Examination of Witnesses (Questions 340-352)|
TUESDAY 2 JULY 2002
340. By future owners you mean when the property
is sold on?
(Mr Muir) When the property is sold on most local
authorities do not have administrative arrangements in place to
ensure that it is sold to the right person. They are not geared
up to that.
341. We are not actually producing many houses
through 106 in the first place, are we?
(Mr Muir) No.
(Mr Muir) I think the background to section 106 agreement
needs robust housing needs surveys. The land needs to be available
in the first place initially on the periphery of the village.
But I think that you will find that one of the reasons that it
is not coming forth is that anyone who is sitting on the periphery
of a village with an area of land will retain that on the basis
that it has some value for future development at some stage in
the next life of the next local plan.
343. Other parts of the country appear to be
slightly better at properties produced, affordable housing, through
the 106 agreement. Are you actually looking at other areas and
seeing how they are doing it and trying to learn some lessons?
Or are you just saying it does not work?
(Mr Muir) I think the issue in somewhere like the
Lake District National Park is that there are very few new build
sites available because of the planning restrictions and the lack
of availability of sites either brownfield or greenfield. So there
are very few new build schemes coming up of any sort. Most of
the movement is around the resale of existing properties. As we
say, section 106 agreements do not apply to those. If we are to
address the issue in some of the rural areas of such a large number
of properties that are second homes, it is not going to be dealt
with by increasing the supply in the very few sites that are available,
and it is only through those new sites that section 106 agreements
can be used.
344. Can we talk a bit about the Housing Corporation.
How do you think its funds could be better used, if at all?
(Mr Muir) Firstly, each year they have a TCI grant
rate regime which is incredibly complex.
345. Can you just spell out the TCI grant regime.
(Mr Muir) They have a system of Total Cost Indicators
which says that in a particular part of the country for a particular
type of property for a particular use there will be typical costs.
That is the TCI. The grant rate is that using those same criteria
again there will be a certain level of grant that Government puts
into that property to achieve our social objectives of either
rental or shared ownership. That system is incredibly complex.
There must be hundred of thousands of different variations and
there is very little local flexibility within the local regional
offices on how to interpret that. So, for example, if we look
at a rural property in an area like Grassmere one or two properties
will make the difference to sustainability of that community.
But the TCI grant rate system does not work if local field officers
and Housing Corporations say, "Well it is only two properties
out of our total regional allocation. If we can still prove value
for money, let's give it what it needs to buy an existing property
in Grassmere for that local family who would otherwise have to
leave the community. Let's do it." I think there is that
local discretion that is missing. I think we have come a long
way down the bureaucratic line and the time has come perhaps to
have a little bit more flexibility. I think the other key issue
though, certainly for low cost home ownership, is that the Housing
Corporation has not got a system that is working in most parts
of the country at the moment. We need a much more flexible equity
sharing arrangement. If that is what the Government wishes, to
increase the amount of home ownership in relation to rented programme
if that is what we chose to have then we need to have a much more
flexible system than the Housing Corporation has currently got.
346. Do you think the Housing Corporation has
sufficient funds if you look at the needs in your own particular
(Mr Darling) I think the rural target of 1,600 nationally
this year and increasing in the years to comeI know it
is the same as it was back in 1988is a reasonable target
to aim for and the funds are there to assist in the provision
of those. But I will just restate the points that Mr Muir has
made. I think you require the flexibility in those areas particularly
in the hot spot areas of the rural parts of Northumberland and
Cumbria which are being alluded to this morning to ensure that
those minimal numbers (we are talking about single figure numbers
but because they are single figure numbers they become more expensive).
You have not got the economies of scale; you have to go in and
compete against the local builder, national house builders in
certain areas, the design which is in sympathy (which will invariably
be stone and slate), it is away from the centres of population,
additional transport costs for materials and labour. All of those
need to be factored into the grant rate and the TCI rate to ensure
that the rents are affordable bearing in mind the local income
rents of those who are likely to rent those properties.
347. Looking at many of these rural areasand
I include smaller villagesis it effectively possible for
anyone who grows up in that area to afford a home in the community
they were brought up in? You have second homes, commuters coming
in, and people retiring to those communities from outside. Can
local authorities do more to actually help young people stay in
their own communities?
(Mr Robertson) In my area we do have villages where
people sleep, they do not actually live, they commute to the town.
