WEDNESDAY 12 DECEMBER 2001
Andrew F Bennett, in the Chair
Examination of Witnesses
MS SALLY KEEBLE, a Member of the House, Parliamentary Under-Secretary of State, and MR MICHAEL FAULKNER, Division Manager, Housing, Private Rented Sector, Department for Transport, Local Government and The Regions, examined.
(Ms Keeble) I am Sally Keeble, I am Parliamentary Under-Secretary of State. This is an official, Michael Faulkner.
(Ms Keeble) I did have a statement but given that we are running short of time you might prefer just to go straight to questions.
(Ms Keeble) Okay. The issues around abandonment and low demand are clearly complex. We have come a long way in our understanding but still have more work to do. We set ourselves a target in January 2001 to turn round the incidence of low demand by 2010 and this timescale reflects the complexity and intractability of the problem. I just want to set out some of the measures that we have taken so far to deal with it. The PAT 7 report on unpopular housing produced nearly 40 recommendations and we are making progress on these. We are taking forward a range of measures to help local authorities and other stakeholders tackle problems linked to low demand and abandonment. For example, we recognise the activities of some private landlords and the effect that they have on the decline of neighbourhoods, so we are consulting on a discretionary licensing scheme in particular for private landlords in areas of low demand. We are reforming the way that local authorities help poor homeowners to repair their properties by giving them more flexibility in how they use the funding. We have already made it easier to declare renewal areas and carry out group repairs, and have further work to do on that as well. We have set ourselves a target to bring all social housing up to a decent standard in ten years. We have made the funding available to do this and we are encouraging local authorities to develop housing strategies to cover all housing tenures. We are also pressing ahead with our neighbourhood renewal agenda. By improving the quality of local services, engaging tenants and residents and improving the livability of neighbourhoods we can help to make them more desirable places to live again. Finally, we are using a planning system which is obviously a key to ensuring that we get redevelopment in low demand areas and we are using this both at a regional and local level.
Chairman: Thank you very much indeed.
(Ms Keeble) Yes. Can I say I think there is a different issue in the high demand areas from the low demand areas and it is quite important to distinguish those. Certainly in the high demand areas there is an issue about empty properties and the need to make sure that they are brought back into use where they can be to make sure we have effective use of the housing stock and also we tackle the problem of homelessness. We have required local authorities as part of their HIP submissions to make reference to what they are doing about empty properties and it is also being looked at as a performance indicator for local authorities. There are measures being taken there but I would say I think it is a different scale of problem from the problems that we see up in the North where you have a complete collapse of the housing market and I think a different scale of action is required.
(Ms Keeble) No. We are looking presently at the particular needs of those low demand areas. Of course it is a problem if there are empty properties in a high demand area. If you look over the past two years' figures at the vacancy rates in certain regions, in particular Yorkshire, Humberside, North East and North West, those have climbed to a particularly high level at a time when the vacancy rates elsewhere in the country have been declining. What is more, up in those regions the vacancy rates are not just in residential properties but in commercial properties too, and it is because of real difficulties in the market and different patterns there. That is why we are looking at measures like the licensing of private sector landlords and the renewal and regeneration strategies. We have been talking with the local authorities there very carefully about the problems that they are experiencing and have had discussions with them about their proposals for a Market Renewal Fund, which I am sure you have had brought to your attention as well.
(Ms Keeble) Yes.
(Ms Keeble) In terms of the different tenures, we are concerned across all the tenures and the discussions we have had with the local authorities and others are about looking for strategies that go across all the different housing tenures. Where you have a problem of low demand it does not just affect the council properties, it affects the private sector properties as well. The strategies for renewal and regeneration and the work that is being done, sometimes by local authorities and also, I have to say, by registered social landlords, is there to help the owner-occupiers, the private sector, as well as the local authority and the social sectors.
(Ms Keeble) The figures that we get would be snapshots. They can be figures taken, because they would be returns from local authorities, at a particular point in time.
(Ms Keeble) An empty home would be a home that is not occupied at the point in time when the census is done. I take your point the problem comes when it stops being an empty property and there is a long-term problem.
