Examination of Witnesses (Questions 440-459)|
WEDNESDAY 5 DECEMBER 2001
440. Is this being fair to the person?
(Mr Osborne) We have been in detailed consultation
in this particular instance with all the people in the community.
There is a local community group working on this and they are
basically forcing us down this line.
441. Do you not think Salford Council to a large
extent is responsible for this unfortunate situation? They promised
all this regeneration and now they are only prepared to pay a
pittance for the house.
(Mr Osborne) To answer your question in reverse, Salford
Council can only offer open market value for the property. The
open market value is only low because of the extant housing market.
Salford Council takes part of the blame for the situation. Can
I remind you that Government money was withdrawn back in the 1970s
from housing action areas and general improvement areas halfway
through the Seedley and Langworthy regeneration project. Salford
Council has worked very hard with the local community to try to
get a solution for people trapped in negative equity. Local people
are saying to us, "Find us a way out of this". This
is the best solution we have at this moment in time.
442. It has taken 18 months and so far six people
are about to move. Is that process good value for money?
(Mr Osborne) If I tell you it has taken 12 months
with the Council of Mortgage Lenders and the Local Government
Association and the Department to get to where we are now in terms
of negotiation about the process, it has taken us three to four
months to get Counsel's opinion and District Auditor's opinion
to say that this process is legal. We are trapped within the cycle
of decision-making in order to facilitate this process.
443. Right, so a great deal of money has been
spent in all of that process without at the moment helping very
(Mr Osborne) We have acquired a number of empty properties
for clearance and we are at the point where we are about to acquire
properties for home swapping. The first clearance area declaration
28 day notice is up on Friday. I have already approved 250 improvement
grants in the area of properties that are remaining and which
we hope can be sustained. Whilst some progress has been made,
you are right to say on the ground it has not happened yet. That
is down to the range of hoops and hurdles that local government
has to go through.
444. Do you feel frustrated by all those?
(Mr Osborne) Yes I am. To give you an example. We
went for Single Regeneration Budget status in the area and went
through a process there, and we have now had to go to clearance
process and get that again, so why can the process not be agreed
through one regeneration channel once and then we have got flexibility
to do things in an area?
445. You mentioned in your memorandum the issue
of the 30-year business plan. If that were to be done, how would
you calculate the contribution that the private homeowner had
made to their own property over that period? How would you quantify
that in the business plan?
(Mr Osborne) I have used the basis of the Stock Condition
Survey which we are required to carry out every five years in
local government, and that would take into account the demographics
of an area, household income, household composition and also the
cost of repair, renewal and possible removal of obsolescent dwellings.
The basic idea would be to plot out in broad terms what financial
contribution that person is currently making to housing costs
in their area and to try to find an equitable way of bringing
in private finance to support that. I recognise that public money
on its own is not enough. If you ask me for a percentage this
morning, I could not give you one. It would depend on each neighbourhood
and each area, whether in the city I work in or across the country.
You have to plot out very carefully in broad terms how money will
be spent and where the various sources are coming from.
446. What role do you think the Housing Corporation
should have in supporting local authorities in this whole area?
(Mr Osborne) I am frustrated by the fact that the
funding mechanisms that are used to support housing associations
do not recognise over-supply of dwellings. The Housing Corporation,
in broad terms, tends to support the development of new housing
but not the removal of old housing. A good example is the Zzara
Street project in Higher Broughton where we are working closely
with housing associations and taking out something like 300 terraced
dwellings but replacing them with 150 new houses. We are reducing
the density. We could do with a targeted funding stream to deal
with that sort of project. In my borough I only get about £3
million a year from the Housing Corporation to support housing
associations. They have 7 per cent voids, the highest in the North
West, and that should be recognised. The Housing Needs Index score
for Salford assumes that that over-supply of dwellings is something
that can be let and therefore assumes that no additional money
is required for new homes. But it cannot be let and, if there
is no money coming in with that over-supply, there is not enough
money coming for Salford to deal with the unwanted empty homes.
That is replicated in other boroughs.
447. What do you feel about the Government's
proposals for compensation in renewal areas?
(Mr Brown) I think probably they are a step forward.
They are phrased in an enabling way rather than a rules-based
way and we have always had this problem in this country where
we like to give people rules within which to operate rather than
tools to operate with. From my point of viewand I was very
interested hearing some of Bob's answersit seems to me
the principle should be "a home for a home". I recognise
that presents the system with significantly more costs of acquiring
properties but for a home owner I cannot imagine being in the
position of having my home taken away and being forced into negative
equity. I feel a home for a home is a basic principle that in
compensation we should be seeking to achieve.
(Mr Osborne) I feel there are a number of people working
in the sorts of areas that I am working in who are buying up properties
in order to make a quick returncarpet bagging. The view
expressed in a previous Local Government Association paper was
that people who are not contributing to the neighbourhood, not
adding to the value of the neighbourhood, letting properties stand
still, should be compensated less than people who are genuine
home owners. I think that needs to be looked at.
448. To what degree? How much?
(Mr Osborne) I could not give a specific number but
if you bought a house for £3,000 and thought you were going
to make a quick return on it, you should not get open market value,
you should get the £3,000 back.
449. How much would you need to provide in assistance
to have a real effect?
(Mr Osborne) I can only talk for the city I work in
which is Salford, and the housing stock condition survey for the
next 30 years suggests we need £1.6 billion to clear obsolescent
loans and repair and renew buildings, so that is about £50
million a year. If you assume that 50 per cent of that comes from
the private sector£25 million a yearthe current
allocation of capital programme I am working to is £10 million.
