looking at it and you will come up with some brilliant ideas
(Mr Gahagan) We are open to any suggestion on this.
Ministers do want to. What I would say to you is in these schemes
there is always a public subsidy of one form or another, it may
be land or it may be money, but the figures do not stack up without
that contribution somewhere in that scheme, and there is the issue
about recycling, except through section 106 agreements.
291. Please do not accept this as a personal
question or an obligation on your part to declare an interest,
but how many people working on the recommendations to Government
a) live in the South East and b) are paid to make a living in
the South East?
(Mr Gahagan) Sorry?
292. How many people within the unit working
on the housing strategy are themselves beneficiaries of additional
money because they live in the South East? Do the majority of
them actually live in the South East?
(Mr Cleary) Yes, all the members of the unit live
in the South East and, as you will know, there is an element of
consolidation there of the cost of living in the South East and
293. I am sure that in no way biases your opinion
to favour certain solutions rather than others.
(Mr Cleary) I am not aware that it does. I should
add that we have a lot of input from our regional colleagues,
we have been working across the regions, and I hope that helps
to counter it.
294. Gentlemen, I am not sure if you were present
when the previous witnesses gave their evidence but if you were
you would have heard Mr Tetlow saying that we could double the
number of affordable units if central government gave far more
robust guidance to local planning authorities. Do you agree with
that statement? Secondly, when you introduced yourselves you said
that looking at the planning system was one of your priorities.
What conclusions have you come to from looking at the way the
planning system is working in providing affordable units?
(Mr Cleary) If I may, I would like to divide it into
three elements. One is the planning policies themselves and particularly
the housing need assessments that local authorities carry out.
What we found in some cases is that they are very narrow. There
are obviously some excellent ones, there are others that just
focus in on one particular section of the market, for example
those in statutory housing need, not extending to key workers
and others across the piece. If you look at the housing policies
in the South East, for example, we have had in recent years 40
per cent completions for four-bedroomed executive houses rather
than the small units that you might expect. If you look at an
authority like Basingstoke which is now requiring a minimum percentage
of one and two bedroom units, that is right up front, and that
is the first stage. The second stage is how is the negotiation
itself carried out and there again your other witnesses alluded
to this. We found an enormous spread of practice. We have some
research on this which is still on-going and which, like our other
research, will report and be published. There is quite a lot you
can do to improve the efficiency with which negotiation is carried
out. The third area is what you actually require, what is the
level of contribution to affordable housing and how much of that
is key worker. That third element, the issue of further guidance
and further definitions and so on, a lot of things have been said
to us on that and that really is now an issue for ministers and
they are thinking about that in the context of the DPM's wider
295. I think that the Department was looking
at a system whereby planning applications that contained an element
of affordable housing would be fast-tracked through the planning
(Mr Gahagan) Yes.
296. Is that right? Were there pilots set up?
Have you had any interim results from those studies?
(Mr Gahagan) That indeed is the research that I was
just referring to. What that is designed to show is if you make
available special help to a sample selection of authorities how
far you speed up the system and improve its content and output.
They are working with ten authorities spread across London and
the South East on projects which involve 1,000 housing units and
that work is about to report and should be completed by the end
of this year and we will then obviously feed that into the process.
297. You have no idea yet how it is shaping
(Mr Gahagan) It is tending to support the points I
made a moment ago, in other words, the spread of good practice,
the importance of the housing needs assessment up front being
broadened and the policies, and then it has some observations
to make about what kind of affordable housing contribution we
298. The Deputy Prime Minister in a statement
in July dropped the suggestion in the Planning Green Paper to
impose a tariff on all developers for affordable housing. Can
we expect that there will be new guidance in place of that suggestion
from the Department to the planning authorities about planning
(Mr Gahagan) Yes. The original objectives to make
the system more transparent, more certain, and to speed it up
remain core priorities and we do want to take those forward, even
though that particular way of doing it is not now being proceeded
299. Is anyone looking at the issue of tax breaks
and tax incentives on developers in providing affordable housing?
(Mr Gahagan) Yes, this is something on which we commissioned
research and we published that very broad piece of work covering
instruments used internationally, so it ranges from encouraging
developers at one end through to helping the saver and also encouraging
employers, because one of the other areas that we found is that
there is quite a lot employers can do. This is all published work
and we have fed that into our colleagues in the Treasury who obviously
have the lead responsibility on fiscal matters.