(Ms Keeble) I would say it is empty if there is nobody living in it. The issue then is why it is empty. A two per cent vacancy rate, I think that is called a transactional value, a fictional level, a level which would be expected given the scale of time it takes to fill a property to re-let and so on and bring it back into use. If you looked at -----
(Ms Keeble) They are clearly not occupied at a point in time.
(Ms Keeble) No, because those are occupied for part of the week. We do not include second homes and holiday homes because they are occupied for at least part of the year. If you look at the level at which a void rate becomes problematic, which is probably more useful in deciding what to do about empty properties, up to two per cent you would accept as being at a level which does not indicate that there is a major problem, but once you get over four per cent you are starting to see real problems of low demand and problems that have got to be tackled in a much more substantial way. I think that might be a more useful way to look at void rates than to ask how long is a property empty.
(Ms Keeble) I am sorry, I cannot hear you very well.
(Ms Keeble) We have not got proposals now to do that, no.
(Ms Keeble) I think there is some Cabinet Office work which is being done on this which was perhaps referred to in the memorandum. We do not currently have legislation, as it were, on the stocks to deal with that particular issue.
(Ms Keeble) There is a Cabinet Office report on it which is supposed to be published in the new year, so hopefully we will see a way forward out of that.
(Ms Keeble) The most recent one will obviously be the tax incentives for conversion of flats over shops. This has only just come into effect so we would not know yet. The other one which is probably going to be of some of the greatest use will be the one about stamp duty which has just been announced which, again, we are not going to see in effect for some time. We would not have stats yet on those particular issues.
(Ms Keeble) We will obviously be looking at it because that is clearly the aim, to get improvements there.
(Ms Keeble) No, we have not got that estimate.
(Ms Keeble) The measures have only just come in quite recently. As I said before, we do not have an indication yet as to the extent to which it is being taken up. It is a very generous allowance so I am quite surprised by the criticisms that you make of it.
(Ms Keeble) I certainly have not seen those criticisms come back from that group despite the fact that we have quite regular meetings and discussions with them. Certainly if they were to bring that back we would look at it. The arrangements that have been made are very generous. We will look and see how they are taken up and if changes are required then I am sure we can look at it.
(Ms Keeble) Obviously all the decisions about that are taken by the Treasury.
(Ms Keeble) If you are looking at issues about bringing properties back into use -
Christine Russell: To stop them being abandoned. If an RSL, for instance, could do some repairs. In Manchester we saw some quite low priced cosmetic repairs to improve some streets that had not cost an awful lot of money but had probably saved those streets from going over the edge.
Ms King: It is about incentives for investment, is it not?
(Ms Keeble) I think the same arguments apply also to the whole range of need for improvement in low demand and inner city areas. All the decisions about VAT will obviously have to be taken by the Treasury.
(Ms Keeble) No, we have not.
(Ms Keeble) I think it is, yes. It is a huge problem and we do have to be able to ensure that we have a viable housing market in those parts of the country which currently are subject to abandonment and extremely low demand.
(Ms Keeble) That is being looked at and I have to say it is not just from the Federation, quite a number of local authorities have also come together and have put in a form of submission which is being actively considered. The funding for that would be considered under the Spending Review. There have been very active discussions about the proposals for the Market Renewal Fund.
(Ms Keeble) We have not formally reached a decision on it yet because the submission has come in quite recently. There are also some issues around the proposals for the Market Renewal Fund. There are discussions about exactly what the money would be used for because there are a range of measures they are talking about using both on capital and on revenue. One of the other factors would be who would be responsible for such restructuring because there is a strong feeling that it should not just be the local authorities, there needs to be a much wider body, and it would need to be looked at on a sub-regional basis rather than just a local authority basis. There are quite a lot of issues that still have to be resolved about the way a Fund would operate and exactly what it would do. The overwhelming question is obviously the one about the level of the Fund and that is being looked at as part of the Spending Review.