That includes Single Regeneration budget and New Deal for Communities
money, so the answer is "not enough".
450. My question is really to Chris Brown. In
the written evidence that you gave to the Committee you seem to
be making the argument quite strongly that the existing compulsory
purchase order rules and regulations, particularly in the context
of empty homes and regeneration, are very slow, unwieldy, etcetera.
How would you like to see the process improved?
(Mr Brown) How long have you got?
451. Not a lot of time, I am afraid. If you
want a supplementary note we will be pleased to accept it.
(Mr Brown) The system has been described by the Law
Commission as a "mess". The average timescale for CPOs
over all CPOs is from start to end between 8 and 13 years. It
is clearly a system that does not work. How to make it better?
One of the things I have been reading recently is some of the
Law Commission's initial papers on the subject, and it seems to
me that from their point of view they think it is very easy to
codify this mess of legislation into a single Act which is relatively
clear, and understandable by the layman as well as by the lawyer.
I think that would be a huge step forward. We have had also published
recently (last week I think) a manual which purports to assist
people doing CPOs. I have not been able to get hold of a copy.
I do not know of anyone else who has been able to get hold of
452. Who has produced that manual?
(Mr Brown) It is technically a Stationery Office publication,
and even the authors, Drivers Jonas, cannot get hold of a copy.
I would love to see what it says. I hope it is helpful. I saw
an earlier draft which I was not impressed with. This is how we
work the system. We are very amateurish about it and we have to
get our act together, we have to be more professional.
453. Do you think the work of this Compulsory
Purchase Order Advisory Group has made any difference?
(Mr Brown) There were a couple of people on that group
who knew what they were talking about in terms of regeneration
CPOs, but they were vastly outnumbered by the lawyers and the
farmers. It was not a fundamental review. It did not understand
the needs of regeneration in respect of CPO. It was more or less
a waste of time in terms of regeneration CPO, in my view.
454. So you do not have much confidence in this
paper that is likely to be coming out at same time as the Planning
(Mr Brown) That is a different matter because I think
Government got quite a hard time when it went out into the regions
talking about the report of the group. I heard a number of Bob's
colleagues savaging some of the civil servants and I hope that
has had an effect.
455. Can I ask you two other questions. One
is how much of a problem is the fact that the applicant usually
needs to have obtained detailed planning permission for the re-use
of the site after demolition or after a CPO Order? Is that a real
(Mr Brown) It is one of the two fundamentals. I think
the best example I can give at the moment is the CPO that the
North West Development Agency is promoting in Ancoats in Manchester.
That is a potential world heritage site, it is a conservation
area, it has got a huge number of listed buildings. The general
opinion is that in order to be sure of getting the CPO you really
should have planning permission and a scheme which can be financed.
English Heritage are, not surprisingly, very unwilling to consider
an outline planning application for such a sensitive area and
the prospect of getting finance for such a project sorted out
before the event is nil, it is just too complicated. You get caught
in this vicious circle that you cannot get out of.
456. Do you think an overall master plan ought
to be sufficient?
(Mr Brown) Yes. We had a system and, without commenting
on the merits or otherwise of urban development corporations,
they were given guidance by government in a Circular in 1984 which
required them to consult on the designation of regeneration areas,
which is a very important process to go through with the public
but then, having consulted, that was a firm basis for taking forward
a CPO, and that seems to be a much more sensible.
457. Can I invite you to be rude about local
government officers and say whether or not you consider that their
inexperience often contributes to the delays in the present system?
(Mr Brown) He is looking at me hard!
(Mr Osborne) It is true.
(Mr Brown) I think there are very few and it is only
the major local authorities that have enough people with the skills
required to do CPOs. The system fell out of use for a couple of
decades almost. The people who used to be able to operate it retired.
Very few people, and they are only in the large authorities, are
still able to operate the process.
458. The trouble with the local regeneration
plans and people like the development authorities under a previous
government was that they had a very limited interpretation of
where housing need ought to respond to the interests of the population
as a whole. Frankly, is it reasonable that because there are lots
of listed buildings to expect outline planning permission? I would
not trust anybody that brought me an outline planning application
that simply said generally "we are going to leave all these
bits in place" Really?
(Mr Brown) I agree absolutely and what is happening
there is planning permission is not being granted at the time
of the CPO. The process is these buildings are almost exclusively
owned by speculators, the sort of people Bob was talking about.
The process is to get the speculators (who are never going to
invest in the properties) out of the system and get the interests
into people who will make detailed planning applications which
will respect the listed buildings and bring the buildings back
459. You called for a definition of "obsolescence".
What is it?
(Mr Osborne) In short terms, property that nobody
wants any more. I gave you the example of the Higher Broughton
area of Salford, the Wiltshire Street area. A new home has not
exchanged hands in that area for the last five years. Private
landlords may have let properties willy-nilly to one or two but
in essence because it is of its age, a built form (ie it has not
got a garden, a place to park or enough power points) it is not
fit in terms of repairs, and there is a choice of another property
elsewhere within reasonable travelling distance, it is basically
obsolescent. I would use the example of a new Brookside-type house.
If you compare a two-up two-down terraced versus a three-bedroomed,
semi-detached house you can buy for £50 down and £36,000
on the open market because of various factors, versus a pre-1919
house which is probably valued at £25,000 but does not compare
in terms of quality of provision. In essence, it is "obsolescent"
as nobody wants to live there any more.