My view is that the planning regime in terms of the planning green
paper offers a great opportunity. The plan should be able to allocate
land for social diversity, ie low cost homes, social housing.
I think that is the way forward, otherwise how are we going to
support the viability of some of our smaller villages who are
struggling in terms of the post office, the school and the pub.
(Mr Muir) Could I raise the issue of rent restructuring
in this context. With rent restructuring the new Government arrangement
to harmonise local authority and housing association rents under
one system across the country, the rent which will be charged
on a housing association or local authority property will be based
on local incomes and the value of the property. What that means
is that for a young person staying in their small rural community
in a very high value low wage area, the rents are going to have
to increase quite substantially. For example, we have a typical
property in Thirlemere, just outside Keswick, which has currently
got a rent of £44 a week. That rent will rise to about £87
a week under rent restructuring because of the high value of that
property. For someone who is a young person in low paid employment
they will not be able to afford that rent. The further problem
is the housing benefit taper system is not flexible enough to
allow someone to make the transition from being on benefit to
being in employment in a smooth way.
348. So you are saying that the restructuring
is going to make the situation worse and actually low cost affordable
housing is going to disappear even though in name it is going
(Mr Muir) If it is rented and it is in the social
sector and it is in a high value area then the rents will almost
certainly rise and in come cases very considerably. The hot spots
that we already have in terms of high value areas are going to
be those where the social rent is extremely high as well. It is
a further push on achieving sustainability. Certainly for someone
currently on benefit it will become more difficult in a high value
area for them to make the transition into low paid employment.
349. As I understand it, the Lake District National
Park Authority has got what I think is called Local Only Market
Housing Scheme. Should we be looking at more of those where, if
low cost housing is provided in an area, there has to be a test
that people can show a connection to that local community before
they are allowed even to purchase a low cost home and even on
resale there might be a condition that it can only be sold on
to someone with a connection to that community. Should that be
done more and why is it not being?
(Mr Muir) That is the section 106 agreement argument
again. I think it is used as effectively as it can be by the National
Park at the moment. I think there are changes which could make
it more effective in relation to existing properties.
(Mr Darling) Can I just come back on a point that
was made earlier about how do we ensure that we can provide affordable
housing. I would urge caution on the brownfield sites requirements,
quotas within rural districts because there are not that many
brownfield sites in rural districts where local authorities or
housing associations can compete with either local builders or
national house builders because we have suffered that fate ourselves.
We produced a scheme in a village, encouraged by the local authority.
The day after we got planning permission the owner of that site
said that he was not going to sell it to us, he was going to sell
it to someone else for private speculative development.
350. Is that because there were not proper conditions
put on the planning permission presumably?
(Mr Darling) Yes.
351. I just want to come back to rent restructuring.
I know that although it is a great idea in theory, it is causing
great anxiety in practice. I just wondered what proposals or proposed
changes you would like to see to the current draft of proposals
that the Government has put forward.
(Mr Muir) There are three variables: there is the
value of the property, the local average manual wage and the size
of the property (the size of the property is a small factor in
it). Taking Cumbria as an example there is an average manual wage
(which is above the national average and that clearly is not the
case in the rural areas), we have a large industrial work force
in Barrow and we have the NFL which employs 6,500 people directly
plus the associated industries and those significantly skew the
county-wide average wage. If we had average wages that were based
down on a district or a parish level we could then target the
existing rent systemwhich has a lot of good points about
it as you suggestvery closely to local afford ability.
As it stands at the moment the main problems are in the areas
where we have the very highest value and the very lowest wages
in areas like the tourist hot spots, the National Parks (and it
applies to all the National Parks in the country, I think).
352. And in those areas what do you think will
be the impact on affordable housing? It will reduce it, is what
you are saying, but how great will the impact be?
(Mr Muir) I think it is going to affect every rented
property we have that meet those criteria being very high value
and low wage. I think we will have more people who cannot move
into employment and I think we will have more problems of affordability.
The average cost of living in rural areas is probably round 30
per cent higher than in a comparable urban area. Everyone has
to have two cars, childcare costs are higher, shopping costs are
higher, everyone has to travel everywhere. The salaries are lower
on average anyway. Also, much of it is seasonal and reliant on
overtime. So, we have a particular problem with the sustainability
already. To increase the rent on those same properties for those
same people would have a cumulative and significant effect.
Chairman: On that note can I thank you very
much for your evidence.