(Ms Keeble) I do not think that is an acceptable solution for quite a number of different reasons, one is that the causes of low demand and abandonment are quite diverse. Certainly they include economic decline, and that is most obvious in the coal field areas where the mines have gone, so the economic reasons behind the settlements are not there. There is also issues about obsolete housing, where the housing is simply not up to standard and there is no way it could be repaired, that goes probably back to VAT. There is already evidence, you have probably seen it, that quite a lot of money has been spent bringing property up to value only to find that it still cannot be let and it has the pulled down. There are also issues about neighbourhood management. Again, you have probably seen areas where there has been wholesale abandonment because of the high crime rates and the area has become such that people do not want to live there. There is quite a number of different reasons for decline and low demand, some of them can be managed, some of them are about changing and rebuilding the housing because they are of a type that people do not want to live in, and some of it is about economic pressures. You have to tackle each of those different problems head on. In some areas, of course, there will need to be demolition and on quite a substantial scale, but in some areas it is possible to turn those areas round, and I think we should focus on doing that.
(Ms Keeble) Yes.
(Ms Keeble) This year and next year the planned demolition is something like 23,000 or 24,000 properties, that is already in the pipeline. That is very, very substantial, it is about 20,000 this year in local authority and about 3,000 private sector and next year it is about 19,000 local authority and about the same in private sector. There is demolition already going on. There is also some reprovision going on. If you look, for example, at the Chilwell Housing Action Trust, which you might have been to, there they have taken down a number of tower blocks and they have provided a smaller number of units, that is a really good example of how they coped with the changing population. Most of the new units, or a large number of them have been sheltered housing because the population has aged and they have completely reprovided a certain sector of housing. That has, perhaps, been an example of the way that quite careful thinking can be done to bring areas back into use.
(Ms Keeble) First of all, the point about the funds for the private sector, as I said we are looking at the Market Renewal Fund and that would cover all sectors, the funds for that, that is part of the discussion about the Spending Review. However, we have simplified the arrangements for renewal areas and those, obviously, cover different sectors. It is also the case that in some of the regeneration work that is being done, in Kensington New Deal for Communities, which I think the Select Committee went to see, work has been done there across sectors, with the Housing Association being the agent for that, which I think has been a particularly innovative way of dealing with it. You are right, there are problems, particularly in some of the ex coal field areas and some of the activities of private sector land who brought up huge swathes of properties which are now derelict and which the owners refuse to do up. We are looking at one particular development there to tackle quite a number of those little villages and try and tackle and overcome some of the problems of abandonment and dereliction there. As part of the planning Green Paper, which is being launched even as we speak now, we also have our proposals for simplifying the CPO procedures. Under the right-to-buy we do not have proposals to change the right-to-buy. We recognise, particularly in Tower Hamlets that has been a problem on one estate, where people have exercised their right-to-buy in very large numbers. Part of our housing funding from this year on included a low demand indicator, which has been the first time that the problems have of low demand have been recognised and those financial ---
(Ms Keeble) It allows for extra funding for those local authorities that have a problem with low demand. It accounts for two per cent of the total funding, which is quite modest now, but it is the first time that the extra pressures caused for housing authorities by the problem of low demand has actually been recognised.
(Ms Keeble) We have not looked at changing any of the right-to-buy provisions.
(Ms Keeble) I am not familiar with that. Can you just describe it for me?
(Ms Keeble) We have not made an estimation of an extension of that programme. I would say, however, that in almost all of the areas where there is regeneration of housing estates there is a major issue of making sure that people are prepared to move in some instances, if you have to clear and reprovide housing. I would say that is obviously one of the issues round the Ocean Estate as well in Tower Hamlets. It is well recognised and it is one of the big issues that comes up in housing management for any regeneration scheme.
(Ms Keeble) How many?
(Ms Keeble) There are obviously real difficulties for people who are stuck in owner-occupied houses in areas of low demand because it is virtually impossible for them to move and because a house loses its value in such a dramatic way they cannot get the equity out of their property to move to an area of their choice. It seems to me that if we are looking at dealing with a low demand problem and regenerating housing we have to make sure, one, that we provide people with the type of housing that they are going to want to live in for a period of time, which can sometimes provide dramatically different housing, for example a shift from family housing to housing for older people. That we also provide people with some greater ability, if they do want to move or move out. Also, this is going to be the real trick of Market Renewal Fund, in most of these areas what we are trying to do is bring value back into areas that have none so that the housing market can operate as it would normally down here. That is going to be an extremely difficult thing to do. If we are seriously going to turnaround the low demand areas and get the market operating properly back in the North-East and North-West and Yorkshire and Humberside that is the intervention that the government has to make.
(Ms Keeble) One is that it is not enough just to repair properties and think that that is the sum total of the problem. You can bring houses up to a certain standard but that sometimes does not deal with the underlying issues which might go very much wider, as I indicated before. The second lesson is that if you are going to renew those low demand areas you have to look at the wider strategies, that includes looking at employment and looking at neighbourhood management. If you look at some of the very interesting work that has been done in some of New Deal for Communities areas by some of the housing associations, they have tackled the wider problems and they have managed to create sustainable communities. I think those are probably the two biggest ones actually, not going for short-term gains and tackling the wider problems that are involved in an area.
(Ms Keeble) I think despite their very turbulent beginnings I think the Housing Action Trust have done some very good work because they have reprovided housing to a very high standard, a remarkably high standard. They have also tackled some of the wider issues about job provision, local communities and things like that. They have also empowered communities, which I know sounds very vague, tenants have become much more engaged in managing their own estates and that helps to sustain them over the longer term. I have to say they have also had vast amounts of money.
(Ms Keeble) We might be here all day. I think Castleway have done extraordinary work, both in providing a wide range of housing and getting private sector housing into what was once truly a big council estate. They have also managed to tackle some of health problems for the local community and educational problem. They have improved the infant mortality rate simply by changing the way the services are managed on the housing estate. They have got school standards up as well because they have worked with the schools, which quite a lot of housing areas have not done. The Tower Hamlets Housing Action Trust has done well in terms of providing a range of different types of housing in place of tower blocks.
(Ms Keeble) In Liverpool, the Housing Action Trust there has done extremely well again in reproviding and taking the tenants with them and in changing tower blocks into some very good sheltered housing, so that they have kept track of the changing in community and they have thought in a very substantial way about how to do it. I think some of the New Deal for Communities, I am just thinking of one, I think the one in Liverpool has done well, and the Kensington one.
(Ms Keeble) Who has made it?
(Ms Keeble) That they have done well? If you ask me which ones I think have done well then I make that judgment looking at what they have achieved.
(Ms Keeble) I think what they have done, which is interesting, is to get partnership working across tenures, which is very difficult. In quite a lot of areas you go and people can say, "we cannot do anything because that is owned by a private landlord, that is housing association, that is council". There is a problem of mixed tenures. I think Kensington New Deal for Communities has recognised that because it has found a model for tackling it.
(Ms Keeble) You have to have a model in place to be able to do anything at all. If you look at some of the other areas of low demand where they have not been able to get that then the areas have not been able to make progress. You can look at the coal field communities in Nottinghamshire and Derbyshire where you have small isolated places that have not been able to get a model to really tackle some of the difficulties they have. I take your point that the Liverpool New Deal for Communities is early days, but they have a model which is able to tackle some of the difficult intractable issues they have and we have to follow through.
Chairman: I think if the Committee is going to get through all of the questions we have to be a bit quicker with our questions.
(Ms Keeble) Are you talking particularly about the Ocean Estate?
(Ms Keeble) I have to say that the one area where that particular issue has been raised has been the Ocean Estate. I have not had that one raised elsewhere.
(Ms Keeble) I under that. We are not looking again at the right-to-buy. We would have to look with Tower Hamlets at what the other options would be for renewing that estate. We are not looking at suspending the right-to-buy.
(Ms Keeble) No, I would not have thought so. The choice based lettings, the entire aim of that is to make sure that all people, all housing tenants in the social sector have more choice about where they live. That would mean that it is not just the people who can wait longest to see what is on offer, that should also apply to people who are coming up through the homelessness procedure.
(Ms Keeble) There has been some work done in particular areas to find ways of making very fast intervention. On the wider question, have we got all of the mechanisms in place, I think the one issue that we need to really deal with is the one of Market Renewal Fund.
(Ms Keeble) That is really about seeing when one property in a street has been empty for period of time and making sure that there is tenant in it quickly before that spreads.
(Ms Keeble) I would put it in months.
(Ms Keeble) I do not want to be drawn into months. If you are talking about letting a property you have to repair the property, bring it back to ---
(Ms Keeble) Yes. I would say months. Can I just say on that, if you are talking about skids going under a particular neighbourhood and it going into decline, there are quite a lot of measures which are in place now, or which are coming into place, which would help deal with that and should help stop that very quick deterioration. For example, the once we get the licensing for private sector landlords I am sure that that will help. I think also the arrangements for the neighbourhoods wardens, street wardens will also help, because they act as an early warning system for problems in the area and they deal also with some of the dereliction, which is the first sign of an area going seriously into decline. We have also produced guidance for fast tracking and the eviction of problem tenants. There are quite a few extra mechanisms that local authorities can actually use to help to manage estates more effectively and help to stop that very sudden collapse that you can see in an area. I take your point that no one might see it coming, but I would also argue that in some instances the early warning signs are there.
(Ms Keeble) I think it is both. The reason why the problem landlords are problem landlords is because by and large what they are doing is they are buying up houses which have virtually no capital value, they are buying them up for a few thousand pounds, and they are buying because of their housing benefit value - I think the term is benefit harvesting - they are simply using the income stream from the housing benefit and they are letting to people who have sometimes been evicted from council properties for anti-social behaviour. You have bad landlords who do not manage their properties letting to very difficult tenants, that is when you get the real disasters.
(Ms Keeble) I have to say I would not blame the Rent Service for that. If you are looking at somebody who has bought a house, and you have probably heard the information as much as I have, for a few thousand pounds the amount of money that they get in for housing benefit is going to cover the cost.
(Ms Keeble) I do not think that is a Rent Service problem. That is entirely a problem of people spotting an easy way to make money, which is you buy up cheap properties and you let them to people who then get housing benefit.
(Ms Keeble) For the kind of prices that people are buying properties for they can let at virtually any price. I do not think that you can shift the problem off on to the Rent Service. The problem seems to me to lie fair and square with people who are using a loophole to make a very lucrative living. The way to deal with it is through the licensing of private sector landlords, which is what we consulted about and what we are hoping to legislate for, because that would link the payment of housing benefit, and this is one of the issues that is raised in the consultation document, the payment of housing benefit to the type of management services and to the way that the landlord manages property, so if they not manage the property properly and they are completely irresponsible as landlords they would not be able to get housing benefit.
(Ms Keeble) Of course there is an issue about where people live but the point is that the landlords should not simply be putting people with profound difficulties into a particular area and then leaving them without any support or any form of management at all. Of course people have to live somewhere but the properties also have to be managed and the landlord has to take some responsibility for the way in which he organises and supports a whole range of properties.
(Ms Keeble) I do not think in the cases where you see the decline of areas because of this type of landlordism, it is not the case you have a road and one person in it and everyone else is owner-occupied. What you have are streets where people are moving out, for all of the reasons we have talked about because of low demand, and then you have whole streets being bought up or large numbers of properties and then quite substantial numbers of anti-social tenants being placed into those properties. I think it is a fairly well recognised cycle of decline that is affecting particular areas of the North. I have to say that I think the real route into it is through private landlord licensing and the link with that through then to housing benefit.
(Ms Keeble) The consultation is out now.
(Ms Keeble) We would hope to be able to get something in the Queen's speech, obviously we cannot make a commitment on that.
(Ms Keeble) Yes.
(Ms Keeble) Local authorities are expected to have quite a number of different strategies, one is a community strategy. We are now asking them specifically about empty properties.
(Ms Keeble) If you mean are they working together properly, I am sure you can point to areas where they are not but I would say that increasingly in the areas that we have seen the different measures that the government is making to ensure that they are working together are working and it is happening.
(Ms Keeble) We are working closely with the Home Office in quite a number of different areas.
(Ms Keeble) Obviously we do not have a particular responsibility for housing asylum seekers.
(Ms Keeble) Okay. Can I just say one thing about the work of the Home Office, we do work closely with the Home Office on a whole range of different areas, in particular in the neighbourhood and street warden schemes, there is very close working there and in the neighbourhood renewal areas as well.
(Ms Keeble) We obviously monitor the way in which the regional strategies are implemented and also how the regional plans come forward for housing.
(Ms Keeble) In what sense?
(Ms Keeble) We certainly look at the way in which the different agencies cooperate in preparing the strategies for housing. We also monitor the work that local housing authorities do and also we obviously, through the Housing Corporation, we look at what the housing associations do as well.
(Ms Keeble) The Regional Development Agencies responsibility would really be through their role in looking at regeneration and they would also have to take into account the housing market as part of their assessment of the overall economic reforms of an area, the housing market as part of the local economy.
(Ms Keeble) We would expect them to work together in putting together the regional plans, yes.
(Ms Keeble) I am not sure about monitoring arrangements I can certainly give you a note on that.
(Ms Keeble) There is obviously some outstanding planning consents and we do not have plans to revoke those, there is always going to be a lag time in the policy coming into effect. I would question whether the assessment that it is not working is based on recent decisions or whether it is the carrying forward of consents that were given before the PPG3 was actually passed. In terms of building it it is still quite a new PPG.
(Ms Keeble) New permissions, we will be monitoring them over time, yes.
(Ms Keeble) We will be monitoring them.
(Ms Keeble) Yes, I am sure we are.
Mr Betts: Can I follow that up, as well as authorities not giving new permissions on sites where brown field sites exist they are also supposed to be revising their housing development plans and where land that was allocated for housing in the new PPG3 falls outside the scope of that they should be removing those applications and chasing the destination of that land. Is that happening? Are you monitoring that? Can you can tell us how much lands is being removed for housing allocation as a result?
(Ms Keeble) Yes, it is happening. However, there is a problem here because whilst the local authorities change their plans that does not mean that existing planning consents are necessarily revoked.
(Ms Keeble) That has happened in some areas, particularly ones that I can quote are Houlton, Oldham, South Lakeland and Bolton. It is happening.
(Ms Keeble) We can certainly do that.
Mr Betts: How much land has been so far removed?
(Ms Keeble) Yes. It would be quite wrong to comment on an individual case and obviously planning inspectors also have to make their decisions on a case by case basis. The Greenfield Direction mean local authorities would have to notify the secretary of state if there are housing proposals on larger green field sites, even where those sites were allocated, the plans, there is monitoring and report back. I would say that where there is an individual case that will have been taken I think in this case by an individual planning inspector on that particular case.
(Ms Keeble) There is obviously quite a long process before you finally agree on regional allocations, and in some areas that is still under discussion. I would just say that there are quite some complications about housing allocations.
(Ms Keeble) Yes. That particular one has not been settled yet. I think the reason why is it is a region that wants a higher allocation and the reason, as I understand it, that they want it is because they say whilst they have an oversupply of housing or what would appear to be an oversupply of housing, they have the wrong type of housing, and they therefore want a more diverse range of housing stock, so that is the reasoning behind that. That particular case is still being looked at.
(Ms Keeble) What they have done in the Hastings case, this is why that is being scrutinised, is there has been some double counting of the properties concerned so that is why there has been an issue round the Hastings plan.
(Ms Keeble) This is obviously tied up with the state aid discussion as well. There have been careful discussions in Brussels and there is some progress being made on that, albeit very slow.
(Ms Keeble) I was not aware of that, I have to say.
(Ms Keeble) I will look at that.
(Ms Keeble) Of abandonment?
(Ms Keeble) The demand for certain neighbourhoods ----
(Ms Keeble) I have to say I have seen exactly the same in Rochdale, and those areas which thrive are largely because the properties still have a high value, because they are highly sought after, partly because there are great restrictions in the supply of them, and they are close to the facilities the community wants. So I think you have different markets working in different parts of a single area. I do think, quite regardless of that, there is a real issue about segregation, it is something that the Department has been looking at. We have been looking at the whole problems surrounding race and housing. My colleague, Charlie Falconer, has been looking at that, and we have strategies and proposals for dealing with those issues. We have also put requirements on local authorities and housing associations around dealing with some of the problems around race and housing.
(Ms Keeble) That is right, and I did refer to that previously.
(Ms Keeble) I think we have some proposals, yes, to speed it up.
(Ms Keeble) We will certainly provide you with a copy of the document.
Chairman: On that note, thank you very much for your evidence.